2 September 2016

David Davis: UK will seek tariff-free access to EU single market

Speaking during a visit to Northern Ireland yesterday, David Davis, Secretary of State for Exiting the EU, said, “With respect to access to the [EU] single market, what we will seek to do is ideally have a tariff-free access but this is a matter of negotiation. We will be negotiating over an issue I suspect is in the interest of other members of the EU and others to get a good trading relationship in the long run.”

Meanwhile, Peter Sutherland, a former Irish EU Commissioner, has dismissed Davis’s comments that there would be no hard trade border with the Republic of Ireland after the UK leaves the EU as “ridiculous”, adding, “We have been told by a number of [UK] Conservative Party spokespeople that Britain will leave the common customs area of the EU. If this is true, the customs union, which relates to sharing a common external tariff of the EU, will have to be maintained by all other EU countries with the UK following its withdrawal. Goods will have to be checked at borders.”

Separately, speaking at a joint press conference with Luxembourgish Prime Minister Xavier Bettel yesterday, European Council President Donald Tusk said, “It is not our intention to talk about the UK in Bratislava or our negotiation strategy vis-à-vis the UK. Our position is crystal clear: there will be no negotiations without notification. This principle is enshrined in our treaties. And it is there for a reason: to protect the interests of the members of the Union that want to stay together, not the one which decides to leave.”

Source: The Irish Times The Independent European Council The Daily Telegraph: Gulliver

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Consumer confidence and construction activity rebound in August in UK

Markit/CIPS UK Construction Purchasing Managers’ Index (PMI), a measure of private sector construction activity, rebounded from 45.9 in July to 49.2 in August. However, the reading of below 50 suggests the sector is still contracting – albeit at a slower pace. Tim Moore, Senior Economist at Markit, said, “The move towards stabilisation chimes with the more upbeat UK manufacturing PMI data for August, and provides hope that the near-term fallout from Brexit uncertainty will prove less severe than feared.”

Separately, according to a monthly business confidence survey by YouGov and the Centre for Economics and Business Research (CEBR), the number of UK businesses that were optimistic about their own prospects over the next twelve months rose to 48% in August from 46% in July. The overall index has regained much of the ground it lost following the UK’s vote to leave the EU.

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Banks press UK Government to seek interim deal to preserve financial services passport

Bloomberg reports that a number of large banks are pressing the UK Government to seek an interim agreement which would secure the rights for financial firms to ‘passport’ their services around the EU from London without having to set up a subsidiary in another country. The deal would aim to secure these rights beyond the two-year negotiation period set out under Article 50 of the EU Treaties, the formal process for leaving the EU.

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ECJ President sceptical of Brexit ever happening

Koen Lenaerts, the President of the European Court of Justice, has told Dutch radio programme De Kennis van Nu, “I would find it very regrettable for the EU that it would lose [the UK’s] input…if it ever comes to a Brexit…Because of course, we don’t know yet if and when and under what conditions” Brexit might happen.

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Sturgeon launches new push to gauge support for second independence referendum following Brexit vote

Scottish First Minister Nicola Sturgeon will today launch the “biggest ever political listening exercise” in order to gauge support for a second independence referendum. Sturgeon puts the announcement down to the “seismic changes” following the UK’s vote to leave the EU and “to ensure that the voice of everyone in Scotland is heard in these changed times.”

A new YouGov poll shows that only 37% of Scots favour a second independence referendum, with 50% opposed. It also finds that, if a referendum were held, 54% would vote against independence compared to 46% who would vote in favour.

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Merkel’s approval rating hits five-year low

According to a new Infratest Dimap poll for German state broadcaster ARD, the approval rating of Chancellor Angela Merkel has fallen to 45% – a five-year low. The poll also found that 51% of Germans would find it “not good” if either Merkel or SPD leader Sigmar Gabriel were to run for chancellor in the 2017 federal election.

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Remain campaign relaunches with push for UK to stay in single market

Britain Stronger in Europe, the designated Remain campaign, has officially relaunched as ‘Open Britain’ with a push for the UK to stay inside the single market following Brexit. The group describes their aim as “a bespoke UK-EU agreement which prioritises continued elimination of non-tariff barriers and continued influence over regulatory decision-making so the UK is a ‘rule maker’ not a ‘rule taker’.”

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Deputy Polish PM hopes Brexit will stop well-educated Poles leaving to “work in a pub” in UK

Mateusz Morawiecki, Poland’s Deputy Prime Minister, said yesterday that the UK will have to stick to the principle of free movement of workers if it wants to keep benefiting from free movement of goods and services after leaving the EU. However, he added that he hopes Brexit will help stem the flow of “well-educated, creative” Poles leaving their country to “work in a pub” in the UK.

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Italian Europe Minister: “If it was up to me, we would have done the EU army yesterday”

Italian Europe Minister Sandro Gozi told Politico in an interview, “If it was up to me, we would have done the EU army yesterday.” He said, “Everyone called the Brexit vote a wake-up call. Bratislava [the meeting of EU-27 leaders on 16 September] is the test that it’s really true that Europe has woken up…Then citizens might listen to us again.” Gozi also argued, “We need to implement the [European] border guard immediately…Next we need a new pact between Europe and Africa. Only the EU can do that.”

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UK’s EU Commissioner-nominee to face MEP grilling on September 12

Julian King, the UK’s new EU Commissioner-nominee following the resignation of Lord Hill, will face a hearing with the European Parliament’s Civil Liberties Committee on September 12. King has been proposed by Commission President Jean-Claude Juncker for the newly-created post of Commissioner for the Security Union.

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Leak reveals EU Commission turf-war ahead of emissions inquiry hearing

EUObserver reports on a leaked EU document that reveals a behind-the-scenes battle in the European Commission over reducing car emissions, as well as the industry’s efforts to lobby against these measures. The departmental struggle saw officials at the Directorate General (DG) for Environment taking to task their counterparts in the Enterprise and Industry DG for dragging their feet on enforcing environmental rules, in a context of unfavourable economic conditions for the automotive sector.

The issue escalated in 2013, when Janez Potocnik, EU Environment Commissioner at the time, wrote to his Industry opposite number Antonio Tajani to notify him of concerns that cars were being engineered to meet test requirements despite much higher real-world emissions.

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Giving meaning to Brexit – an essay by Andrew Tyrie MP

In a new essay, published by Open Europe, Andrew Tyrie MP, Chairman of the Treasury Select Committee, attempts to give greater meaning to Brexit. He argues that falling back on World Trade Organisation (WTO) trading rules is not “an attractive blueprint.” He also stresses the need for the UK to leave the customs union to allow it to strike new trade deals. In his view, the UK “will want more market access than Canada, whose trade deal with the EU contains only limited provisions on services, and more control and influence than Norway, which is a passive recipient of single market regulation.”

Tyrie also argues that the Government needs to set aside the “false prospectus” of the Leave campaign, particularly the promises in terms of £350m per week fiscal savings from EU budget contributions. He is also scathing of former Prime Minister David Cameron’s “catastrophic” renegotiation. In terms of Article 50, the formal process for leaving the EU, Tyrie calls for Parliament to be given the chance to “express a view” on the UK’s negotiating position. He also believes that triggering Article 50 should not be done until the UK has a clear strategy and is willing to see it delayed until autumn 2017, after the French and German elections, if needs be. Finally, Tyrie sees the negotiations taking longer than the two years specified under Article 50 and, as such, sees need for some transitional arrangement to avoid falling back to WTO rules mid-talks.

The essay is cited by the Financial Times, BBC News, Bloomberg, the Independent and the Guardian.