Brexit Bulletin: Tech calls for open internet borders

By Simon Kennedy

Sign up to receive the Brexit Bulletin in your inbox. Technology companies are warning that leaving the European Union could end up blocking digital traffic and stifling a fast-growing part of the British economy.

That's because when consumers across the bloc go shopping online, their credit-card details and other personal information often zip across borders to giant data centers in the UK, according to Bloomberg’s Michael Scaturro.

Companies now want the UK government to negotiate a deal that keeps Internet borders open. The UK houses about 500 server farms, representing almost 43 per cent of data-center capacity in Europe's four biggest digital hubs—Germany, France, the Netherlands and the UK—according to data supplied by TechUK.

City Wants Swiss Model
Britain's finance industry has given up hope of the UK continuing to have free access to the EU’s single market and is now seeking bespoke trade deals for its different sectors, according to the Financial Times.

A City of London taskforce is close to recommending to Prime Minister Theresa May that she seeks a Swiss-style relationship with the EU in which individual services are still provided to EU customers tariff-free so long as regulations are similar to those in the bloc, the newspaper said. Unlike Switzerland, the proposed UK plan would allow banks access the EU.

Italy Goes For Growth
Italy is seeking an expansionary push for growth in the EU following the UK’s vote to leave, Prime Minister Matteo Renzi’s junior minister for European affairs said.

Undersecretary Sandro Gozi told Bloomberg's John Follain he wants a wide-ranging agreement to boost cooperation on security and defense as well as an expansionary economic policy to propel European growth.

"We need to increase and reinforce EU action on security and defense, including rapidly launching the European policing of its external borders," Gozi said in a telephone interview.

Fed Still on Guard
The Federal Reserve is still watching for contagion risk from Brexit, although the central bank’s July minutes, released earlier in the week, downplayed such concerns.

Dallas Fed Bank President Robert Kaplan said the UK vote to leave the EU means slower growth in Europe although he suggested the impact on the US would be modest.

On the Markets
Bloomberg New Energy Finance cut its outlook for pollution prices by 14 percent amid uncertainty over Britain’s future participation in the EU carbon market. Britain is the 28-nation bloc’s third-biggest emitter.

Overnight, the pound unwound some of the gains made following yesterday's UK retail numbers as the dollar pared its loss for the week. Asian stocks extended their retreat from a one-year high.

And Finally...
US presidential hopeful Donald Trump is hoping to repeat the success of Brexit supporters. As he trails in the polls behind Democrat Hillary Clinton, the Republican yesterday took to Twitter to declare himself “Mr Brexit,” in anticipation of a come-from-behind victory in November.