Edinburgh march for vote on final Brexit deal

Demonstrators have taken to the streets of Edinburgh to call for the public be given a vote on the final Brexit deal.

The march is one of 12 major rallies planned across the UK during what organisers claim will be “the largest ever pro-European day of action”.

It comes ahead of the launch of a UK-wide People’s Vote campaign on Sunday.

Organisers are demanding a “fair and democratic” ballot on the final deal for the UK’s departure from the European Union.

Groups behind the demonstrations include Open Britain, the European Movement and Britain for Europe.

John Edward, of Open Britain, said: “Our largest ever National Day of Action is all about bringing together the various pro-European groups so that we can speak with one, unified voice, because we know that together we are stronger.”

European Movement in Scotland’s Vanessa Glynn said: “The pro-European movement is gaining in strength and momentum and that progress will be reflected this weekend with a huge demonstration of grassroots power in favour of a People’s Vote on the Brexit deal.”

Anne Weyman, of Britain for Europe, said: “We may come from different political parties, different traditions and different groups, but we are united by our desire for the people to have their say on the Brexit deal and we are determined to make sure their voice is heard loud and clear.”

Carmakers fear rising trade barriers after Brexit

A storm is brewing as clouds gather over Bristol Port, with the rain set to fall on tens of thousands of vehicles parked in the port’s car compounds, ready for export by ship, or destined for UK dealerships.

It is an apt backdrop for the UK automotive sector’s current predicament.

“Brexit has derailed the industry,” says Sarwant Singh, senior partner and global head of automotive and transportation at consultants Frost & Sullivan.

“The uncertainty causes people not to buy cars.”

The number of cars sold in the UK dropped 5.7% in 2017, according to industry body the Society of Motor Manufacturers & Traders, and ratings agency Moody’s predicts a further 5.5% fall this year.

There has been little respite from foreign markets, with exports slipping 1% last year.

Each year, about 80% of the vehicles built in the UK are exported, so smooth international trade relations are vital for the automotive sector’s continued prosperity.

But these days, the relations are as choppy as the sea in the Bristol Channel.

Industry executives’ main fear is that Brexit will result in heightened barriers to trade, not only with the European Union, but with the rest of the world too, once the transition period ends on 31 December 2020.

The prospect of an escalating trade dispute between the US and its main trading partners, the EU and China, also looms large, after US President Donald Trump’s recent threat to tax cars imported into the world’s largest market.

“All of Europe is exposed,” says Justin Cox, director of global production at consultants LMC Automotive, “but some plants are more exposed than others, and it so happens that several of those are in the UK.”

Then there’s China, the world’s second-largest car market. Trading relations with China are already complicated, and may well be subject to even greater complexity in future.

“A UK-China free trade agreement will be neither easy nor clearly advantageous for the UK,” says Bruegel, a European think tank that specialises in economics.

Part of the issue, it says, is that the UK would like to land better trade deals with China when it leaves the bloc than the ones the EU already has in place. But being smaller, the UK will be in a weaker position during trade talks, so there are no guarantees China will be prepared to offer better terms.

On top of this, UK automotive trade with China – and other fast-growing markets such as India, Brazil and Russia – could suffer, depending on the terms of a post-Brexit trade deal with the EU, Mr Singh says.

That’s because the UK might not be able to piggyback on the EU’s existing bilateral trade agreements with third countries, including those entered into since the Brexit vote with Canada and Japan. Instead, it would face years of protracted trade talks with dozens of countries.

Getting a good Brexit deal is also important because of the interdependence of European automotive companies.

“The motor industry has taken advantage of the EU’s single market as much as, perhaps more than, any other industry,” says Mike Hawes, chief executive of SMMT.

As a result, EU customers buy about €15bn ($18.5bn; £13bn) worth of British-made cars per year, accounting for some 53% of the UK’s vehicle exports, according to the European Automobile Manufacturers Association (ACEA).

Conversely, EU manufacturers deliver 81% of the cars imported by the UK, to the tune of about €45bn, a trade imbalance that Brexit supporters hope will give the UK leverage during trade talks.

At the same time, about 80% of the parts and components used to build cars in the UK are also imported from the EU, while 70% of the parts and components made in the UK are exported to EU countries.

“Any changes to the deep economic and regulatory integration between the EU and the UK will have an adverse impact on automobile manufacturers with operations in the EU and/or the UK, as well as on the European economy in general,” the ACEA says.

Hence, both the UK and the European car industries are keen to see a final UK-EU deal that retains frictionless trade in the long-term.

“Anything short of single market membership could be a problem for the UK,” says Simon Dorris, managing partner at Lansdowne Consulting.

Free trade is indeed key to future prosperity, not just within Europe but beyond, according to Prof Patrick Minford of Cardiff University, who chairs Economists for Free Trade, a group of pro-Brexit economists.

Its much debated paper, From Project Fear to Project Prosperity, suggests fears of rising trade barriers for carmakers after Brexit are misplaced.

Prime Minister Theresa May has said that Brexit presents an “opportunity to strike free trade deals around the world“.

“Auto manufacturers will improve profitability post-Brexit,” Prof Minford predicts.


Motor vehicle production, 2017

  • UK production: 1.75 million motor vehicles. Exports to the EU: 800,000
  • EU 27 production: 19.69 million motor vehicles. Exports to the UK: 2.3 million

    Source: ACEA


    Despite the uncertainty about a future trade deal, a number of big carmakers have committed to building more cars in the UK since the Brexit vote, including Nissan, BMW, Toyota, and last week Vauxhall, which is owned by French group PSA.

    But Parliament’s cross-party Business, Energy and Industrial Strategy Committee is pessimistic, recently warning that “there are no advantages to be gained from Brexit for the automotive industry for the foreseeable future”.

    The UK prime minister’s desire for free trade is shared by the global motor industry more generally.

    Executives are nevertheless pragmatic, and accept that although international trade is governed by rules policed by the World Trade Organization, free trade is rarely a reality.

    Trade-distorting subsidies and a variety of measures, such as regulatory barriers, internal tax measures, and intellectual property rights, still impede the free flow of goods, even when trade agreements are in place, according to the European Commission.

    The EU, for instance, will not import cars unless they meet EU safety and emissions requirements.

    Moreover, trade agreements are generally conditional. For instance, cars exported from the EU must be predominantly made within the EU to be allowed free entry into other markets.

    Such “Rules of Origin” could complicate exports for UK carmakers after Brexit, as an estimated 55%-75% of the parts and components that make up a car built in Britain are imported, according to Mr Hawes of SMMT.


    Global Trade

    More from the BBC’s series taking an international perspective on trade:

UK/EU trade deal? Boy, it’s going to be a complicated year

When considering any difficult conundrum, it is often worth stating the obvious first.

Both sides in the negotiations between Britain and the European Union say they want a deal on trade once Brexit has happened.

Both have said they want that deal to be comprehensive – “deep and special” according to the UK.

Both have signalled they are willing to give ground to achieve their desired outcome.

Britain – for example – has moved on the issue of financial services’ access to the European Union once we have departed.

No “passporting rights” as Theresa May admitted in her Mansion House speech in London earlier this month.

Benefits

Just one of the “costs” of Brexit the Government is now admitting are attached to the decision to depart.

Alongside the “benefits” on sovereignty and the freedom to sign free trade deals with non-EU countries.

The EU – for example – has agreed that Britain will be able to negotiate and sign (if not implement) free trade deals with non-EU countries whilst still effectively a member of the single market during the implementation period.

And despite many protestations that there would be no such thing as a “bespoke” free trade deal for the UK, Donald Tusk, the president of the European Council, has made it clear that a different type of deal is exactly what is on offer.

As David Cameron’s former advisor, Mats Persson, now of EY, points out, the offer of no tariffs and no quotas on goods trade between Britain and the EU already puts the deal in a better position than the EU’s agreements with Canada, Norway and Switzerland.

The two sides do differ on sticking points and red lines.

‘Equivalence’

Such as how on earth do you solve the Irish border issue without resorting to “technological solutions” that even the most optimistic of trade negotiators admit don’t actually exist yet?

Or what does “equivalence” look like when it comes to regulating the insurance or banking industries for example?

And can that equivalence be too easily withdrawn by either side, leaving a great deal of regulatory risk on the post-Brexit table?

But, here are two sides in a difficult negotiation whose expressed will is to get a deal.

And, when it comes to negotiations, that is not a bad starting point.

Lower growth?

That is not to say for a moment that whatever Britain’s deal with the EU, there are not likely to be costs.

Nearly all the economic modelling done on any future free trade arrangements – including by the government – have said comparative economic growth is likely to be lower for the UK.

And growth since the referendum has softened as Brexit uncertainty has weighed on business confidence and the inflation spike linked to the fall in the value of sterling has re-introduced the incomes squeeze.

That’s when prices go up more quickly than peoples’ wages.

That effect is only now starting to unwind as the pound strengthens once again.

The timetable is tight for the “political agreement” planned for later this year on a future trade deal.

The government insists it is doable as there is already a great deal of regulatory trust between the two sides, bound as they have been for more than 40 years in a trading union.

And sources indicate that Britain will show the correct degree of humility in asking the “club” to rewrite the rules of an organisation we have just quit.

Heroic assumptions, critics will say.

No deal has been done and Parliament has not voted on leaving the customs union or the single market.

“A shambles” according to the Labour MP, Ben Bradshaw, will remain just that until the government either falls or a different deal is put in place.

For the two protagonists, though, at least in this negotiation both sides want an outcome whose similarities possibly outweigh the contradictions.

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Made in Britain: What does it mean for trade after Brexit?

Rules of Origin sounds like it should be a cult video game.

But it is actually an important concept in international trade that will have a big impact on the Brexit negotiations, as they begin to focus on the future relationship between the EU and the UK.

It’s all about how you define where products really come from and what Made in Britain really means.

At issue is the kind of economic and trade agreement that will replace the UK’s current membership of the European Union.

What do we know so far about what that agreement could look like?

Well, we know Theresa May’s government is committed to leaving the single market and the customs union.

And we also know that, given the red lines the UK has established, the EU is saying that the best it can offer is a free trade agreement, along the lines of the EU-Canada deal (known as Ceta) which came into force last year.

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    The UK wants something more ambitious, but leaving the customs union has a big impact on rules of origin.

    The big advantage of being in the customs union is that there are no tariffs (taxes on imports or exports) charged on goods traded between its member states.

    The disadvantage, from a UK perspective, is that you lose the ability to negotiate your own trade deals with other countries around the world.

    Can’t you have the best of both worlds?

    Well, you can get rid of most tariffs in a free trade agreement, and still retain the ability to negotiate your own trade deals. But unfortunately it’s not that simple.

    This is where rules of origin complicate the picture.

    To comply with rules of origin requirements, companies that make things need to tell customs authorities where all the component parts come from.

    To put it another way, they need to prove the “economic nationality” of their products. That means working out the total value, and where that value was added along the way.

    Why do they need to do that?

    The idea is to prevent abuse of the system, by making sure that products can’t enjoy preferential or zero tariffs as part of a free trade deal after being manufactured mostly on the cheap elsewhere.

    At the moment, because the UK is in the EU customs union, any value added to a UK product anywhere in Europe is considered local, and vice versa. Once the UK leaves, that will no longer be the case automatically.

    And that makes supply chains important. Some products have much more complex supply chains than others, so rules of origin requirements will affect some industries more than others.

    So which sectors are likely to have a problem?

    For some sectors it’s not an issue at all because they are exempt.

    But chemicals, various kinds of machines, and cars are all potentially vulnerable.

    For example, rules of origin in trade deals usually require around 55% of the components of cars to be considered local.

    But – according to the Society of Motor Manufacturers and Traders – the average car manufactured in the UK currently has only about 44% UK content at best, because so many parts cross borders several times before the finished product emerges.

    And once you take account of the fact that many of the sub-contractors down the supply chain also source many of their parts from abroad, the SMMT estimates that that figure for cars made in the UK could be as low as 25%. A huge challenge.

    Are there any solutions?

    Yes, there are ways to reduce the risk to business. Free trade deals often include measures that allow both parties to consider value added in the other jurisdiction as local – and it seems safe to assume that a future EU-UK trade deal would do just that.

    But a report published this month by the Food and Drink Federation said everyday food products manufactured in the UK, such as chocolate bars and frozen pizza, could fail to meet some rules of origin requirements anyway if a free trade deal similar to Ceta was negotiated between the EU and the UK.

    That’s because the food industry relies on ingredients that are sourced from across the globe.

    So this is not just about the EU market?

    No, it’s not. Many supply chains are global.

    And it’s also worth bearing in mind that rules of origin will have an impact on the UK’s efforts to replicate its current EU trade agreements with other countries around the world, or to sign new ones.

    UK manufacturers with products that are made in both the UK and the EU may well find it difficult to meet rules of origin requirements with these other countries.

    Again, deals can be done to broaden the definition of what “local” origin means. But if the UK wants a broader definition, other countries could demand the same in return.

    Either way, there could well be an extra burden on businesses.

    So what are the costs?

    There are significant costs, administrative and legal, for businesses that have to prove the origin of goods.

    In some cases, that could even mean that it’s cheaper just to pay a low tariff than to go through the bureaucracy involved in getting an exemption.

    “There are steps that can be taken to mitigate the costs,” says Sam Lowe of the Centre for European Reform. “But outside the customs union you cannot eliminate those extra costs entirely.”

    It sounds complicated…

    Yes, and there are other layers of complexity that we haven’t got into here. But you could well begin to hear a lot more about rules of origin once talks on the future relationship between the UK and the EU get under way.

    The task for EU and UK negotiators is to come up with a new agreement that limits the disruption to supply chains as much as possible. But it will not be frictionless trade.

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David Davis says a deal with EU is ‘incredibly probable’

It is “incredibly probable” that the UK will reach a final deal with the EU, the Brexit secretary says.

David Davis defended planning for a stalemate, saying it was like having home insurance when “you don’t expect your house to burn down”.

He also hit back at Tory Eurosceptic concerns about what has been agreed so far.

Last week prominent backbencher Jacob Rees-Mogg accused the government of giving away “almost everything”.

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    But speaking on BBC One’s Andrew Marr Show, Mr Davis said the UK had succeeded in getting a transition deal for the period after March 2019 and moving talks onto trade, adding: “So I don’t think Jacob’s got a point.”

    He insisted a solution could be found to avoid introducing physical border checks on the border between Northern Ireland and the Republic of Ireland, saying a “whole lot of technology” was available to achieve this.

    And challenged on the EU’s controversial “backstop” proposal of Northern Ireland effectively remaining in the customs union, he said the “overwhelmingly likely option” was a free trade and customs agreement which would make finding a solution to the border question “much, much easier”.

    Mr Davis said the progress made in talks with Brussels meant it was now “incredibly probable, very, very highly probable” that there would be a final deal.

    But he said “you can never stop making arrangements” for a potential no-deal scenario, “because that’s one of the things that guarantees the deal”.

    “You don’t expect your house to burn down, it’s less than a one in 100,000 chance, but you have house insurance anyway,” he said.

    ‘Under our control’

    Mr Davis predicted the deal would be nothing like the current arrangements between the EU and Norway. Theresa May has already ruled out this model, which gives Norway access to the single market while accepting EU laws and free movement and making annual financial commitments to Brussels.

    “This will not really look like any other deal as it stands at the moment,” Mr Davis said, predicting “the most comprehensive trade deal ever”.

    He also sought to reassure worries about fishing rights, saying that after the end of the transition period in 2021: “We will negotiate with our surrounding states so that we have access to their waters and theirs to ours, and markets and so on, but it will be under our control.”

    Mr Rees-Mogg, meanwhile, is urging the UK to be prepared to walk out on talks and warning that rowing back on Brexit would be “the most almighty smash to the national psyche” akin to the Suez crisis, when Britain and France attempted to regain control of the Suez Canal from Egypt in 1956.

    “It would be an admission of abject failure, a view of our politicians, of our leaders, of our establishment that we were not fit, that we were too craven, that we were too weak to be able to govern ourselves and that therefore we had to go crawling back to the mighty bastion of power that is Brussels,” he will say in a speech on Tuesday.

    “As with the disaster of Suez it would end up being a national humiliation based on lies.”

Vote Leave broke spending limits in Brexit referendum, activist claims

Vote Leave broke the law during the EU referendum by exceeding legal spending limits, a Brexit activist has claimed.

Shahmir Sanni told Channel 4 News that the official Brexit campaign used a different group, BeLeave, to overspend.

Vote Leave chief Dominic Cummings has already denied the claim and said he checked with the Electoral Commission before donating money to the group.

Mr Sanni has also criticised Vote Leave manager Stephen Parkinson, his ex-boyfriend, for outing him as gay.

“I know that, that Vote Leave cheated… I know that, that people have been lied to and that the referendum wasn’t legitimate,” Mr Sanni told Channel 4 News.

BeLeave was set up to give young pro-Brexit campaigners a voice during the referendum.

Separate campaign groups could spend up to £700,000 if they registered as permitted participants.

Skip Twitter post by @BorisJohnson

Observer/C4 story utterly ludicrous, #VoteLeave won fair & square – and legally. We are leaving the EU in a year and going global #TakeBackControl #GlobalBritain

— Boris Johnson (@BorisJohnson) March 24, 2018

Report

End of Twitter post by @BorisJohnson

In a blog on Friday, Mr Cummings denied allegations of links between his campaign and Cambridge Analytica and said the claims were “factually wrong, hopelessly confused, or nonsensical”.

Lawyers for AIQ told Channel 4 News that it had “never entered into a contract with Cambridge Analytica” and it had “never knowingly been involved in any illegal activity”.

‘Misleading’

In a “personal statement” issued to Channel 4 News, Stephen Parkinson denied the allegations and said he was confident he had stayed within the law and spending rules “at all times”.

He said he was “saddened” by the “factually incorrect and misleading” statements from Mr Sanni, who now works for the Taxpayer’s Alliance.

Earlier, Mr Sanni said – in a statement issued through his lawyers – that Mr Parkinson had outed him as gay in his original response.

Mr Sanni, a British Pakistani, said he was forced to tell his family and that relatives in Pakistan could be in danger as a result.

Skip Twitter post 2 by @Channel4News

“The idea… that the campaign was legitimate is false.” A Brexit insider accuses Vote Leave of cheating – in response the PM’s political secretary denies the claims and “outs” the accuser as gay. #TheBrexitWhistleblower https://t.co/NWMQSmElof pic.twitter.com/uM8koUk7Ta

— Channel 4 News (@Channel4News) March 24, 2018

Report

End of Twitter post 2 by @Channel4News

In his original statement, published on Mr Cummings’ blog on Friday, Mr Parkinson said he dated Mr Sanni for 18 months, before splitting up in September 2017.

“That is the capacity in which I gave Shahmir advice and encouragement, and I can understand if the lines became blurred for him, but I am clear that I did not direct the activities of any separate campaign groups,” he said.

Mr Grimes told Channel 4 News he denied the allegations.

A solicitor for Vote Leave told the programme the campaign had been cleared twice on this issue by the Electoral Commission.

The Electoral Commission said: “The commission has a number of investigations open in relation to campaigners at the EU referendum; it does not comment on live investigations.”

Green Party joint leader Caroline Lucas told the BBC’s Andrew Marr Show: “This is a really complex network – but big, big questions need to be asked and it goes much wider than just the referendum.”

But Brexit campaigning Tory MP John Redwood told Sky News Vote Leave had twice been cleared of breaching the rules.

He added: “If it’s got to be investigated again, well then, so be it. But I think most people out there feel we had a perfectly fair referendum.”

Lords seek rethink on UK passport contract

Members of the House of Lords have called on the government to reconsider awarding a contract to print new blue UK passports to a Franco-Dutch firm.

Conservative peer Lord Naseby said it would have a major adverse effect on “the whole of British industry, and the British people as they face Brexit”.

The burgundy passport, in use since 1988, will revert to its original blue and gold colour from October 2019.

Gemalto has won the contract ahead of the current UK producer De La Rue.

Lord Naseby said that he wanted an assurance that “nothing will be signed or sealed until the whole matter’s been reviewed”.

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    However, fellow Conservative Lord Courtown said that as a member of the European Union, the UK had to abide by procurement rules.

    He denied that there were any security issue in awarding the £490m contract to Gemalto, adding that some 20% of blank passports were already manufactured overseas and would continue to be personalised in the UK.

    Lord Courtown said that the decision would save the UK £120m over the course of the contract.

    But Lord Forsyth, a Conservative former cabinet minister, said the government was taking an “extraordinary position” while Labour peer Lord Foulkes said the matter should be reviewed “in the name of not just security, but of national pride”.

    De La Rue, which has printed the burgundy version of the British passport since 2009, said that it been “undercut on price” by Gemalto.

    The company’s chief executive, Martin Sutherland, said that he would appeal against the decision.

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Brexit: Electoral Commission reopens probe into Vote Leave

The Electoral Commission has reopened an investigation into Vote Leave’s EU referendum spending.

The campaign paid £625,000 to clear bills allegedly run up by university student Darren Grimes with a digital agency days ahead of last June’s vote.

A separate group, Veterans for Britain, received £100,000 from Vote Leave.

The campaign denies attempting to get round spending limits – the Electoral Commission initially accepted this but now says it has new information.

A group of campaigning lawyers, The Good Law Project, has started legal action against the commission over its original decision to drop the investigation, claiming the watchdog was not doing its job properly.

‘Utter joke’

Jo Maugham QC, of the Good Law Project, said: “We are 18 months after the referendum vote. It is extraordinary that only now is the Electoral Commission taking a serious look at whether the rules were complied with. And only in response to legal action.”

He added: “The Electoral Commission has urged us to agree to drop our High Court case. We will consider this question carefully in the coming days.”

A former senior Vote Leave source accused the watchdog of giving in to pressure from the Good Law project – something the watchdog has denied.

“The Electoral Commission is an utter joke,” the source told BBC News.

“They investigated the last time there was a spurious complaint and found Vote Leave followed the rules and donations were within the law.

“Now they’ve given in to peer pressure from a bunch of die-hard Remainers who would rather believe in some vast conspiracy rather than respect the democratic vote of the British people.

“This is in contrast to the Electoral Commission’s repeated failures to call out dodgy Remain behaviour, which exploited the full weight of the government during the campaign. It reeks of double standards.”

Obscure group

The row centres around Darren Grimes, at the time a fashion student at the University of Brighton, who set up a group called BeLeave, to give young pro-Brexit campaigners a voice during last year’s referendum.

As a registered campaigner, he was allowed to spend up to £700,000. He initially spent very little but in the 10 days leading up to the 23 June vote he ran up a £675,315 bill with AggregateIQ Data, a Canadian marketing firm that specialises in political campaigns.

Money to clear the bill was not given to Mr Grimes but sent directly to Aggregate IQ by Vote Leave, which separately spent £2.7m with the same firm, more than a third of its £6.8m budget.

Mr Grimes also received £50,000 from an individual Vote Leave donor in the final 10 days, making the previously obscure campaigner’s group one of the best-funded at the referendum.

Vote Leave Campaign director Dominic Cummings was quoted on AggregateIQ’s website as saying “we couldn’t have done it without them”.

In total, AIQ was given £3.5m by groups campaigning for Brexit, including Vote Leave, the Democratic Unionist Party and Veterans for Britain.

Vote Leave would have gone over its campaign spending limit if it had spent the money it donated on behalf of Mr Grimes itself.

The campaign group said it made the donation to Mr Grimes because it was coming up to its £7m spending limit and wanted a way of using £9.2m it had raised from individuals and companies on campaigning activities.

The Electoral Commission said in March this was an “acceptable method of donating under the rules” and after a “detailed look” at the case it did not find reasonable grounds to suspect an offence had been committed.

‘Public interest’

The new probe will look at whether the spending returns delivered by Mr Grimes, Veterans for Britain and Vote Leave were correct – and whether or not Vote Leave exceeded its spending limit.

Bob Posner, the Electoral Commission’s director of political finance and regulation, said: “There is significant public interest in being satisfied that the facts are known about Vote Leave’s spending on the campaign, particularly as it was a lead campaigner with a greater spending limit than any other campaigners on the Leave side.

“Legitimate questions over the funding provided to campaigners risks causing harm to voters’ confidence in the referendum and it is therefore right that we investigate.”

In April, the Electoral Commission launched a separate investigation into spending during the referendum by Leave.EU, the campaign backed by then-UKIP leader Nigel Farage and donor Arron Banks.

It is also investigating spending by the anti-Brexit campaign Britain Stronger in Europe.