5 February 2019

Backstop talks begin as May visits Northern Ireland

The Government yesterday began talks with a number of Conservative MPs in order to try to find “alternative arrangements” to the Irish backstop. The Alternative Arrangements Working Group, which includes both Leave and Remain-supporting MPs and is chaired by Brexit Secretary Stephen Barclay, met for the first time yesterday. Several MPs have suggested that technology could be used to avoid a hard border and remove the need for a backstop. However, the Irish Prime Minister, Leo Varadkar, warned that the group were discussing ideas that had “already been rejected” by the EU, adding, “It is very frustrating that we are going back to this idea of technology.”

Elsewhere, speaking on a visit to Northern Ireland, Shadow Brexit Secretary Sir Keir Starmer cast doubt on the Prime Minister’s ability to find an alternative solution, saying, “The Prime Minister and her team have spent over 12 months trying to find an alternative to the backstop. We have only got the backstop because they couldn’t find an alternative.”

This comes as the Prime Minister, Theresa May, will today visit Northern Ireland to speak to business leaders and give a speech on Brexit. She will say “I know this is a concerning time for many people here in Northern Ireland. But we will find a way to deliver Brexit that honours our commitments to Northern Ireland … that commands broad support across the community in Northern Ireland … and that secures a majority in the Westminster parliament.” Meanwhile, Arlene Foster, the leader of the Democratic Unionist Party (DUP), told the BBC Today programme that the current backstop is “toxic” and would “cause the break-up of the UK in the medium to long term.” She added, “Through the intransigence of the EU and Republic of Ireland in their attitude, they are more likely to bring about the very thing they want to avoid.”

Separately, EU chief Brexit negotiator Michel Barnier yesterday said the Withdrawal Agreement “cannot be reopened,” adding that the EU would be “ready to work on alternative solutions [to the Irish backstop] during [the] transition [period].”

Source: BBC News The Times The Guardian I Reuters The Guardian II BBC Radio 4 Today

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Commission Secretary General: EU not considering legally binding assurances on Withdrawal Agreement

Following a meeting with a delegation from the Commons Exiting the EU Committee, the Secretary General of the European Commission, Martin Selmayr said, “On the EU side, nobody is considering” legally binding assurances on the Withdrawal Agreement in order to help the Brexit deal pass through Parliament. This came as Pat McFadden, a Labour member of the committee, said that Selmayr had asked the Brexit-supporting MPs whether they would vote for May’s deal if such a change were made, but “they weren’t able to.”

Meanwhile the Chair of the Committee, the Labour MP Hilary Benn, said the meeting suggested that the EU were considering a legal protocol in addition to the Withdrawal Agreement. Selmayr commented, “Asked whether any assurance would help to get the Withdrawal Agreement through the Commons, the answers of MPs were … inconclusive,” adding, “The meeting confirmed that the EU did well to start its No Deal preparations in December 2017.”

Separately, German Chancellor Angela Merkel yesterday said that to solve the Irish border issue, “You have to be creative and listen to each other, and such discussions can and must be conducted,” adding, “We can still use the time to perhaps reach an agreement if everyone shows good will. But we have to hear from the UK – this is the decisive point – how they view this.” Merkel also warned, “We’re saying that the exit treaty took a long time to negotiate, so we don’t want to re-open the exit treaty. That’s not on the agenda.”

Source: The Guardian I The Times BBC News Reuters The Guardian II

Constructor sector growth at ten month low

IHS Markit’s UK Construction PMI index fell from 52.8 in December to 50.6 in January, indicating “a decline in work on commercial construction projects for the first time in ten months,” according to the information services provider. An IHS Markit news release published yesterday said, “Anecdotal evidence suggested that Brexit-related anxiety and associated concerns about the domestic economic outlook continued to weigh on client demand,” with clients delaying decisions on new projects. Duncan Brook, Group Director at the Chartered Institute of Procurement & Supply said, “The biggest shock came in the form of job creation which has managed to suffer the slings and arrows of Brexit highs and lows with solid hiring since the referendum result.”

Meanwhile, 78% of chief financial officers surveyed by Consultancy firm Deloitte have said that Brexit would deteriorate the UK’s business environment. The consultancy also said that corporations are withholding capital expenditure and new hires because of uncertainty over the UK’s future relationship with the EU. Deloitte’s chief economist, Ian Stewart, said, “Businesses seem to be increasingly pricing in a worst-case outcome. Anything better, including a delay or a deal, could deliver a Brexit bounce in sentiment.”

Source: IHS Markit The Financial Times

No Deal might be less harmful for Ireland than initially thought, says London-based consultancy

London-based consultancy Capital Economics has said that a No Deal Brexit would be less costly for Ireland than forecasts had suggested, given that these do not take into account sector-by-sector agreements to mitigate “disruption at the borders and to airlines.” The firm predicted that the combined effect of World Trade Organisation (WTO) tariffs and a stronger euro would raise the cost of Irish goods exports to the UK by up to 25 per cent. Capital Economics added “If the price of those goods in the UK rose by 25 per cent in the UK, so export volumes fell by 25 per cent, then Ireland’s economy would contract by about 1.5 per cent.” The firm also predicted that in the event of No Deal, the UK Government would expand its fiscal spending by up to 1 per cent of GDP.

Source: Irish Times

16 EU countries recognise Juan Guaidó as Interim President of Venezuela

Sixteen European countries, including France, Spain, Germany, Britain and the Netherlands, have recognised Juan Guaidó as the Interim President of Venezuela. This comes after the expiry of the EU ultimatum sent to Venezuelan President Nicolas Maduro that urged him to call fresh elections within eight days. Guaidó, who leads the National Assembly, declared himself caretaker leader last month.

Spanish Prime Minister Pedro Sánchez said that there was a “clear horizon” of holding elections that “were free, democratic, with guarantees and without exclusions,” adding that “In the coming hours and days, I will contact the EU and European and Ibero-American Governments that want to join forces with the cause of democracy in Venezuela to elaborate our position.”

Source: Reuters The Financial Times

New liberal pro-EU party launched in Poland

Politician and former mayor of Słupsk, Robert Biedron, has formed a new political party in Poland called “Wiosna” (Spring). Last Saturday, Biedron introduced the party’s policies, including legalisation on abortion, same sex-marriage and efforts to promote renewable energy. He said “Neither one side nor the other solved our problems…We have had enough of this war. We won’t let them run Poland instead of us anymore. They’ve all let us down”, adding “We don’t want a Polish-Polish war anymore; we want mutual respect and dialogue.”

Source: The Financial Times EU Observer

Henry Newman: Beyond Malthouse. Which compromise would be feasible and acceptable to secure a deal?

In a column for ConservativeHome, Open Europe Director Henry Newman writes, “European leaders are understandably irritated that Theresa May is seeking changes to a package she herself signed off in December. However, the Prime Minister has little choice – the [Brexit] deal suffered the biggest defeat in Parliamentary history. Getting it through the Commons will require movement.” On possible compromises to secure a deal, he warns that the ‘Malthouse Compromise’ is seen as a “non-starter” in the EU, adding, “What’s more possible is a legally-binding protocol, that sits alongside the Withdrawal Treaty… It needs to do two key things: first, provide clarity on exiting the backstop, and second, reassure the DUP and others that Stormont will have a “lock” over any new regulatory divergence if the UK enters the backstop.” On the exit mechanism, he suggests “a [ten year] sunset clause combined with objective criteria that any ‘alternative arrangements’ [to replace the backstop] must achieve.” He concludes, “Finding a possible ‘landing zone’ for a Brexit compromise with the EU will be challenging… MPs should push for the backstop’s issues to be addressed, but insisting that it’s the ‘Malthouse compromise’ or nothing is a risky path.”