4 March 2019

Daily Telegraph: Attorney-General no longer seeking unilateral exit clause or time limit on the backstop

The Daily Telegraph reports this morning that the Attorney-General, Geoffrey Cox, has abandoned efforts to secure a unilateral exit clause or time limit on the Irish backstop in order to secure greater support for the Brexit deal. Both demands have been repeatedly rejected by EU negotiators. According to ministers briefed on Cox’s approach, Cox will instead pursue an enhanced “arbitration mechanism,” allowing either the UK or the EU to provide formal notice that the backstop should come to an end.

A Downing Street spokesperson said, “The Attorney General continues to pursue legally binding changes to the backstop that are necessary to ensure it cannot be indefinite. We will not however comment on the specifics of the negotiations at this critical stage.” Communities Secretary James Brokenshire also said this morning, “The Attorney General continues with his work to ensure we get legally-binding changes to ensure that we are not locked in the backstop,” adding, “The negotiations are at a critical and sensitive point. People just need to have this little bit of patience to see how this now comes forward.”

Deputy Chairman of the European Research Group (ERG) of Eurosceptic Conservative MPs, Steve Baker, criticised the Government for appearing to go against the Sir Graham Brady’s amendment, which called for the backstop to be replaced with “alternative arrangements.” He told the Telegraph, “This seems to indicate a satirical approach to fulfilling the Brady amendment which the Government whipped for. The Brady amendment required that you replace the backstop with alternative arrangements. That’s light years away from tweaking arbitration mechanisms.”

Over the weekend, a group of seven MPs, including six members of the ERG , the Westminster leader of the Democratic Unionist Party (DUP), Nigel Dodds, and barrister Martin Howe, have outlined three changes to the backstop needed in order to gain their support for Prime Minister Theresa May’s Brexit deal. A document drawn up by the eight, who are all qualified lawyers, demands a “clearly worded, legally binding, treaty-level clause which unambiguously overrides” the Withdrawal Agreement, as well as language that “must go beyond simply re-emphasising/re-interpreting the temporary nature of the backstop.” It also asks for a “clear and unconditional route out of the backstop if trade talks fail,” such as “a time limit or a unilateral exit mechanism.”

Meanwhile, EU chief Brexit negotiator Michel Barnier told European newspapers during the weekend, “We know that there are misgivings in Britain that the backstop could keep Britain forever connected to the EU. This is not the case. And we are ready to give further guarantees, assurances and clarifications that the backstop should only be temporary.” Barnier reiterated that the deal will not be reopened, but said that assurances could be given in an “interpretative document” which would be added to the Withdrawal Agreement and the Political Declaration.

However, Dodds yesterday told BBC’s Westminster Hour programme, “It has to be treaty-level change. It has to be a change which isn’t some kind of subordinate document. It has to be treaty-level, legally binding, which makes it very very clear that the current interpretation, the current meaning of the Withdrawal Agreement, is re-opened and changed.”

Separately, Sir Graham Brady, the Chairman of the 1922 Committee of Conservative backbenchers, suggested that he would support May’s deal with the right legal assurances on the Irish backstop. He wrote in the Mail on Sunday, “The Attorney General [Geoffrey Cox] needs to give a legally binding guarantee that the backstop is temporary… When the right compromise is offered, we should pull together behind the Prime Minister and help her deliver our exit from the European Union on March 29.” Brady also told the Observer, “As long as the Attorney General is able to assure the House that he has a legally binding guarantee that the backstop can only be temporary, I would accept that and would urge others to accept it.”

Source: The Daily Telegraph Reuters I The Sunday Times Reuters II BBC News PoliticsHome Politico The Mail on Sunday The Observer

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Government boosts funding to address inequality across English towns

The Government has outlined details about a £1.6bn Stronger Towns Fund to support former coalfield and coastal towns after Brexit. £1bn will be allocated to English regions on a “needs-based formula,” while £600m will be made available through a bidding process. The Fund has been reported as an effort to gather support among Labour MPs representing constituencies which voted Leave in the 2016 referendum. Prime Minister Theresa May said, “For too long in our country prosperity has been unfairly spread…Communities across the country voted for Brexit as an expression of their desire to see change — that must be a change for the better, with more opportunity and greater control.” The Government is also expected to outline details of a Workers Rights package on Wednesday.

Meanwhile, Communities Secretary James Brokenshire told BBC Radio 4’s Today programme, “This funding is there regardless of the outcome [of the meaningful vote] … there is no conditionality,” adding, “This funding is there to see that towns grow … and we leave no part of our UK left behind.”

Shadow Chancellor John McDonnell commented, “This towns fund smacks of desperation from a government reduced to bribing MPs to vote for its damaging flagship Brexit legislation. The reason our towns are struggling is because of a decade of cuts, including to council funding, and a failure to invest in businesses and our communities.”

The Labour MP for Wigan, Lisa Nandy, said, “If it is a one-off payment designed to help the Prime Minister ahead of a key Brexit vote, it will fail and confirm to people in our towns that the government is not serious in its commitment to our communities.”

Separately, Labour MP Caroline Flint, who represents a Leave constituency, told Sky News’ Sophy Ridge on Sunday that if given the choice between “an improved deal and No Deal, we should seriously consider the improved deal,” adding that as many as 30 Labour MPs agreed with her.

Source: Financial Times The Times The Sun I The Sun II The Guardian

Michel Barnier: “technical” Article 50 extension will be needed

In an interview with Les Échos and other European newspapers, EU chief Brexit negotiator Michel Barnier suggested that even if the UK Parliament ratifies the Withdrawal Agreement before 29 March, a “simple” and “technical” extension to Article 50 will be needed in order to pass the necessary legislation. Barnier added, “The duration of the potential extension [to Article 50] will depend on the response from the EU27 heads of state. New elements will be needed. The extension must solve the problem, not just postpone it.”

Elsewhere, International Trade Secretary Liam Fox yesterday told BBC’s Andrew Marr programme that while it would be “very unfortunate” for MPs to vote for an extension of Article 50, “If we have no option, in order to deliver a smooth Brexit, then so be it.” He suggested that an extension should not be used “to thwart the process of Brexit itself,” as this “would provoke a backlash amongst voters.”

This comes as Leader of the House of Commons Andrea Leadsom and Foreign Secretary Jeremy Hunt write in the Sunday Telegraph, “The active pursuit of a delay to Brexit – with no purpose beyond frustration – is a betrayal of the referendum result. It would lead to an irretrievable breach of trust with those who are already cynical about the will of Westminster to deliver on the result to begin with.” A Sun on Sunday poll revealed that two in five voters find a Brexit delay unacceptable, and 17 percent of voters think a short delay is acceptable if the Brexit deal can be improved.

Meanwhile, Slovenian President Borut Pahor told Sky News that Slovenia and “a lot of other countries would say yes” to an extension of Article 50, adding, “I think that nobody wants to see a hard Brexit in a chaotic way.” According to the Irish Sunday Independent, Taoiseach Leo Varadkar told Irish officials that Article 50 is likely to be extended until June.

Separately, legal advice given to the German parliament seen by German daily Die Welt suggests that an extension of Article 50 beyond the European Parliament elections could be a violation of EU law and the UK could face “legal consequences.”

Source: Les Échos The Observer BBC News The Sunday Telegraph The Sun on Sunday Sky News Irish Sunday Independent The Guardian

Labour would whip MPs to back second referendum, suggests Shadow Chancellor

Shadow Chancellor John McDonnell yesterday suggested that the Labour party would whip its MPs to vote for a second referendum. He told Sky News’ Sophy Ridge on Sunday, “I think on an issue as this we would see a whip but also you’ve got to respect people’s views and their constituency interests as well, and the whipping arrangement will be determined in discussion in due course.”

Speaking on the same programme, Labour MP Caroline Flint, who represents a ‘Leave’ constituency, said, “I think there is something like 60 or 70 Labour MPs who feel as strongly as I do against a second referendum.” Flint added, “My appeal to John McDonnell, to [Labour leader] Jeremy Corbyn, to [Shadow Brexit Secretary] Keir Starmer, is allow MPs to have a free vote on an improved deal. So those MPs who want a second referendum can vote for that but those of us who want to keep our promises to our electorate can also keep faith with those people and vote for an improved deal.”

Elsewhere, the Daily Telegraph reports that up to 17 shadow ministers have indicated their opposition to another public vote. Labour MP John Mann told the Sun that around 35 Labour MPs would be ready to back May’s deal in order to avoid a second referendum.

Source: The Guardian Sky News The Daily Telegraph The Sun

Several trade agreements “very close” to being rolled over after Brexit, says Liam Fox

International Trade Secretary Liam Fox told BBC’s Andrew Marr programme yesterday that a number of trade agreements of which the UK is part of as an EU member were “very close” to being rolled after Brexit, adding, “A lot of countries are waiting to see what we do in the next couple of weeks. If there is going to be No Deal, a lot of those countries will be willing to sign what we have agreed with them now.”

Separately, the Daily Telegraph reported on Friday that the Government is planning to align with EU foods safety and animal health regulations for at least nine months in case of a No Deal Brexit scenario. This came as US ambassador to the UK Woody Johnson wrote in the Daily Telegraph last week, “It would be a genuine missed opportunity to buy into the idea that the EU’s traditionalist approach to agriculture is Britain’s only option for a quality and efficient agriculture sector moving forward.”

Source: Politico Sunday Crunch The Daily Telegraph I The Daily Telegraph II

Public finances set for windfall in spring statement

The Chancellor, Philip Hammond, is set to announce a multibillion-pound windfall for the public finances in his spring statement on March 13. This is the result of higher-than-expected tax receipts, with self-assessment returns paid in January particularly strong. As a result, forecasts from the Office for Budget Responsibility published next week will show better investment in public finances than expected over the next five years.

If MPs vote against the Prime Minister’s revised deal on March 12, there will be a vote on March 13 on whether to proceed with No Deal. Hammond’s spring statement will take place earlier on the same day. Hammond has previously promised that if MPs back the Brexit deal, there will be a “deal dividend” of extra public spending as funds held back for No Deal are released.

Source: Financial Times

CBI survey: UK business activity at lowest level since 2013

The new Confederation of British Industry (CBI) Growth Indicator reveals that the growth of UK businesses in the quarter to February 2019 was at its lowest since April 2013, marking the fourth consecutive month with no growth. Warning that “the prospect of a No Deal Brexit [is] tightening the vice on business investment,” the CBI survey also predicts that private sector activity is likely to fall over the next three months. CBI Chief Economist, Rain Newton-Smith, said, “Economic momentum is ebbing away as consumer confidence weakens and businesses brace themselves for the possibility of a No Deal Brexit,” adding, “Until politicians can agree a deal that commands a majority in Parliament and protects our economy, growth will continue to suffer and long-term damage will be done.”

Elsewhere, The Daily Telegraph reports that European investment in the UK has more than doubled over the past three years, growing from $13.6bn in 2016 to $31.1bn in 2018.

Source: CBI The Daily Telegraph

EU Competition Commissioner warns European capitals to be "aware of consequences" of changing merger rules

In an interview with the Financial Times, EU Competition Commissioner Margrethe Vestager said that national capitals must be “aware of the consequences” of watering down merger rules, describing this move as a “strategic choice” to change Europe’s economic model. She explained, “We have a lot of state intervention in our economy but basically it is a very strategic choice to have fair competition — and you can see that it bites.” She added that it was “more and more obvious” that the openness of European markets was “an asymmetrical thing” due to the rise of US protectionism and Chinese state capitalism, but defended the current European model as having made European companies more efficient, innovative and better able to compete globally.

This follows the decision of French Finance Minister Bruno Le Maire and his German counterpart Peter Altmaier to alter EU Commission competition laws after Vestager last month blocked the French and German plan to merge the rail businesses of Siemens and Alstom.

Source: Financial Times

Opposition party wins Estonian general election

The Estonian centre-right opposition party Reform has won the country’s general election. The party won with 29% of the vote while Prime Minister Jüri Ratas’ Centre party received 23%. Meanwhile, the right-wing populist Conservative People’s Party of Estonia (EKRE) came a close third with 17.8%, twice as much as they received in the last election. Reform is led by the former MEP Kaja Kallas, who is set to become Estonia’s first female Prime Minister. She reportedly said that all coalition options are on the table except for EKRE, which she said “[is] not a choice for us.”

Source: BBC News EUObserver

Henry Newman: Where better to look to solve the Brexit backstop problem than Ireland's history with the EU?

In an article for the Sunday Telegraph, Open Europe’s Henry Newman writes, “Brussels is irresponsibly resisting [legally binding changes to the backstop], with President Juncker saying the EU ‘cannot accept the idea that the Withdrawal Agreement could be reopened.’ But in the past the EU did return to deals, which had supposedly been signed off.” Newman adds, “The current deal already offers a path out the backstop (if we ever get there) through ‘alternative solutions’. It’s not a contradiction to obtain more detail about what these alternatives could look like. It wouldn’t even be a contradiction to offer a date by when they must be in place. Ireland’s Lisbon treaty experience offers another useful precedent.” He concludes, “We need to know if we were trapped in the backstop, with the EU refusing to use best endeavours to negotiate, that we would have a legal case against Brussels. This might mean a political or legal row. But it’s far better to end up in court, with a strongly arguable case, than in what some see as a permanent backstop prison.”

Elsewhere, in a piece for The Article, Open Europe’s Dominic Walsh warns that MPs cannot take an extension of Article 50 for granted. Noting that any extension will have to be approved by all 27 EU member states, he writes, “There is a view in some European capitals, particularly Paris, that delay for the sake of delay is pointless… if France will only allow [extension] with a ‘clear objective,’ then both the Government and MPs will need to start thinking about what that objective is.” He adds, “Forcing the Prime Minister to concede an extension in principle is all very well, but is pointless if EU countries refuse – or attach conditions that make the extension politically unpalatable to the UK.” Walsh concludes, “Ultimately, delaying Brexit merely postpones the choice which MPs have to make – a version of the deal, No Deal, or no Brexit. Any Article 50 extension can only work as a bridge to one of these options – it should not be seen as an end in itself.”