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Cabinet ministers have reportedly agreed a compromise on the future UK-EU relationship after an eight-hour meeting of the cabinet Brexit committee yesterday at Chequers. A Downing Street spokesperson said ministers “held discussions including about the automotive sector led by [Business Secretary] Greg Clark, agrifood led by [Environment Secretary] Michael Gove, digital trade by [International Trade Secretary] Liam Fox and a discussion on the overall future economic partnership that was led by the Prime Minister.” One cabinet minister reportedly said that “divergence had won the day”, with ministers uniting behind a plan to agree mutual recogntion on goods rather than continue complying with EU rules. But another source told the BBC that Prime Minister Theresa May had “played a blinder” to persuade Brexiters to change their mind and allow her to make an opening offer to the EU. May is expected to give a speech next Friday outlining the government’s vision of the future relationship.
Elsewhere, The Times reports that May is examining proposals to allow EU citizens who arrive during the transition period the right to remain in the UK. The Prime Minister had previously suggested that EU migrants that arrive after March 2019 would not receive the same “settled status” rights as those already resident in the UK.
The EU has ruled out the possibility of a Brexit deal based on the ‘three baskets approach’ that would see the UK aligning itself with Single Market regulation on a sectoral basis. In a series of slides published on Wednesday night, the European Commission warns, “UK views on regulatory issues in the future relationship including [the] ‘three basket approach’ are not compatible with the principles in the [European Council] guidelines.” According to the Commission, the approach would amount to cherry-picking and represent a “risk for integrity and distortions to proper functioning of [the] internal market” as British access would not be policed by the European Court of Justice and EU regulators would not be able to supervise British businesses.
The Commission adds that “no EU-UK co-decision” arrangement will be possible after Brexit, stressing that the UK is either “in or out.” It also warns that there will be “no escaping from significant impact on trading conditions” such as border controls and no mutual recognition on financial services. Establishing a “level playing field” mechanism to limit unfair competition, however, could open the way for a more sectoral approach.
The EU is due to publish its draft withdrawal agreement next week, which could include legal text on the Irish border question.
Elsewhere, according to The Sun, a paper prepared by the Belgian government for a meeting of EU diplomats suggests that a UK-EU trade agreement should be modelled after the EU-US TTIP deal rather than CETA, as this would see more trade barriers removed. Open Europe’s Pieter Cleppe is quoted saying, “It’s significant some of the EU countries that trade a lot with Britain are studying arrangements to limit trade disruption after Brexit that are more flexible than the ones put forward so far by the Commission.”
Speaking to LBC radio ahead of Labour leader Jeremy Corbyn’s speech next week, shadow Foreign Secretary Emily Thornberry confirmed suggestions of a shift in Labour’s Brexit policy. She suggested the party wants to replicate the current UK’s Customs Union arrangement with the EU post-Brexit, saying, “Technically, because we’re leaving the European Union, we can’t be in the customs union that we’re in now. So we leave and then we have to negotiate a new agreement”, adding, “That [agreement] we think is likely to be a customs union that will look pretty much like the current Customs Union.” Under such a scenario the UK’s trade policy after Brexit will have to remain closely aligned to the EU’s one. Labour could now back an amendment by Tory MP Anna Soubry to the government’s trade bill, calling for the UK to remain in “a customs union” with the EU post-Brexit.
Britain could have to make payments into the EU budget for the duration it’s in the Brexit transition period, the chair of the House of Commons European Scrutiny committee, Sir Bill Cash, has said. Speaking yesterday in a select committee evidence session with the UK ambassador to the EU, Sir Tim Barrow, and Brexit minister Robin Walker, Sir Bill said, “If the transition lasts beyond 2020, then this could require the UK to make payments into the EU budget for 2021 as well, and therefore from January 2021 we’d then be paying into the EU’s new long-term budget and the net result of this is that the additional costs could run into billions of pounds, and the estimate is between £4 and £5 billion.” Sir Tim responded, “While there has been some discussion in Brussels among the 27 about the duration, the [EU] negotiating directives point to end 2020 and that is the basis on which we are currently talking to the commission about the logic of how they derive that figure. But … it is absolutely in the same scope of what we have said, of around two years.” Brexit minister Robin Walker added, “I think it’s important that we [the UK and EU] are both aligned on the rough duration of the period, clearly there are negotiations still to come in exploring exactly where we draw it to a close.” The committee has sent a letter calling on the Treasury for clarification.
Meanwhile, The Guardian quotes a senior EU official saying Britain will lose its rebate if it extends the Brexit transition period beyond 2020, as it would be expected to contribute into the EU budget during that time. The rebate is estimated to be £4.5bn a year on average and is never sent to the EU.
According to the Office for National Statistics (ONS), the UK’s economy grew at a slower rate than expected in the final quarter of 2017, with the growth rate revised from 0.5 percent to 0.4 percent, bringing the overall rate for 2017 down to 1.7 percent. This is the lowest economic performance in the Group of Seven (G7) largest economies in the world, and the weakest the UK has seen in five years. The ONS said that UK consumers were less willing spend due to price rises after the Brexit vote.
Migration figures released yesterday by the Office for National Statistics (ONS) reveal that the level of net migration from non-EU countries overtook net migration from the EU last year. The ONS said that the number of EU citizens coming to the UK over the last year has dropped by 47,000 since 2016 to roughly 220,000, and the number of EU nationals departing the UK was the highest recorded since 2008, at 130,000. Meanwhile, the number of arrivals from outside of the EU has increased by 26,000 to a total of 285,000.
The ONS explained that the fall in the number of EU arrivals cannot be solely attributed to Brexit, noting the stronger economic growth seen in the EU from 2016.
Chief Executive Officer of Airbus SE, Tom Enders, promised in a letter to Business Secretary Greg Clark that the company plans to maintain its operations in the UK “long in the future,” adding that Airbus would continue to see the UK as a “home country and a competitive place to invest.’’
German Chancellor Angela Merkel yesterday said, “The debate about the [EU’s] future financial framework [2021-2025] is also a chance to look at the finances of the EU as a whole,” adding that Brexit offered the EU an opportunity to reorient its budget. She suggested that EU structural and cohesion funds should “in the future also reflect the efforts made by many regions and municipalities on the reception and integration of migrants … solidarity cannot be a one-way street.”
The German chair of the EU budgetary control committee, Inge Gräßle, yesterday also spoke out in favour of linking EU financial support for member states to conditions. Meanwhile, Poland’s Europe Minister Konrad Szymanski yesterday rejected the proposal, saying, “Whoever plans such a political manoeuvre, I can only tell them: it would be a mistake.”
An informal summit of EU27 leaders will today take place in Brussels. The main topics on the table will be Brexit and the next EU budget.