8 March 2019

EU calls for concrete proposals to break Brexit deadlock

The Daily Telegraph reports that the EU has asked the UK Government to present concrete proposals on changes to the Irish backstop today to break the impasse in negotiations. This comes as the Sun reports that the Attorney General, Geoffrey Cox, has called off a trip to Brussels scheduled for today.

Meanwhile, Prime Minister Theresa May will today deliver a speech in Grimsby saying, “Just as MPs will face a big choice next week, the EU has a choice to make too… We are working with them but the decisions that the European Union makes over the next few days will have a big impact on the outcome of the vote.” Final negotiations are expected to take place this weekend ahead of Parliament’s vote on the Prime Minister’s Brexit deal this Tuesday.

Speaking in the House of Commons yesterday, Cox suggested the Government was seeking to strengthen the arbitration mechanism applying to the backstop, saying, “Although the arbitration system applies to the [Irish] Protocol…the question about when the Protocol would end is likely to be determinative of whether the mechanism is effective.” Cox also committed to publishing his legal opinion on any new document renegotiated with the EU.

This comes as anonymous sources tell Bloomberg that the EU has offered to strengthen the review mechanism of the Irish backstop, which would include check-ins every six months to assist the process of replacing the backstop with alternative arrangements. A source close to the UK negotiating team tells the Times that the EU has agreed to give legal assurances that the backstop would be temporary and that the role of the independent arbitration committee, which will handle disputes over the Withdrawal Agreement, will be bolstered.

Separately, French European Affairs Minister, Nathalie Loiseau, told an event at the London School of Economics, “The backstop is not a solution the EU had in mind initially. The EU changed its plans according to the UK’s requests,” adding, “The EU does not want the backstop… If implemented, the EU does not want it to be permanent and we could not make it permanent even if we wanted to, as it’s against the EU treaties…But we must have it ready.”

On a potential extension of Article 50, Loiseau said the EU “does not want or need an extension,” but if the UK requests one, “it will not be a blind extension” without a credible reason which is supported by the majority of the UK Parliament.

Source: The Daily Telegraph Hansard LSE Event Bloomberg Politico London Playbook The Times The Sun

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Meaningful vote on Brexit deal confirmed for 12 March

The Leader of the House of Commons, Andrea Leadsom, yesterday confirmed that the second meaningful vote on the Prime Minister’s Brexit deal will take place on 12 March. If MPs reject the deal once again, they will then vote pursuing a No Deal Brexit and extending Article 50 on 13 and 14 March respectively.

Elsewhere, the Daily Mail reports that the Government is not planning to whip on the No Deal vote on 13 March, citing a Government official as saying, “Whichever way you whipped it, it would split the [Conservative] party…A free vote is inevitable.” Chancellor Philip Hammond yesterday said he did not yet know the Government’s whipping arrangements for the No Deal vote, explaining, “We always said it would be a very bad outcome for the UK to leave the EU without a deal but there isn’t a motion yet.” This comes as the Telegraph reports that Environment Secretary Michael Gove has told Gavin Barwell, the Prime Minister’s Chief of Staff, that several ministers were ready to resign if they are not given a free vote on a No Deal scenario.

Meanwhile, several Cabinet ministers including Hammond, Justice Secretary David Gauke and Business Secretary Greg Clark have reportedly called for the Prime Minister to hold a series of “indicative votes” to find a consensus in Parliament on other Brexit options including a customs union and a Norway-style model for future UK-EU relations. A senior Government source is quoted in The Times saying, “We can’t go back to Brussels unless we have something to go back with. The choice is to hold indicative votes — or have them imposed on us and lose control.”

Elsewhere, Chancellor Philip Hammond yesterday said he did not yet know the Government’s whipping arrangements for the vote on No Deal if the Brexit deal is rejected, explaining, “We always said it would be a very bad outcome for the UK to leave the EU without a deal but there isn’t a motion yet.”

Hammond also commented on No Deal saying, “We’ve got adequate fiscal reserves now because the public finances have improved very significantly over the last couple of years but we’ve been holding those in reserve because of the possibility that the UK would leave the EU without a deal.” He added, “If that money is spent on dealing with the disruption of a No Deal exit it can’t be spent on policing, on social care, on schools on higher education, on defence and all the things that people want to see money directed to.”

Source: The Daily Telegraph I Financial Times I The Times I The Times II The Times III The Daily Mail Financial Times II The Daily Telegraph II

Brexit Secretary: Not possible to transition all EU international agreements before Brexit

In a written statement yesterday, Brexit Secretary Steve Barclay confirmed, “If the UK leaves the EU without a deal, it will not be possible to complete the transition of all agreements by 29 March 2019.” 43 of the EU’s 161 international agreements will be rolled over before exit day. These include aviation agreements and nuclear cooperation deals. 21 further deals are “expected to be ready” for transition by 29 March. Barclay also said, “It is not the Government’s intention to transition all agreements in their entirety. This includes the EEA Agreement, the EU-Swiss Free Movement of Persons Agreement and the Ankara Agreement.”

Source: The Guardian Parliament Business

The Guardian: Attorney General claims backstop could breach European Convention on Human Rights

The Guardian reports that the Attorney General, Geoffrey Cox, told EU chief Brexit negotiator Michel Barnier that the backstop arrangement could potentially be in breach of the European Convention of Human Rights (ECHR). In the latest round of negotiations in Brussels, Cox asserted that if the backstop became permanent it could breach Protocol 1, Article 3 of the convention, which protects the rights of people to vote to choose their own legislature. Cox said that Northern Irish citizens would be bound by EU laws without being represented in European decision-making institutions, and that the risk of an ECHR breach meant it was incumbent on both sides to ensure the backstop was temporary. EU diplomats told the Guardian they were surprised by Cox’s claim, with one saying, “They agreed on this arrangement in November and now it is a human rights risk?”

Source: The Guardian

Martin Selmayr: Brexit has made other EU countries realise leaving “is not a good idea”

The Secretary-General of the European Commission, Martin Selmayr, said yesterday that Brexit has made other European countries realise that leaving the EU “is not a good idea.” Selmayr said that while “it is a bit too early to say what the European Union will look like without the UK,” Brexit has “forced the European Union to address how we move on from here.” He added, “I know that some people thought when the referendum in the United Kingdom turned out… for leave, that there [would] be in several other countries movements to leave the European Union… that hasn’t happened… confronted with the existential question, the Europeans have suddenly realised that this is not a good idea.” Selmayr also said, “In all EU member states, except two, the support for the European Union has gone up tremendously since the Brexit referendum for two reasons. The Europeans, the other 27, were extremely united, and I think you have all seen that with the idea during the Brexit negotiations the 27 would be divided, that hasn’t happened.”

Separately, EU Trade Commissioner Cecilia Malmstrom said that a No Deal scenario would be “pretty chaotic,” adding, “There will be tariffs imposed as from Day 1…There will be tariffs on the WTO [World Trade Organization] basis and some of them will be very high. It will damage our economy and it will damage the British economy.”

Source: The Daily Telegraph Bloomberg

Flights to continue between UK and EU even in event of No Deal Brexit

The Department for Transport has announced that the Government has agreed contingency measures which will provide protection for airlines operating between the UK and the EU in the event of a No Deal Brexit. This comes as the EU prepares to finalise a regulation allowing UK airlines to fly to and from EU countries until the end of March 2020 even if the UK leaves without a deal. Aviation minister, Baroness Sugg, said yesterday, “Measures put forward by the UK and the EU will ensure that flights can continue in any scenario; deal or No Deal.” She added, “This is good news, not only for the industry but most importantly it reaffirms the fact that passengers can book flights with confidence, as normal.”

Source: Department for Transport Financial Times

ECB to keep interests rates unchanged until 2020

The European Central Bank (ECB) announced yesterday it would keep interest rates on hold until 2020 and provide cheap funding to the Eurozone’s banks in response to weakening growth in the Eurozone. ECB President Mario Draghi said yesterday that the Eurozone was “in a period of continued weakness and pervasive uncertainty.”

Source: Financial Times

BoE: UK productivity growth “mildly improving”

One of the members of the Bank of England’s (BoE) Monetary Policy Committee, Silvana Tenreyro, said yesterday that productivity has been “mildly improving” in the UK in the past four years, and may be even better than statistics suggest. Speaking in Glasgow, Tenreyro added that a “smooth transition to a new trading arrangement with the EU” would help to ensure that productivity growth continued.

Source: Financial Times

Permanent Secretary to the Brexit Department plans to resign on March 31

The Permanent Secretary to the Department for Exiting the European Union, Philip Rycroft, has announced that he plans to leave his 31 March. He said, “While I have enjoyed the challenge Brexit presents, I have also spent the past ten years commuting weekly from Scotland,” adding, “I made a commitment to my family that I would not do it for more than ten years.” Rycroft is to be replaced by Clare Moriarty, the Permanent Secretary at the Department for Environment, Food and Rural Affairs.

Source: The Times

Independent: Labour may not support a second referendum

The Independent reports that Labour will only support a second referendum on a “damaging Tory Brexit,” and will not call for one if Britain leaves the EU on terms supported by Labour. The move appears to mark a change in thinking since the party’s announcement last week that it would support a “confirmatory referendum” on “whatever deal may or may not pass through parliament.”

Source: The Independent

EU votes for law to increase transparency in investment decisions

The EU yesterday agreed on a law setting out how asset managers, insurers and pension funds must disclose environmental and social risks in their investments, in an effort to increase transparency requirements for investment decisions. This aims at boosting green investment and restricting the practice of “greenwashing”, whereby companies claim to be more environmentally friendly than they are.

Source: Reuters

Henry Newman: A good Brexit deal is within grasp, but MPs risk throwing it away

Writing for Reaction, Open Europe’s Henry Newman argues, “A good Brexit deal is within grasp but MPs risk throwing that away in the hope that by leaving with No Deal, we might be able to improve our position. That’s a huge gamble. It’s time we took some deep breaths and went back to look at what’s actually on the table.” Newman outlines what the UK could do if the backstop arrangement were to come into force, adding, “Critics of deal are often blind to its benefits and unrealistic about the alternatives actually possible at this point in time.” He concludes, “The main downside to the deal is the lack of freedom to do our own comprehensive trade deals and control our trade policy… But that doesn’t mean it doesn’t make sense to spend some time in a customs union (to protect trade) and redesign our approach to customs.”

Separately, in an article for CapX, Open Europe’s Pieter Cleppe outlines five reasons why Ireland should back a time-limited backstop. He writes, “The prospects of Theresa May’s Brexit deal have, for quite some time, depended on her Government’s ability to amend or in some other way mitigate the so-called backstop set out in the Withdrawal Agreement,” adding, “It’s an issue which remains clouded in uncertainty, even at this late stage, and multiple hurdles remain. In Brussels, many realise Taoiseach Leo Varadkar has limited room to manoeuvre on this domestically. Many in Ireland consider giving ground on the backstop as the gravest of Irish concessions.” He concludes, “It would be a bit unfair to blame the Irish Government for making only sketchy preparations for what was long considered a worst-case scenario, rather than a likely one. One would hope that reason will prevail and the investments to prepare for No Deal turn out to be unnecessary. At the same time, all parties should do their utmost to avoid such an eventuality happening by accident.”