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More than 1,300 migrants rescued at sea in one day: Italy coast guard

ROME (Reuters) – More than 1,300 migrants were rescued in 13 separate missions in the Mediterranean on Friday, bringing the total helped over the last three days to more than 2,600, the coast guard said.

The migrants, who were aboard 13 vessels, were saved in the central Mediterranean by ships from the Italian coast guard, the Italian and British navies, merchant ships and vessels operated by non-government organizations, a statement said.

Another 1,300 were rescued on Wednesday.

The voyage from Libya across the Mediterranean to Italy is currently the main route to Europe for migrants.

A record 181,000 made the journey last year, most on flimsy boats run by people-smugglers.

More than 5,000 are believed to have died attempting the crossing in 2016.

In the latest in a series of measures pushed by the European Union to stop migrants reaching Europe, Italy launched a new fund on Wednesday to help African countries control their borders.

(Reporting By Philip Pullella; Editing by Hugh Lawson)

Dollar steadies after stumble, Brexit ruling saps sterling

woman walks past electronic board with stock market numbers on it

By Marc Jones

LONDON (Reuters) – The dollar and world stocks tip-toed higher on Tuesday, as signs of a revival of worldwide economic activity helped ease some of the caution triggered in recent days by U.S. President Donald Trump’s focus on protectionism over fiscal stimulus.

Talk of trade wars rumbled in the background but was offset as Japanese manufacturing showed the fastest expansion in almost three years and a 5-1/2 year peak in French business activity provided the latest proof of a nascent euro zone recovery.

European stocks made modest gains as the data helped bolster a 2-1/2 year high in commodity stocks and as merger talk swirling around two of Italy’s big insurers fueled a 1 percent jump in shares in Milan.

There was also the expected confirmation that Britain’s parliament will have to approve the start of the Brexit process, though sterling dropped on news that assent will not be needed from pro-EU Scotland or Northern Ireland.

It was largely fine-tuning however, with both the pound and the euro, as well as the Japanese yen already pushed back by the dollar as its index clawed its way back above the 100 point threshold breach on Monday.

“Most of the PMIs around the world have been quite strong so there is no bad news here, but the protectionism above stimulus story (from Trump) has given the dollar bulls reason for pause,” said Saxo bank’s head of FX strategy John Hardy.

“The dollar rally needs to find some support pretty soon otherwise we are facing a potentially serious correction.”

U.S. futures also pointed to another flat start for Wall Street’s S&P 500, Dow Jones Industrial and Nasdaq ahead of U.S. manufacturing data and what should be more activity in Washington from Trump’s new administration.

Sentiment had taken a knock on Monday when U.S. Treasury Secretary nominee Steven Mnuchin told senators that he would work to combat currency manipulation but would not give a clear answer on whether he thought China was manipulating its yuan.

In written answers to a Senate Finance Committee, Mnuchin also reportedly said an excessively strong dollar could be negative in the short term.

The dollar duly skidded as far as 112.52 yen in its biggest fall since July though it was back up at 113.40 yen by 1300 GMT. It had also hopped up to $1.0745 to the euro and almost a full cent to $1.2440 per pound.

SCEPTICISM GROWS

While Trump promised huge cuts in taxes and regulations on Monday, he also formally withdrew from the Trans-Pacific Partnership (TPP) trade deal and talked of border tariffs.

“It’s interesting that markets did not respond positively to a reaffirmation of lower taxes and looser regulation, reinforcing the impression that all the good news is discounted for now,” wrote analysts at ANZ in a note.

“As week one in office gets underway, there is a growing sense of scepticism, not helped by the tone of Friday’s inaugural address and subsequent spat with the media.”

Doubts about exactly how much fiscal stimulus might be forthcoming had helped Treasuries rally. Yields on 10-year notes steadied at 2.42 percent in European trading, having enjoyed the steepest single-day drop since Jan. 5 on Monday.

Two-year yields were around 1.16 percent, narrowing the dollar’s premium over the euro to 183 basis points from a recent top of 207 basis points.

Europe’s moves included the second dip in a row for Italian yields as its highest court began deliberations on the legality of the country’s latest electoral law with the decision likely to influence the timing of elections there.

An unambiguous ruling offering a simple solution to Italy’s electoral tangle could open the way for an early ballot by June. A more nuanced, convoluted reading would almost certainly leave parliament in place until the legislature ends in early 2018.

Spain and France clocked up impressive demand of almost 50 billion euros between them in new 10- and 22-year bond sales.

The upbeat global data boosted industrial metals including copper and iron ore, while gold was near two-month high at $1,212 an ounce.

Oil prices edged up too as signs that OPEC and non-OPEC producers were on track to meet output reduction goals largely overshadowed a strong recovery in U.S. drilling.

U.S. crude futures added 45 cents to $53.19, while Brent crude climbed 42 cents to $55.65 a barrel. [O/R]

(Additional reporting by Wayne Cole in Sydney; Editing by Andrew Heavens)

As attacks grow, EU mulls banking stress tests for cyber risks

file graphic of man using a computer representing cyber attacks

By Francesco Guarascio

BRUSSELS (Reuters) – The European Union is considering testing banks’ defenses against cyber attacks, EU officials and sources said, as concerns grow about the industry’s vulnerability to hacking.

Cyber attacks against banks have increased in numbers and sophistication in recent years, with criminals finding new ways to target banks beyond trying to illicitly obtain details of their customers’ online accounts. Last February $81 million was taken from the Bangladesh central bank when hackers broke into its system and gained access to the SWIFT international transactions network.

Global regulators have tightened security requirements for banks after that giant cyber fraud, one of the biggest in history, and in some countries have carried out checks on lenders’ security systems.

But complex cyber attacks have kept rising, as revealed in November by SWIFT in a letter to client banks and by the theft of 2.5 million pounds ($3 million) from Tesco Plc’s banking arm in the first mass hacking of accounts at a Western lender.

Banks “are struggling to demonstrate their ability to cope with the rising threat of intruders gaining unauthorized access to their critical systems and data,” a report of the European Banking Authority (EBA) warned in December.

The next step from European regulators to boost security could be an EU-wide stress test.

The European executive commission is assessing additional initiatives to counter cyber attacks, a commission official told Reuters. “These include cyber-threat information sharing or penetration and resilience testing of systems.”

The European Central Bank announced last year it would set up a database to register incidents of cyber crime at commercial banks in the 19-country euro zone. But exchanges of information among national authorities on cyber incidents remains scant.

The Commission is studying whether EU-wide tests would help step up security, a source at the EU executive said. This would be in addition to controls already carried out by national authorities.

EBA, which is in charge of stress-testing the bloc’s banks, is expected to detail in summer the checks it intends to conduct in the next exercise planned in mid 2018.

EBA tests banks’ capital cushions and can conduct checks on specific issues. Last year it monitored risks caused by fines, as EU lenders faced sanctions from U.S. regulators.

An EBA official said cyber security was on the agency’s radar but no decision had been made on a possible stress test. The body’s chairman, Andrea Enria, has urged EU states to stress-test their financial institutions for cyber risks.

Lloyds Banking Group is working with law enforcement agencies to trace who was behind a cyber attack that caused intermittent outages for customers of its personal banking websites almost two weeks ago, according to a source familiar with the incident. Lloyds said it would not speculate on the cause of the attack. No customers suffered any losses.

BLOCKCHAIN

As European banks keep relying on digital infrastructure that is “rigid and outdated”, according to EBA, regulators are considering new technologies that could boost security.

Blockchain, the technology behind the most successful virtual currency, Bitcoin, is being closely monitored in Brussels “to establish the advantages and possible risks” but also to weigh possible moves to enable blockchain where it is hindered, the Commission source said.

More than 1 billion euros have been invested in blockchain startups, a World Economic Forum report said.

The EU agency for network and information security (ENISA) said in a report last week the technology offered new opportunities and could cut costs, but may also pose new cyber security challenges, mostly caused by its decentralized network.

Turkish parliament nears approval of presidential system sought by Erdogan

ANKARA (Reuters) – Turkey moved closer to adopting a new constitutional bill extending President Tayyip Erdogan’s powers that supporters welcome as a guarantor of stability at a time of turmoil and opponents see as a step toward an authoritarian state.

Parliament ratified the first seven of 18 articles in a second round of voting, putting the assembly on track to approve the package as a whole by Friday night.

Under the new system, Erdogan could rule in the NATO-member and European Union candidate country until 2029.

As debate on the reforms went late into the evening, an independent lawmaker, Aylin Nazliaka, handcuffed herself to the podium in protest against the stronger presidency.

A lawmaker from the ruling AK Party attempted to end the protest by force and deputies from other parties then weighed in, one losing her prosthetic arm in the fracas, witnesses said.

The AK Party, backed by the nationalist MHP, says it will bring the strong leadership needed to prevent a return to the fragile coalition governments of the past. It would also, they say, help Turkey tackle attacks by Kurdish insurgents and Islamic State militants spilling over from war in Syria.

The reform would enable the president to issue decrees, declare emergency rule, appoint ministers and top state officials and dissolve parliament – powers that the two main opposition parties say strip away balances to Erdogan’s power.

Prime Minister Binali Yildirim was cited as telling Turkey’s Fox TV: “In the presidential period, when ministers will be appointed from outside, people from and close to the MHP could be appointed as ministers.”

MASS ARRESTS

Erdogan assumed the presidency, a largely ceremonial position, in 2014 after over a decade as prime minister. Since then, pushing his powers to the limit, he has continued to dominate politics by dint of his personal popularity.

Critics accuse him of increasing authoritarianism with the arrests and dismissal of tens of thousands of judges, police, military officers, journalists and academics since a failed military coup in July. Erdogan points to a danger from Islamic State militants and Kurdish insurgents.

The seven articles approved lower the minimum age to be a lawmaker to 18 from 25, raise the number of MPs to 600 from 550 and will result in parliamentary and presidential elections being held together every five years.

The seventh article opens the way for the president to be a member of a political party.

The main opposition CHP and the pro-Kurdish HDP, the second largest opposition party, strongly oppose the changes.

The bill needs the support of at least 330 deputies in the assembly to go to a referendum. The AKP has 316 deputies eligible to vote and the MHP 39. So far, articles have generally been approved with at least 340 votes in favor.

A study by Istanbul’s Kadir Has University showed the presidency was rated as Turkey’s most trusted institution, outstripping the army, which normally tops such surveys but whose popularity has fallen after a failed coup in July.

(Reporting by Gulsen Solaker and Ercan Gurses; Writing by Daren Butler and Tuvan Gumrukcu; Editing by Ralph Boulton and Janet Lawrence)

Sterling skids to three-month low as ‘hard Brexit’ fears bite

By Jemima Kelly

LONDON (Reuters) – Sterling skidded to its lowest levels – bar a “flash crash” in October – in 32 years on Monday, hit by fears that Prime Minister Theresa May will say on Tuesday that Britain is set for a “hard” Brexit out of the EU and its single market.

Sterling fell as much as 1.5 percent against the dollar and 2.5 percent against the yen. That shifted the spotlight away from the greenback, which has come under pressure in recent days as investors ponder U.S. President-elect Donald Trump’s likely economic policies after he takes office on Friday.

The pound plunged to $1.1983 <GBP=D4> in early trade in Asia, depths not seen since a bout of thin liquidity triggered a “flash crash” on Oct. 7 that wiped as much as 10 percent off the pound in a matter of minutes. Apart from that, it was the lowest level since May 1985.

By 1230 GMT (7:30 a.m. ET) sterling had managed to climb back above $1.20, but was still trading down more than 1 percent on the day at $1.204.

Dealers said the market was reacting to various media reports over the weekend that said May would signal plans for a “hard” Brexit in her speech on Tuesday, saying she’s willing to quit the European Union’s single market in order to regain control of Britain’s borders.

“Every time there’s ‘hard Brexit’ headlines, that triggers a fresh bout of selling sterling,” said MUFG currency analyst Lee Hardman, in London. “It’s almost impossible to see Europe allowing the UK to remain a full member of the single market if it wants to regain control of the border and the laws and wants to strike its own agreements.”

Hardman added that the weekend reports were “not really new news”, as May’s government has consistently pointed toward giving priority to immigration controls over single market access, and that was why sterling had not fallen further in London trading hours.

U.S. markets were closed on Monday for Martin Luther King day, which means liquidity will be lower.

“The fact that the sell-offs usually happen during periods in which there’s less liquidity increases the risk we could have a sharper sell-off (today), but as we saw in the flash crash that doesn’t mean that’s fundamentally justified,” said Hardman.

Citi’s head of European G10 currency strategy in London, Richard Cochinos, said Britain’s hefty current account and budget deficits meant it was heavily dependent on foreign capital. The more uncertainty investors feel over Britain’s place in Europe, he said, the more investment dries up – the key reason for sterling’s weakness.

May has said she will trigger Article 50 – starting the formal EU withdrawal talks – by the end of March. But so far, she has revealed few details about what kind of deal she will seek, frustrating some investors, businesses and lawmakers.

“SAFE-HAVEN” YEN

The euro climbed as much as 1.5 percent against the pound to a two-month high of 88.53 pence <EURGBP=>, before retreating to 87.85 pence, still up 0.7 percent on the day.

Against the yen, which is perceived as a safe haven, sterling fell as much as 2.3 percent to a two-month low of 136.48 yen <GBPJPY=>, before recovering to trade down around 1.4 percent on the day by 1230 GMT.

The Japanese currency gained broadly as a risk-off mood permeated markets, hitting a six-week high of 113.61 yen to the U.S. dollar <JPY=>.

“The risk-averse sentiment stemming from ‘hard Brexit’ (worries) is pushing down the dollar/yen,” Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.

“But so far, I think the correction from the dollar/yen’s high in December, and concerns about stronger protectionism under the new U.S. presidency, have been the dominant theme.”

The dollar index climbed 0.4 percent to 101.59 <.DXY>.

Trump revealed few policy clues at his first press conference last week since his November election victory. The dollar rose after the election on expectations that his administration would embark on stimulus to boost growth and inflation, prompting the U.S. Federal Reserve to adopt a faster pace of interest rate hikes.

But Trump’s protectionist stance has also added to some investors’ risk aversion, as he has threatened to impose retaliatory tariffs on China, build a wall along the Mexican border and tear up the North American Free Trade Agreement (NAFTA).

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

(Additional reporting by Wayne Cole in Sydney and Tokyo markets team; Editing by Catherine Evans)

EU eyes new Libya approach to block feared migrant wave

raft overcrowded with migrants/refugees in the Mediterranean Sea

By Alastair Macdonald

VALLETTA (Reuters) – The European Union plans new measures to deter migrants crossing the Mediterranean from Libya, officials said, as Malta urged the bloc to act on Thursday to head off a surge in arrivals from a country where Russia is taking a new interest.

With options limited by the weakness of the U.N.-recognized government and by divisions among EU states, it is unclear just what the EU may agree. But officials believe a consensus can be found within weeks in support of national steps taken by Italy.

Rome once effectively paid Libyan strongman Muammar Gaddafi to block migrants. Since he was overthrown with Western backing in 2011, it has struggled to cope with large numbers of new arrivals. Italy is now working with U.N.-backed Prime Minister Fayez Seraj on a new agreement under which Rome will help guard Libya’s southern desert borders against smugglers.

Malta’s Prime Minister Joseph Muscat, who hosted the executive European Commission in Valletta on Wednesday and will host an EU summit discussing migration on Feb. 3, said new Russian contacts with a Libyan rebel commander and intelligence indicating a sharp increase in crossings once the weather improves made urgent EU action imperative.

“Come next spring, we will have a crisis,” he told a news conference, forecasting “unprecedented” numbers following the record 180,000 sea arrivals in Italy last year.

“The choice is trying to do something now … or meeting urgently in April, May, saying there are tens of thousands of people crossing the Mediterranean, drowning … and then trying to do a deal then.”

“I would beg that we try … to do a deal now,” added Muscat, whose government will chair EU councils until June.

The Commission visit to Malta included senior Libya experts, said officials who foresee new EU policy proposals within weeks.

TURKEY MODEL

After all but halting migrant flows to Greece through a deal last year with Turkey to hold back Syrian refugees, the EU wants to cut flows from Libya. It wants to step up deportations of failed asylum seekers and is using aid budgets to pressure African states to cooperate in taking back their citizens.

Some EU states are looking at greater military involvement to disrupt migrant smuggling gangs which have thrived in the absence of effective authority in Libya.

The EU is training the Libyan coastguard in international waters but has not been able to agree for many months on whether to move into Libya’s territorial waters.

But Muscat said he saw an emerging consensus on a new approach, including from a hitherto skeptical Germany, adding Italy’s deal with Libya should be emulated by the EU.

Muscat said the EU should seek Libyan agreement to expand the bloc’s mission – currently involved in search and rescue operations, trying to obstruct traffickers and uphold a U.N. arms embargo – into Libyan waters.

He said the EU should revive an agreement drafted with Gaddafi, which offered funding to Libya in exchange for more checks on migration.

Asked whether he foresaw EU forces patrolling Libyan borders or the EU setting up camps in Libya to process asylum claims, Muscat did not go into detail on how an EU plan would work beyond saying that, as with the Turkey deal, the key element was “scuttling the business model” of smuggling gangs.

After talks on Thursday, Italian Interior Minister Marco Minniti and EU migration commissioner Dimitris Avramopoulos said in a joint statement that the EU backed engagement with Libya. They said: “The Commission is ready to further support Italy in this engagement politically, financially and operationally.”

(Additional reporting by Isla Binnie in Rome and Gabriela Baczynska and Robin Emmott in Brussels; Editing by Janet Lawrence)

UK government expects to lose Brexit trigger case, making contingency plans: report

LONDON (Reuters) – The British government expects to lose its legal battle to start the Brexit process without going through parliament, and has drafted versions of a bill to put to lawmakers after the ruling, the Guardian newspaper reported on Tuesday.

The Supreme Court is expected to rule in the next two weeks on whether the government can trigger Article 50 of the European Union’s Lisbon Treaty, the first formal step toward leaving the bloc, without first getting parliament’s approval.

Citing unnamed sources, the Guardian reported that ministers had privately conceded they were very likely to lose the case, and had drawn up at least two versions of a bill to be presented to parliament after the ruling. [http://bit.ly/2iiL6oP]

The report also said the government had asked the court for early sight of the ruling before it is made public, to allow for contingency planning.

During the Supreme Court hearing in December, government lawyer James Eadie said that if judges ruled parliament had to give its assent to the triggering of Article 50, the solution would be a “one-line” bill.

The Guardian said ministers were hoping the ruling would allow Prime Minister Theresa May to put forward a short bill or motion, narrowly focused on Article 50, to make it difficult for lawmakers to amend.

Those in favor of a clean break with the European Union are concerned that parliament, where a majority of members were in favor of remaining in the bloc, could seek to water down ministers’ plan in pursuit of a so-called “soft Brexit”.

The government’s opponents in the legal battle argued that triggering Article 50 would nullify the 1972 act of parliament that opened the way for Britain to join the EU, and therefore parliament had to give its assent for its act to be undone.

London’s High Court backed that argument, prompting the government to appeal to the Supreme Court, Britain’s highest judicial body, in December.

(Reporting by Estelle Shirbon; editing by Michael Holden)

Dollar falls against yen on risk reduction; sterling sinks

By Sam Forgione

NEW YORK (Reuters) – The U.S. dollar slumped against the safe-haven yen on Monday on investors’ reduced appetite for risk, while sterling sank to more than two-month lows on talk that Britain would drastically rework trade ties with the European Union after Brexit.

A fall in U.S. Treasury yields and U.S. stocks drove the dollar down as much as 0.6 percent against the yen to a session low of 116.16 yen JPY=. The dollar remained within recent trading ranges and did not test Friday’s more than three-week low of 115.04 yen.

Analysts said there was no fundamental catalyst for the dollar’s decline against the yen, with traders probably reacting to lower U.S. yields and equities.

“There’s an optical relationship with the fact that stocks are lower,” said Shahab Jalinoos, global head of FX strategy at Credit Suisse in New York.

The dollar was last down 0.4 percent at 116.43 yen. It dipped modestly against the euro and Swiss franc, leading the dollar index .DXY, which measures the greenback against a basket of six major currencies, to stand 0.08 percent lower at 102.150.

The pound slid more than 1 percent against both the dollar GBP=D4 and the euro EURGBP=R after weekend comments from British Prime Minister Theresa May that she was not interested in keeping “bits of membership” of the European Union.

Sterling slid as low as $1.2125, its weakest against the dollar since the end of October. It fell about 1.2 percent against the euro, hitting 86.91 pence per euro, the lowest since mid-November.

“Anything that suggests a hard Brexit is more likely … is very damaging to UK growth prospects,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp in New York.

Against the dollar, sterling was last down 1 percent at $1.2156, while the euro EUR= was up 0.3 percent at 1.0562. The dollar was down 0.17 percent against the franc at 1.0162 francs CHF=.

On Wall Street, the benchmark S&P 500 stock index .SPX was down 0.13 percent, while benchmark 10-year U.S. Treasury yields US10YT=RR fell nearly four basis points on the day to 2.383 percent.

(Reporting by Sam Forgione; Additional reporting by Marc Jones in London; Editing by Lisa Von Ahn))

Hard Brexit is not inevitable, says British PM May

By Elizabeth Piper

LONDON (Reuters) – A clean break with the EU’s single market is not inevitable, British Prime Minister Theresa May said on Monday, seeking to clarify comments that pushed down the pound on the possibility of a hard Brexit from the European Union.

She criticized British media for misinterpreting what she described as long-term position on EU talks but the pound failed to recover from a 10-week low and was down more than 1 percent to the dollar and 1.2 percent against the euro on the day.

May, under pressure to offer more detail on her strategy before launching divorce talks with the European Union, said on Sunday in her first televised interview of the year that Britain would not be able to keep “bits” of its membership.

Some commentators saw that as a sign she was heading for a hard Brexit, which business says would damage the economy by breaking links with the single market of 500 million consumers. May shot back that the media was using terms she did not accept.

“I’m tempted to say that the people who are getting it wrong are those who print things saying I’m talking about a hard Brexit, (that) it is absolutely inevitable there’s a hard Brexit,” she told the Charity Commission, a government department that regulates charities in England and Wales.

“I don’t accept the terms hard and soft Brexit. What we’re doing is (that we are) going to get an ambitious, good, best possible deal for the United Kingdom in terms of … trading with and operating within the single European market.”

May’s frustration was clear. The former interior minister, who was appointed as prime minister shortly after Britain voted to leave the EU at a June referendum, is increasingly concerned that Brexit will define her time in power, sources say.

In her speech on Monday, she said she wanted her government to help to heal the divisions in Britain that were deepened by the EU vote, and ensure that “everyone has the chance to share in the wealth and opportunity on offer in Britain today”.

She announced measures to boost support to those suffering from mental health problems and said she would do more on housing, education and schooling, but despite applause from the audience, two out of four questioners asked about Brexit.

May has repeatedly said she will not reveal her strategy before triggering Article 50 of the EU’s Lisbon Treaty to start some of the most complicated negotiations since World War Two, but her reticence has spurred scrutiny of her every comment.

She has largely stuck to the script that she wants Britain to regain control over immigration, restore its sovereignty and also to get the best possible trading relations with the EU, but any comment that seems to stray is pored over for signs of how May sees Britain’s future relationship with the EU.

Asked whether May had ruled out getting preferential access to the single market in her interview on Sunday, her spokeswoman said she had ruled nothing out or in.

On Monday, May again said she was ambitious before the talks with the EU, which are due to be launched before the end of March.

“But we mustn’t think of this as sort of leaving the EU and trying to keep bits of membership, what bits of membership will we keep,” she said.

“It’s a new relationship, we’ll be outside the EU, we will have a new relationship but I believe that can be a relationship which has a good trading deal at its heart.”

(Additional reporting by William James and Kylie MacLellan; editing by Jeremy Gaunt)

At odds over Brexit, UK nations hold ‘frustrating’ talks on common stance

By Kylie MacLellan

LONDON (Reuters) – British Prime Minister Theresa May tried to persuade the leaders of Scotland, Wales and Northern Ireland on Monday to work with her government on a common Brexit negotiating position, but the Scottish leader dismissed the meeting as “deeply frustrating”.

May says that while the devolved governments of the UK’s three smaller nations should give their views on what the terms of Brexit should be, they must not undermine the UK’s strategy by seeking separate settlements with the EU.

“I don’t know what the UK’s negotiating position is because they can’t tell us,” Scotland’s First Minister Nicola Sturgeon said after talks at May’s Downing Street office.

“I can’t undermine something that doesn’t exist, it doesn’t appear to me at the moment that there is a UK negotiating strategy,” she told Sky News television.

While England and Wales voted for Brexit in a June referendum, Scotland and Northern Ireland voted to remain in the EU, setting the devolved governments in Edinburgh and Belfast on a collision course with the UK’s central government in London.

This could lead to a constitutional crisis, and potentially to Scottish independence and renewed political tensions in Northern Ireland.

At the meeting with Sturgeon and the Welsh and Northern Irish leaders, May proposed setting up a new body to give the three devolved governments, which have varying degrees of autonomy from London, a formal avenue to express their views.

“Working together, the nations of the United Kingdom will make a success of leaving the European Union — and we will further strengthen our unique and enduring union as we do so,” May said in a statement after the talks.

But Sturgeon struck a very different tone as she emerged.

“What I’m not prepared to do … is stand back and watch Scotland driven off a hard Brexit cliff edge because the consequences in lost jobs, lost investment and lower living standards are too serious,” she said.

CONFLICTING PRIORITIES

The British government, which has promised to kick off formal divorce talks with the EU before the end of March, has said it will negotiate a bespoke deal on behalf of the whole United Kingdom with the bloc’s other 27 members.

Sturgeon said she would make specific proposals over the next few weeks to keep Scotland in the single market even if the rest of the UK left, and that May had said she was prepared to listen to options.

“So far those words are not matched by substance or actions and that is what has got to change,” Sturgeon said.

Sturgeon, head of the Scottish National Party, has said her government is preparing for all possibilities, including independence from the UK, after Britain leaves the EU. She wants each of the UK’s four assemblies to get a vote on the proposed negotiating package.

In Northern Ireland, there are fears that Brexit could undermine a 1998 peace deal and lead to the reintroduction of unpopular and cumbersome controls on the border with the Republic of Ireland, an EU member.

Northern Ireland’s First Minister Arlene Foster said the devolved nations had to be at “the heart of the process” so that issues relevant to them could be tackled as they arose.

Welsh First Minister Carwyn Jones said it was difficult for the devolved administrations to influence the process when there was so much uncertainty over what the government was seeking.

Jones said he had argued very strongly for “full and unfettered access” to the EU’s single market, which is in doubt because EU leaders say it would require Britain to continue to accept EU freedom of movement rules.

One of the central planks of the pro-Brexit campaign was that exiting the EU would give Britain greater control over immigration and help reduce the numbers arriving in the country.

(Additional reporting by Elisabeth O’Leary, William James and Kate Holton; Editing by Estelle Shirbon and Robin Pomeroy)

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