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Prime Minister Theresa May yesterday told the House of Commons that despite the lack of agreement on issues such as the Northern Irish backstop to avoid a hard border on the island of Ireland, “I continue to believe that a negotiated deal is the best outcome for the UK and for the European Union. I continue to believe that such a deal is achievable. And that is the spirit in which I will continue to work with our European partners.” May said that “the backstop should not need to come into force… If it does, it must be temporary, and… If the EU were not to co-operate on our future relationship, we must be able to ensure that we cannot be kept in this backstop arrangement indefinitely.” She added, “I do not believe the UK and the EU are far apart. We both agree that Article 50 cannot provide the legal basis for a permanent relationship. And we both agree this backstop must be temporary. So we must now work together to give effect to that agreement.”
Elsewhere, in a letter to EU leaders ahead of the European Council summit this week, European Council President Donald Tusk wrote, “As things stand today, it has proven to be more complicated [to reach a deal] than some may have expected. We should nevertheless remain hopeful and determined, as there is good will to continue these talks on both sides. But at the same time, responsible as we are, we must prepare the EU for a no-deal scenario, which is more likely than ever before,” adding, “The fact that we are preparing for a no-deal scenario must not, under any circumstances, lead us away from making every effort to reach the best agreement possible, for all sides.” Theresa May will on Wednesday night update the EU27 leaders on the progress in negotiations.
Elsewhere, Irish Prime Minister Leo Varadkar said that an agreement could be delayed until December, explaining, “The negotiations are still ongoing, we are at a sensitive phase and I know some people were optimistic about an agreement on the withdrawal agreement this week. I have to say I always thought that was unlikely, I figure November or December is the best opportunity for a deal. This is a dynamic situation. We are always open to compromise, as the EU of course we are, but there are some fundamentals we can’t compromise on.”
Separately, German Chancellor Angela Merkel yesterday suggested it was increasingly difficult for the UK and EU to reach an agreement due to deadlock on the Irish border issue, saying, “With the exit agreement we were actually very hopeful that it could perhaps succeed but at the moment it actually looks a bit more difficult.”
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The Daily Telegraph reports that Eurosceptic Conservative MPs are calling on cabinet colleagues to force the Prime Minister to drop her Chequers proposal for future UK-EU relations, or face a vote of no confidence. Elsewhere, former Brexit Minister and member of the Eurosceptic European Research Group (ERG), Steve Baker, yesterday said, “Either the Cabinet need to change the prime minister’s mind on where she’s going — or it’s clear that if a Chequers-based deal comes back it will be voted down.”
The Daily Telegraph
Scottish National Party leader Nicola Sturgeon said yesterday at the RSA in London, “If the last two years have shown us anything, it is surely that more time will inevitably be needed to agree the future relationship, and so being able to extend the transition period will be vital to avoid another cliff-edge scenario.” Sturgeon also said, “For MPs to support a bad or blindfold Brexit – a cobbled-together withdrawal agreement and a vague statement about our future relationship – would, in my view, be a dereliction of duty.” She also said that the SNP would vote against EU withdrawal in any form as most Scottish voters had voted to remain in the EU.
The leader of Sinn Féin, Mary Lou McDonald, said yesterday that if there was no Brexit deal, her party would demand a referendum on the future of Northern Ireland because a hard border would undermine peace on the island of Ireland. “I very much hope that it doesn’t but if, by accident or design, there is a crash or a no-deal Brexit, [Prime Minister] Mrs [Theresa] May and whoever is in No 10 needs to understand that in those circumstances the constitutional question would have to be put to the people of Ireland,” McDonald said prior to meeting with Theresa May yesterday. She also said that May should not “hitch herself” to the Democratic Unionist Party (DUP), whose ten MPs prop up her Government, describing their stance on Brexit as “irresponsible.”
Following their poor results in the Bavarian state elections this past Sunday, leading politicians of Germany’s Social Democratic Party (SPD) have questioned the value of their ‘Grand coalition’ with Chancellor Angela Merkel’s Christian Democrats (CDU) and their sister-party, the Bavarian Christian Social Union (CSU). SPD deputy leader Ralf Stegner said, “The durability of the grand coalition is wasting away… There is no good reason to cling to the grand coalition at any price. Simply carrying on is not an option.” Party leader Andrea Nahles however said, “I don’t think this is the time to draw red lines,” adding that the next months would show whether her party could still realise its goals in the coalition.
Elsewhere, Open Europe’s Leopold Traugott told Euronews on the election results, “You may argue that by now we should be used to seeing them [the SPD] losing, but yesterday’s defeat has a special quality. The party’s vote actually halved.” He added, “Their poor result is also important because the SPD is the party most likely to burst apart Germany’s governing ‘Grand Coalition’ (if it really gets that far). Not that such a move would necessarily help them solve their structural and strategic problems, but internal pressure to achieve some sort of drastic change is likely to keep growing.” Traugott also is quoted by Voice of America, saying, “Germany’s political fragmentation, which was shown strongly in the 2017 federal elections, is continuing at full speed.”
Voice of America
The Prime Minister of the Former Yugoslav Republic of Macedonia, Zoran Zaev, has urged his country’s Parliament to support a constitutional amendment to change the country’s name to the “Republic of North Macedonia.” The change is part of an agreement with Greece to end a long dispute over its name. In return, Greece has pledged to lift its veto on Macedonia’s applications to join NATO and the EU. This follows a referendum last month where a majority of voters backed the change, but on insufficient turnout. Zaev said that failure to agree to the change would “throw us into isolation and [an] uncertain future,” and could possibly lead to a new election.
Nissan Motor Co. issued a statement yesterday saying that it would delay the start of wage talks with UK employees until the terms of Brexit are known. The talks, which were due to begin this autumn, will instead begin in 2019, “when we have better clarity on the future business outlook, ” the statement said.
In his column for ConservativeHome, Open Europe’s Director Henry Newman writes that given the “growing risk of No Deal”, the Government “should commit now to reduce our overall tariffs” in such a scenario. Though he argues that “No Deal should be nobody’s preferred option,” Newman adds, “There might be little choice if the alternative would mean a backstop which threatens the long-term integrity of the United Kingdom.”
Newman points out that if there is No Deal, “there would be tariffs payable on our trade with the EU under WTO rules. [The UK] can’t just choose not to levy tariffs on European trade. But we can change our overall tariff regime. Although our WTO commitments impose a maximum level on tariffs which can be charged with any member state, it’s open to the UK to charge less as long as they do this on a most-favoured nation basis.” He also cites Open Europe’s new report, “No Deal: The economic consequences and how they could be mitigated,” published yesterday. This found that the macroeconomic effects of No Deal by 2030 would be “material but relatively small,” at an estimated 2.2% drag on GDP – a figure that our model suggests could be reduced to 0.5% through unilateral tariff liberalisation. Such an action, Newman argues, “would dramatically reduce the impact of No Deal.”
Newman concludes with a call for the Government to “clarify its policy on what it would do to tariffs in the event of No Deal,” adding that a “trade war” with the EU is inadvisable: “there’s nothing to be gained from raising tariffs on our biggest trading partner.”