UK leader May hits back on Brexit plan; pound falls

LONDON — British Prime Minister Theresa May accused the European Union on Friday of creating an “impasse” in divorce negotiations by bluntly rejecting her blueprint for Brexit, sending the value of the pound falling as worries about a chaotic U.K. exit from the EU soared.

With British newspapers declaring that May had been “humiliated” by EU leaders, the prime minister used a televised statement from 10 Downing St. to insist she was prepared to take Britain out of the bloc without a deal if it did not treat the country with more respect.

Declaring that “we are at an impasse,” May said the EU must lay out “what the real issues are and what their alternative is.”

“Throughout this process, I have treated the EU with nothing but respect,” she said. “The U.K. expects the same. A good relationship at the end of this process depends on it.”

The pound fell 1.5 per cent to $1.3066 on May’s comments, which seemed to make the prospect of an economically disruptive “no deal” Brexit more likely.

May’s strong words belied her weak position: She is a prime minister without a parliamentary majority, caught between the EU and a pro-Brexit wing of her Conservative Party that threatens to oust her if she makes a compromise too far.

May’s combative remarks were calibrated to appease euroskeptic Conservatives ahead of what’s likely to be a bruising annual party conference at the end of the month.

May’s statement followed a fraught EU summit in Salzburg, Austria, which dashed hopes of a breakthrough in stalled divorce talks with only six months to go until Britain leaves the bloc on March 29.

European Council President Donald Tusk said at the meeting that parts of the U.K.’s plan simply “will not work.” French President Emmanuel Macron called pro-Brexit U.K. politicians “liars” who had misled the country about the costs of leaving the 28-nation bloc.

The judgment of British newspapers was brutal. The broadly pro-EU Guardian said May had been “humiliated.” The conservative Times of London said: “Humiliation for May as EU rejects Brexit plan.”

The Brexit-supporting tabloid Sun branded bloc leaders “EU dirty rats,” accusing “Euro mobsters” Tusk and Macron of “ambushing” May.

UK Brexit Secretary Dominic Raab said the bloc had “yanked up the handbrake” on the negotiations.

But despite all the heated British rhetoric, the EU’s position was not new.

May’s “Chequers plan” — named for the prime minister’s country retreat where it was hammered out in July — aims to keep the U.K. in the EU single market for goods but not services, in order to ensure free trade with the bloc and an open border between the U.K.’s Northern Ireland and EU member Ireland.

EU officials have been cool on the plan from the start, saying Britain can’t “cherry-pick” elements of membership in the bloc without accepting all the costs and responsibilities.

Yet British politicians and diplomats were taken aback by Tusk’s blunt dismissal of the Chequers plan on Thursday — and by his light-hearted Instagram post showing Tusk and May looking at a dessert tray and the words: “A piece of cake, perhaps? Sorry, no cherries.”

In a statement Friday, Tusk said the bloc’s position had “been known to the British side in every detail for many weeks.” He said EU leaders regarded Chequers as “a step in the right direction” but had been taken aback by May’s “uncompromising” stance in Salzburg.

Tusk said in Salzburg that an EU summit on Oct. 18-19 would be the moment of truth, when an agreement on divorce terms and the outlines of future trade would be sealed or would fail.

The biggest single obstacle to a deal is the need to maintain an open Irish border. Failing to do so could disrupt the lives of people and business on both sides, and undermine Northern Ireland’s hard-won peace.

Britain and the EU have agreed on the need for a legally binding backstop to guarantee there is no return to customs posts and other border checks. But Britain rejects the EU’s proposed solution, which would keep Northern Ireland inside the bloc’s customs union while the rest of the U.K. leaves.

May said Friday the EU was “making a fundamental mistake” if it believed she would agree to “any form of customs border between Northern Ireland and the rest of the U.K.”

May said she wanted to reassure people in Northern Ireland “that in the event of no deal, we will do everything in our power to prevent a return to a hard border.”

She also said more than 3 million EU citizens living in the U.K. would retain their rights even if Britain left the bloc without an agreement.

“You are our friends, our neighbours, our colleagues. We want you to stay,” May said.

Dealing with the EU is only part of May’s problem. Pro-Brexit Conservatives, including former Foreign Secretary Boris Johnson, hate the Chequers plan, saying it would keep Britain tethered to the bloc, unable to strike new trade deals around the world.

Conservative lawmaker Jacob Rees-Mogg, an arch-Brexiteer, praised May for “standing up to the EU bullies,” but urged her to ditch the Chequers plan for a much looser “Canada-style” free trade agreement.”

Pro-EU politicians don’t like the Chequers plan either, saying it will cut the U.K.’s vast services sector out of the EU’s single market. Many are pushing for a new referendum that would let voters choose between accepting whatever deal she manages to negotiate with the bloc and staying in the EU.

Labour Party Brexit spokesman Keir Starmer said May was “in denial.”

“I don’t understand why she’s failed to hear the message that the Chequers proposal wasn’t going to be accepted by the EU and frankly it’s not going to be accepted by her own party,” he said.

Despite the sombre mood music, Britain and the EU hinted there could be a way forward.

“I remain convinced that a compromise, good for all, is still possible,” Tusk said. “I say these words as a close friend of the U.K. and a true admirer of PM May.”

May said a solution required “serious engagement on resolving the two big problems in the negotiations” — trade and the Irish border.

“We stand ready,” she said.

___

Associated Press writers Danica Kirka and Carlo Piovano contributed.

Jill Lawless, The Associated Press

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Taxpayers Federation calling on BC Government to scrap failed Carbon Tax

Published on January 16, 2025

Todayville

From the Canadian Taxpayers Federation

By Carson Binda

BC Government promised carbon tax would reduce CO2 by 33%. It has done nothing.

The Canadian Taxpayers Federation is calling on the British Columbia government to scrap the carbon tax as new data shows the province’s carbon emissions have continued to rise, despite the oldest carbon tax in the country.

“The carbon tax isn’t reducing carbon emissions like the politicians promised,” said Carson Binda, B.C. Director for the Canadian Taxpayers Federation. “Premier David Eby needs to axe the tax now to save British Columbians money.”

Emissions data from the provincial government shows that British Columbia’s emissions have risen since the introduction of a carbon tax.

Total emissions in 2007, the last year without a provincial carbon tax, stood at 65.5 MtCO2e, while 2022 emissions data shows an increase to 65.6 MtCO2e.

When the carbon tax was introduced, the B.C. government pledged that it would reduce greenhouse gas emissions by 33 per cent.

The Eby government plans to increase the B.C. carbon tax again on April 1, 2025. After that increase, the carbon tax will add 21 cents to the cost of a litre of natural gas, 25 cents per litre of diesel and 18 cents per cubic meter of natural gas.

“The carbon tax has cost British Columbians a lot of money, but it hasn’t helped the environment as promised,” Binda said. “Eby has a simple choice: scrap the carbon tax before April 1, or force British Columbians to pay even more to heat our homes and drive to work.”

If a family fills up the minivan once per week for a year, the carbon tax will cost them $728. The carbon tax on natural gas will add $435 to the average family’s home heating bills in the 12 months after the April 1 carbon tax hike.

Other provinces, like Saskatchewan, have unilaterally stopped collecting the carbon tax on essentials like home heating and have not faced consequences from Ottawa.

“British Columbians need real relief from the costs of the provincial carbon tax,” Binda said. “Eby needs to stop waiting for permission from the leaderless federal government and scrap the tax on British Columbians.”

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The problem with deficits and debt

Published on January 13, 2025

Todayville

From the Fraser Institute

By Tegan Hill and Jake Fuss

This fiscal year (2024/25), the federal government and eight out of 10 provinces project a budget deficit, meaning they’re spending more than collecting in revenues. Unfortunately, this trend isn’t new. Many Canadian governments—including the federal government—have routinely ran deficits over the last decade.

But why should Canadians care? If you listen to some politicians (and even some economists), they say deficits—and the debt they produce—are no big deal. But in reality, the consequences of government debt are real and land squarely on everyday Canadians.

Budget deficits, which occur when the government spends more than it collects in revenue over the fiscal year, fuel debt accumulation. For example, since 2015, the federal government’s large and persistent deficits have more than doubled total federal debt, which will reach a projected $2.2 trillion this fiscal year. That has real world consequences. Here are a few of them:

Diverted Program Spending: Just as Canadians must pay interest on their own mortgages or car loans, taxpayers must pay interest on government debt. Each dollar spent paying interest is a dollar diverted from public programs such as health care and education, or potential tax relief. This fiscal year, federal debt interest costs will reach $53.7 billion or $1,301 per Canadian. And that number doesn’t include provincial government debt interest, which varies by province. In Ontario, for example, debt interest costs are projected to be $12.7 billion or $789 per Ontarian.

Higher Taxes in the Future: When governments run deficits, they’re borrowing to pay for today’s spending. But eventually someone (i.e. future generations of Canadians) must pay for this borrowing in the form of higher taxes. For example, if you’re a 16-year-old Canadian in 2025, you’ll pay an estimated $29,663 over your lifetime in additional personal income taxes (that you would otherwise not pay) due to Canada’s ballooning federal debt. By comparison, a 65-year-old will pay an estimated $2,433. Younger Canadians clearly bear a disproportionately large share of the government debt being accumulated currently.

Risks of rising interest rates: When governments run deficits, they increase demand for borrowing. In other words, governments compete with individuals, families and businesses for the savings available for borrowing. In response, interest rates rise, and subsequently, so does the cost of servicing government debt. Of course, the private sector also must pay these higher interest rates, which can reduce the level of private investment in the economy. In other words, private investment that would have occurred no longer does because of higher interest rates, which reduces overall economic growth—the foundation for job-creation and prosperity. Not surprisingly, as government debt has increased, business investment has declined—specifically, business investment per worker fell from $18,363 in 2014 to $14,687 in 2021 (inflation-adjusted).

Risk of Inflation: When governments increase spending, particularly with borrowed money, they add more money to the economy, which can fuel inflation. According to a 2023 report from Scotiabank, government spending contributed significantly to higher interest rates in Canada, accounting for an estimated 42 per cent of the increase in the Bank of Canada’s rate since the first quarter of 2022. As a result, many Canadians have seen the costs of their borrowing—mortgages, car loans, lines of credit—soar in recent years.

Recession Risks: The accumulation of deficits and debt, which do not enhance productivity in the economy, weaken the government’s ability to deal with future challenges including economic downturns because the government has less fiscal capacity available to take on more debt. That’s because during a recession, government spending automatically increases and government revenues decrease, even before policymakers react with any specific measures. For example, as unemployment rises, employment insurance (EI) payments automatically increase, while revenues for EI decrease. Therefore, when a downturn or recession hits, and the government wants to spend even more money beyond these automatic programs, it must go further into debt.

Government debt comes with major consequences for Canadians. To alleviate the pain of government debt on Canadians, our policymakers should work to balance their budgets in 2025.