17 May 2017

Labour Party manifesto pledges to end free movement, while it rules out leaving without a deal

Yesterday, the Labour Party released its manifesto, which reiterates the party’s commitment to oppose a “no deal” Brexit. The manifesto states that Labour’s vision of Brexit would prioritise jobs, and would “have a strong emphasis on retaining the benefits of the Single Market and the Customs Union.” On immigration, the manifesto states that “freedom of movement will end when we leave the European Union” and “Britain’s immigration system will change.” The Times reports that this pledge, which was not included in the leaked draft of the manifesto, comes following the intervention of shadow Brexit Secretary Kier Starmer. The final manifesto further states that EU nationals currently in the UK would have their rights immediately guaranteed, and there would be protections for the agricultural sector and any rights currently derived from the EU. It commits to the devolution of powers that will be regained from Brussels, vows to “build a close co-operative future relationship with the EU,” and promises a meaningful vote in parliament at the end of the Brexit process. Labour leader Jeremy Corbyn said, “This manifesto is the first draft of a better future for the people of our country. A blueprint of what Britain could be and a pledge of the difference a Labour government can and will make.”

Writing for Open Europe’s blog, Alex Greer comments, “Labour’s manifesto pledge to end free movement may appear to have added detail to Labour’s Brexit stance, but it has not added clarity on how a Labour Government would address the practical trade-offs that will inevitably be necessary in negotiation with the EU… The EU has made clear on multiple occasions its red line on cherry-picking, insisting the need to accept free movement in order to retain the full benefits of the single market. In contrast, it is unclear where Labour’s red line would lie between retaining the benefits of single market or ending free movement.”

Source: The Times The Independent Labour Party Reuters Open Europe blog: Greer

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ECJ ruling on Singapore trade deal could remove obstacles to UK-EU deal

The European Court of Justice yesterday ruled that the EU-Singapore free trade agreement will require ratification by member states. The ECJ judgment argues that two aspects of the deal, relating to non-direct foreign investment and the investor-state dispute mechanism, cannot be approved by the EU alone. It therefore concludes, “The agreement cannot, as it stands, be concluded without the participation of the member states.” However, compared to the Advocate General’s opinion on this case last December, the ECJ ruling provides a broader interpretation of the EU’s exclusive competence in trade agreements. It argues that aspects of the EU-Singapore deal relating to transport services, labour standards and environmental protection can be approved by the EU alone.

The Times reports that sources close to Brexit negotiations believe the ECJ ruling could remove potential obstacles to a UK-EU deal by “restricting the scope of what can be classed as a mixed agreement [an agreement that requires ratification by member states].” A government spokesperson has said they are considering the implications of the ECJ judgement.

Open Europe’s Aarti Shankar told City AM that the ruling offers a precedent for a broad UK-EU deal to avoid national ratification, saying, “If the UK deal were to avoid provisions on investment and on an investor-state dispute settlement mechanism, there is the possibility it could be concluded as EU-only.” Open Europe will publish a blog on this topic shortly.

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Weber: Brexit bill will be the easiest issue to resolve in Brexit talks

Manfred Weber, chair of the centre-right European People’s Party (EPP), the alliance in the European Parliament affiliated with German Chancellor Angela Merkel’s Christian Democratic Party (CDU), has said that, “Frankly speaking, I think the [exit] bill question will be finally, probably, having the three priorities in mind [issues of citizens’ rights, the exit bill and the border issue between Northern Ireland and Republic of Ireland], will be the easiest one to solve. In the end, the British position is clear. Our position is clear. And then we have to find a middle way.” He added, “The MFF [Multi-annual Financial Framework, the long-term EU budget] is a very solid base where we can calculate what are the demands, the payments necessary to work on the current MFF, and Britain will until the end benefit from the MFF so that is a very easy task.” However, Weber warned that the issue of avoiding a breakdown in peace in Ireland would be the hardest issue to deal with.

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Deloitte: German firms fear negative consequences of ‘hard Brexit’

According to a study by Deloitte, many German firms are preparing themselves for reduced German investment in the UK and British investment in Germany after Brexit, while they also anticipate currency fluctuations and weakening bilateral trade ties. Chief Economist and Research Director at Deloitte Deutschland Alexander Börsch said, “Brexit is making itself felt. Almost all firms are preoccupied with it, two thirds even intensively so,” noting that this is a marked increase from the beginning of the year. Meanwhile, almost half of the firms see freedom of movement as a prerequisite for Britain’s participation in the single market, saying that they would back an exclusion of the UK if the four freedoms were not guaranteed. However, 25% of the participating firms said that they would be willing to continue trading in the single market, even if the four freedoms were constrained. When asked to identify the biggest danger posed by Brexit, 38% of the responding firms named “higher complexity and costs incurred through legal regulations”, while 36% think that “reduced competition in the domestic market” constitutes the biggest opportunity presented by Brexit.

Separately, Open Europe’s Pieter Cleppe appeared on BBC World TV’s World Business Report, discussing Brexit, saying, “The chances for a Brexit deal are better than portrayed. [Prime Minister] Theresa May is even putting her job on the line to enable a compromise, while the EU side only wants material progress and not a final deal on the “exit bill” before there can be trade talks.”

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UK inflation rate at highest level since September 2016

According to the Bank of England, inflation rates are well above its target of 2%, currently standing at 2.7% -up from 2.3% in March. The main contributing factor has been identified as higher air fares because of the later date of Easter this year. Chief business economist at analysts IHS Markit Chris Williamson said, “The timing of Easter looks to have played an important role in pushing inflation higher in year-on-year terms. But sterling’s depreciation since the referendum last June is also clearly a significant factor, lifting prices for imports and likely to pile further upward pressure on consumer prices in coming months.” He added, “There are nevertheless signs that inflation could perhaps rise less than many had been fearing.”

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