6 September 2017

David Davis says the UK’s negotiating stance is “substantially more flexible and pragmatic than that of the EU”

David Davis yesterday told MPs that the UK and the EU still have “significant differences” and “very different legal stances” over Britain’s financial settlement with the EU. The Brexit Secretary stated that, regarding the financial settlement, the UK had “been clear that the UK and the EU have obligations to each other that will survive the exit from the EU,” but that his department has “a duty to our taxpayers to interrogate [the EU’s] position rigorously.” He added that this approach “might have been a little bit of a shock to the [European] Commission, but that is what we did, line by line.” Mr Davis stated that he had “urged the EU to be more imaginative and flexible in its approach,” commenting that “the UK’s approach is substantially more flexible and pragmatic than that of the EU.” Labour’s Shadow Brexit Secretary Sir Keir Starmer said that “fantasy was meeting brutal reality” and that “the time for floating fantastical ideas is over.” In response, Davis said that the EU’s intransigence on the financial settlement was “a pressure tactic to make us pay” and that the “Commission is seeking to use keeping the first part of the negotiations going as a pressure point.” He vowed not to relent, and to “do this the proper way.”

Meanwhile, Guy Verhofstadt, the European Parliament’s (EP) Brexit representative, told MEPs that he wanted to propose to EP political groups by October a resolution containing an assessment of whether sufficient progress has been made in talks on withdrawal issues between the UK and the European Commission to allow discussions to move to the future relationship. Verhofstadt said, “I have to tell you that after the briefing I had in July, in August, and also today with Mr Barnier, the assessment is very clear, there is not enough progress today to say ok, we can go immediately into phase two of the negotiations.” This came as Bloomberg reports that Sabine Weyand, the EU’s deputy negotiator on Brexit, briefed the European Affairs committee of the German Bundestag that there were no signs that the fourth round of UK-EU negotiations due to begin on 18 September would produce any more progress  than the previous round.

Separately, Simon Coveney, the Republic of Ireland’s Foreign Minister, told media that, in any agreement on the UK’s exit from the European Union, Ireland could not “be part of essentially creating some kind of a backdoor into the single market that is not properly regulated.” On the phasing of negotiations, Coveney added, “There is more that could be done to add credibility to the solution before we move to transitional issues.”

Source: BBC News Hansard euobserver euobserver 2 Bloomberg

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Labour set to vote against Brexit Repeal Bill

The Labour party has declared that it will vote against the European Union (Withdrawal) Bill – also known as the Repeal Bill – which aims to repeal the European Communities Act (ECA) and incorporate EU law into domestic law. In a statement, Labour’s spokesperson said, “Labour fully respects the democratic decision to leave the European Union… But as democrats we cannot vote for a bill that unamended would let government ministers grab powers from parliament to slash people’s rights at work and reduce protection for consumers and the environment.” The spokesperson added, “This power-grab Bill would do the opposite. It would allow the government to seize control from the parliament that the British people have just elected.”

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Leaked Home Office document suggests “end of rights-based, unconditional free movement” in 2019

A leaked Home Office document obtained by The Guardian suggests that leaving the EU will mean “the end of rights-based, unconditional free movement” from the EU-27 countries to the UK, heralding an immigration system in which “the Government will take a view on the economic and social needs of the country as regards EU migration, rather than leaving this decision entirely to those wishing to come here and employers.” The report proposes a phased introduction of the new system, with an implementation period. It also includes suggestions for a two-year limit on work visas for low-skilled workers, with the possibility of a three to five year work permit for highly-skilled workers. It notes that in the future businesses will be encouraged to “meet their needs from the resident labour market,” and will be required to fulfil an “economic needs test” before hiring migrant workers. The document, running to 82 pages and classified ‘Official Sensitive’, continued, “Put plainly, this means that, to be considered valuable to the country as a whole, immigration should benefit not just the migrants themselves but also make existing residents better off.”

The Times quotes a source who said, “This [document] was drawn up by Home Office officials still working to Theresa May rather than Amber Rudd. She has been working to modify this significantly and it is not where the government is any more.” Elsewhere, chair of the Home Affairs Select Committee Yvette Cooper criticised the government for its “completely confused” policy developed and questioned whether an impact assessment had been done for these proposals.

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Turkey decries Merkel’s suggestion that she would seek to end Turkey’s EU accession talks

Responding to statements made on Sunday by German Chancellor Angela Merkel and her election opponent Martin Schulz in debate in which they suggested they would seek to end membership negotiations between the EU and Turkey, Omer Celik, Turkish Minister for EU affairs, said, “Mentioning stopping Turkey’s [EU membership] talks means attacking the EU’s founding values. These politicians are unaware what the EU is. They confuse the EU with the United States of Germany.” Separately, Mevlut Cavusoglu, Turkey’s Foreign Minister, said, “Looking at these debates, we see populism at its peak. Europe must rid itself of this political populism.’”

Despite originally stating that Turkey should be a partner with the EU, later in the debate Merkel said, “I will talk with my [EU] colleagues again on whether we can… end the accession negotiations.” Meanwhile, Federica Mogherini, the EU’s High Representative for Foreign Affairs, maintained that Turkey was still a candidate for membership, saying, “We will continue talks; it will be up to the internal discussions we will have and most of all to the discussions we will have together with them.”

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Brexit has “re-energised” the debate about a united Ireland says Sinn Féin

Sinn Féin party leader Gerry Adams has called for a referendum on a united Ireland within five years as “Brexit has re-energised and reshaped the debate about a united Ireland.” He added, “The people of the North voted against Brexit. The Irish government has a responsibility to defend that vote and to act in the best interests of all the people of this island.” Leader of the Democratic Unionist Party, Arlene Foster, called the suggestion “divisive and destabilising.” She argued “There is no evidence of overwhelming support for a united Ireland. Holding, or indeed even just proposing, a border-poll within five years is not sensible.”

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Record quarter for UK manufacturing output and orders amid 11 month low for services growth

Surveys by the manufacturing body EEF and accountancy firm BDO showed that a record proportion of UK exporters reported increases in output and orders in the third quarter of 2017, while confidence in the UK economic outlook fell. The proportion of firms reporting increased output rose from 26% in the second quarter to 34% in the third, with those reporting increased orders rising from 25% to 37% over the same period. 47% of firms also reported an increase in sales to the European Union. EEF also forecast a tempering in UK GDP growth at 1.6% in 2017 and 1.3% in 2018. Tom Lawton, BDO’s head of manufacturing, said, “Despite the economic and political uncertainties, manufacturers continue to be a force to be reckoned with… With growing opportunities around the world, particularly the eurozone, manufacturers need stability and certainty in Government policy, including Brexit, to provide the right environment for them to commit to the significant capital and research investment required to support continued growth.”

Separately, the IHS Markit / CIPS Purchasing Managers’ Index (PMI) for UK services fell from 53.8 in July to 53.2 in August. This is the lowest level since September 2016, with figures above 50.0 representing growth and below representing contraction. Chris Williamson, Chief Business Economist at IHS Markit, said, “Robust manufacturing growth means the economy may be rebalancing towards goods production, aided by the weaker pound, but the slowdowns in services and construction send warning signals about the health of the economy.” The bulletin also stated that some firms reported that “recent exchange rate depreciation against the euro would likely drive up costs in the near-term.”

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