16 January 2018

EU draft negotiating position outlines tougher requirements for transition period

According to The Times, a leaked draft of the EU’s new negotiating directives calls for EU citizens arriving in the UK until the end of the transition period to be eligible for special status to remain in the UK. However, the joint report agreed by Prime Minister Theresa May and European Commission President Jean-Claude Juncker last month had said only EU citizens arriving before the UK’s formal withdrawal in March 2019 would be eligible for special status, which grants permanent residency rights. This change reportedly comes after Poland and other central and eastern European countries expressed concern that the UK would impose new immigration requirements on EU nationals during a transition period. Sources from France and Germany told The Times they supported the proposal, and one EU source said, “The deal in December did specify March 2019 for free movement rights. That was then. Now as part of the discussion on transitional arrangements that has changed.”

Elsewhere, the Financial Times also reports that the draft negotiating directives call for stricter terms on trade agreements, fishing rights and judicial oversight during the transitional period. For instance, the document reportedly says the UK must seek “authorisation” from the EU in order to roll-over EU trade deals with third countries after March 2019. It also says, “The direct effect and primacy of union law should be preserved.”

Separately, the Guardian reports that Norway has warned Brussels over giving the UK overly favourable trading terms, quoting senior diplomatic sources as saying that the country might want to reconsider its ties to the bloc. A senior official said, “[The Norwegians] are following this very closely to make sure that we are not giving the UK a much more favourable deal.”

Source: The Guardian Financial Times The Times

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Scottish First Minister Nicola Sturgeon: EU single market membership the "least damaging" option for Scottish economy

Scottish First Minister Nicola Sturgeon yesterday launched her Brexit impact report on the Scottish economy and called on the government “to drop its hard Brexit red lines”. The Scottish government’s report had analysed three different scenarios considered “realistic”: remaining in the single market, agreeing a Canada-style free trade agreement, and reverting to World Trade Organisation (WTO) terms.  Sturgeon argued, “None of these options are as good as staying within the EU,” but added, “If Brexit is to proceed then staying in the single market is the only option that makes sense.” The report estimates that, compared to continued EU membership, Scottish GDP would be 2.7% worse off by 2030 with full participation in the single market, 6.1% worse off with a Canada–type deal, and reverting to WTO rules could cost the Scottish economy roughly 8.5% of GDP. The analysis also argues in favour of maintaining freedom of movement, saying, “Without immigration, the number of people of working age, working and paying towards public services in Scotland, is likely to fall.”

Elsewhere, in response to the impact assessment, a spokesman for Prime Minister Theresa May said she has “made clear her commitment to getting a good deal which serves the interests of all parts of the United Kingdom and that we are confident of doing so.”

This comes as a cross-party delegation of pro-remain MPs, including Labour’s Chuka Umunna, and Conservative MPs Anna Soubry and Dominic Grieve, yesterday met with the EU’s chief Brexit negotiator, Michel Barnier, as part of a fact-finding mission. After the meeting, Umunna said, “What they [the EU] do recognise is that the UK legislature has a distinct and sometimes different voice from the UK executive and we’re not going to behave like some simple rubber-stamping mechanism.” Soubry added, “We have got to be realistic as a nation about all this. It doesn’t mean we can’t be ambitious, and that’s what I’m concerned about is how realistic we’re being as a country.”

Source: The Independent Reuters Reuters II BBC News The Guardian

Lloyds of London to open Brussels unit next year

Lloyd’s of London is set to begin operations  in its new Brussels unit by early next year, according to the insurance market’s Chief Executive, Inga Beale. She said, “We will have the Brussels subsidiary up and running by January 1, 2019 … That is ahead of the actual official exit, but we run a market and we want to be ready for all of our businesses and syndicates that operate within the market.” Regarding the size of the new subsidiary, she said, “It will be in the tens, probably, up to 40 [staff] or something,” and discussing the launch plan, she added, “The only thing that might change it … is any sort of delay to an actual impact of Brexit.”

Source: Reuters

A majority of medium size companies favour break from single market, survey suggests

A new YouGov survey, conducted for the accountancy company RSM, suggests that a majority of medium size firms prefer breaking away from the single market over a Norway or Switzerland-like arrangement. The survey shows that while the companies, with annual turnover between £30m and £300m, generally thought Brexit would damage the UK’s economy over the next two years, they were also generally confident that it will not have major effects in the long run. Simon Hart, Brexit lead partner for professional services firm RSM, said, “The midmarket can be more reactive and move later in the game.” But he also urged the government to secure a deal that could reassure large foreign investors, stressing, “If US investors such as Pepsi and Ford do not continue with capital investment as they have done previously because of the loss of access to Europe the impact on middle market companies in their supply chains could be dramatic.”

Source: Financial Times

France calls for improvements to the UK-France Le Touquet agreement

An Elysée official has confirmed that French President Emmanuel Macron wants to discuss reforms to the Le Touquet treaty, which governs the British-French border, at the UK-France bilateral summit on Thursday. The official said France wants to “obtain a certain number of improvements from the UK.” France is reportedly calling on the UK to process asylum seekers faster as well as to increase financial contributions towards border controls in Calais. Downing Street said it had “already provided help through the provision of extra security fencing” and that it had put in place arrangements “to take minors from Calais and to find them homes here”. A Home Office spokesman said, “We work closely with the French authorities at all levels to reduce migrant pressures and target criminal gangs involved in people trafficking, both in northern France and further afield in source and transit countries.”

President Macron is set to travel to Calais today with his interior and justice ministers, and is expected to announce a review of immigration policy in order to assist “those who we must protect” and remove those who “have no right to remain in France”.

Source: Financial Times The Guardian

French Finance Minister calls for urgent reforms to Eurozone

French Finance Minister Bruno Le Maire yesterday called for urgent reforms to the Eurozone, with the convergence of tax rules and financial sector regulations enjoying the highest priority. Le Maire said, “The first [phase of reforms] includes banking union, capital market union and fiscal convergence. In these areas, progress must be made by the end of 2018 and at the latest by the start of 2019.” He added that the improvement of crisis stabilisation mechanisms and the introduction of a joint Eurozone budget would follow later.

Source: Reuters

Boris Johnson: Leave campaign’s £350 million a week claim “grossly underestimated” the UK’s actual contributions to the EU

Speaking to the Guardian, Foreign Secretary Boris Johnson has claimed that the UK’s contribution to the EU has already increased to £362 million a week for 2017-18, and could rise to £438 million by the last year of the transition period in 2020-21. He said, “There was an error on the side of the bus. We grossly underestimated the sum over which we would be able to take back control.” He added, “As and when the cash becomes available – and it won’t until we leave – the NHS should be at the very top of the list.” Johnson insisted that additional funding for the health service is a “huge priority for the British people.”

Shadow Brexit Minister, Matthew Pennycook, has since criticised the Foreign Secretary’s comments. He said Johnson “spent the entire referendum campaign standing in front of his red bus with a bogus claim on the side, and now he is saying the figure should be higher. The public really do deserve better from the foreign secretary.”

Source: The Guardian

Madrid rules out government from Brussels option in Catalonia

Spanish Prime Minister Mariano Rajoy has ruled out the option of an investiture via Skype or a proxy, and “other kinds of tricks”, to elect the new Catalan President. Rajoy said the option of ruling Catalonia from Brussels would result in a continued application of Article 155, which was activated following Catalonia’s unilateral declaration of independence and has imposed Madrid’s direct rule over the region. This complicates the re-election of Catalonia’s ex-President Puigdemont, currently self-exiled in Brussels, while facing charges of rebellion and sedition at home. Referring to Catalonia’s ex-president Puigdemont, Rajoy added, “It’s absurd that someone aspires to be president of the Catalan regional government as a fugitive in Brussels – it’s a case of common sense.” The Catalan parliament is scheduled to elect the committee that rules its day-to-day activities on 17 January, while the new regional president is expected to be voted on 31 January.

Source: Reuters La Vanguardia