7 March 2019

Brexit negotiations remain deadlocked over the Irish backstop

The Attorney General, Geoffrey Cox, yesterday suggested that Brexit negotiations have reached an impasse after no agreement was reached on the Irish backstop. Cox has been attempting to secure assurances from the EU side that would allow him to change his legal advice on the backstop, which had previously said that the backstop could endure indefinitely. He said, “Both sides have exchanged robust, strong views and we are now facing the real discussions. Talks will be resuming soon.”

Meanwhile, a European Commission spokesman said that EU chief Brexit negotiator, Michel Barnier, had “informed the commissioners that while the talks take place in a constructive atmosphere, discussions have been difficult. No solution has been identified at this point that is consistent with the Withdrawal Agreement including the protocol on Northern Ireland, which as you all know will not be reopened.”

Buzzfeed reports that Cox had proposed two reforms to the current backstop: the inclusion of an arbitration panel to determine whether both sides were being reasonable in efforts to find alternative arrangements to the backstop; and a “mini-backstop”, which would be limited only to elements that relate to border infrastructure. Barnier reportedly rejected both ideas.

Elsewhere, the DUP’s Brexit spokesperson, Sammy Wilson, told the Northern Ireland Affairs Committee yesterday that the party is prepared to back the Brexit deal if the backstop is given a time limit. He said, “I’m only telling you what the EU have said and what the Irish Government have said: once you do that, you have removed the backstop. If they didn’t want to have the Withdrawal Agreement totally destroyed, you could remove the backstop by imposing a time limit on it. That in effect has the same outcome – there is no backstop.”

This comes as a senior Government source quoted by the Times said, “Part of the problem is the EU side remains unconvinced that the Prime Minister can win the [meaningful] vote. That is potentially a big mistake.” However, the Daily Telegraph reports that ministers believe the Government will lose next week’s meaningful vote on the Brexit deal by up to 100.

Meanwhile, the Department for Exiting the EU (DExEU) has said that it will set up three advisory groups with customs and business experts in order to work on technological solutions to keep the Irish border open and avoid the use of the Irish backstop arrangement. A DExEU spokesperson said, “There is clear support for finding alternative arrangements to ensure there is no hard border on the island of Ireland,” adding, “In adding business and technical expertise on top of civil service resource, we will ensure we are strengthening the Government’s efforts to identify the necessary facilitations and technologies.”

Source: The Times The Guardian I Buzzfeed Irish Times The Telegraph Politics Home

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UK should present new initiatives on the backstop, says French minister

The French European Affairs Minister, Nathalie Loiseau, has said that the EU is ready to give reassurances that the Irish backstop would be temporary, but warned that the UK should present new proposals on how to break the impasse in negotiations. Loiseau told the Guardian, “So far, we are still waiting for a proposal from London. It’s really a British initiative which has to come. And it has to be supported domestically in the UK,” adding, “At the moment, we’re talking. We have not heard proposals, ideas or initiatives coming from the British government to overcome the current difficulties. We stand ready for talks and reassurances on the idea that the vocation of the Irish backstop is to be temporary.” She also told BBC Radio 4’s Today programme that the Attorney General, Geoffrey Cox, did not present “precise proposals” during talks with EU chief Brexit negotiator Michel Barnier this week. On a possible extension of Article 50 she said, “Why would be there be an extension without a reason?…We have been in discussions for quite a long time now. There needs to be something specific to justify an extension,” adding that the EU27 “all have the same sense. A short extension: why not, if there is a good and credible reason.”

Loiseau will meet Brexit Secretary Stephen Barclay in London today. According to the Telegraph, she will also meet Conservative MP Dominic Grieve and other pro-EU Conservative MPs in order to discuss a potential Article 50 extension to hold a second referendum.

This comes as opposition leader Jeremy Corbyn met yesterday with former Conservative ministers Nick Boles and Oliver Letwin, as well as Labour MPs Lucy Powell and Stephen Kinnock, to discuss plans for a Norway-style Brexit, or “Common market 2.0.” Powell said, “Everyone recognises that there needs to be another serious option on the table. We have always felt that we could attract support from both Leavers and Remainers.”

Source: The Guardian I Politico The Telegraph The Guardian II

MPs call on Government to publish No Deal tariff schedule before meaningful vote

The Chair of the Treasury Select Committee, Nicky Morgan, has called on the Government to publish its No Deal tariff schedule before the meaningful vote next week. In a letter to the Chancellor, Philip Hammond, Morgan said that “MPs should not have to read reports in the press that the Government is planning to slash tariffs on almost all imported goods…At present, MPs are expected to vote blindly next week without this information.” Giving evidence to the International Trade Committee yesterday, International Trade Secretary, Liam Fox, said that “It would be helpful for MPs when making a decision about what they thought about No Deal to have as much information as possible.” Fox said that the timing of any announcement was a matter for the Treasury.

Elsewhere, Philip Hammond has said that Brexit would be delayed if the Withdrawal Agreement fails to command support in the House of Commons. Speaking to broadcasters yesterday, he said, “If we don’t pass the meaningful vote on Tuesday we’ll go into a parliamentary process that very likely will lead to an extension of time and an uncertain outcome, more uncertainty for the British economy, more uncertainty for people across the country.”

Source: The Times Reuters

OECD downgrades forecasts for global economy because of "high policy uncertainty"

The OECD has downgraded forecasts for the global economy this year, with the economic prospects in the UK, Eurozone and most G20 countries now weaker than anticipated. In its interim economic outlook, the organisation forecast that the UK economy will grow by 0.8% in 2019, down from 1.4% projected in November 2018, while the Eurozone will grow by 1% this year, down from 1.8%. Downward revisions were particularly significant for Germany and Italy. The OECD blamed “high policy uncertainty” for the revised outlook and said that a No Deal Brexit would cause “sizeable spillovers on growth in other countries” along with a “major adverse shock for Europe and possibly elsewhere in the world, given that the United Kingdom is an important trading partner for many countries.”

Meanwhile, Laurence Boone, the OECD’s Chief Economist, said that the costs of No Deal for the UK would be “significant,” adding, “According to our estimates, it could amount to 2% of GDP for the United Kingdom by 2020 already.” The OECD also said that Ireland, Denmark and the Netherlands could see exports to the UK falling by 15% in the medium term as a result of No Deal.

Separately, the Munich-based Institute for Economic Research (IFO) has estimated in a new report that Ireland’s GDP would be hit three times harder than that of the UK in the event of a No Deal Brexit.

Source: OECD OECD ECOSCOPE RTE Financial Times IFO

Toyota: Leaving the UK is "on the agenda" in No Deal scenario

Responding to a question regarding whether Toyota would end its manufacturing in the UK in the event of a No Deal Brexit, CEO of Toyota Europe, Johan van Zyl, said yesterday, “If the business environment becomes very difficult to operate, of course those types of decisions should be on the agenda… But hopefully we will be able to avoid a withdrawal.” Van Zyl added, “If there is a bad Brexit, we will need to look at future investments.”

Source: Bloomberg

Anna Nadibaidze: Macron launches EU election campaign by calling for “European renewal”

In a new blog, Open Europe’s Anna Nadibaidze responds to French President Emmanuel Macron’s recent op-ed, in which he outlines his vision for the EU after Brexit, as well as the reactions it has generated across Europe. She writes, “Although this time Macron’s proposals seem to strike a more intergovernmental note, he continues to push for more European solutions where there is no agreement on how to move forward,” adding that this piece also “builds on Macron’s narrative that the [European Parliament] election will be a contest between the pro-EU camp and the populist one.” She concludes, “At the moment, Macron does not have wide-ranging support across Europe… and it is unclear to what extent Macron’s proposals resonate around the continent.”

Elsewhere, in a new blog, Open Europe’s Zoe Alipranti discusses how, ahead of the EU elections, “A new area of contention has been reignited in the EU: competition policy, and, in particular a Franco-German attempt to overhaul antitrust rules.” She suggests that “calls to change the competition rules are not new,” but “with Brexit on the horizon and a Franco-German axis pushing for a different direction, the tide might be changing.” Specifically, a common Franco-German proposal suggests allowing the European Council the right to override some antitrust decisions by the European Commission in certain “well-defined cases” and calls for greater Commission flexibility when assessing “relevant markets.” She explains, “A change in EU competition rules would signal a weakening of Commission power at the expense of smaller member states.” She concludes, “A triumph of inter-governmentalism over institutions that are in place to safeguard the interests of smaller member states will set a new precedent for the EU.”