9 August 2018

EU27 leaders consider softening governance proposals in Irish backstop draft

The Financial Times reports that the EU is considering softening its proposal for an Irish border backstop solution, including by limiting both the jurisdiction of the EU’s court and the power of EU authorities to undertake checks in Northern Ireland. Under the EU’s original proposal, the European Court of Justice would have direct jurisdiction in Northern Ireland, and EU authorities would be given the right to enforce the relevant EU laws in the region. However, the EU’s amendments are not expected to expand the backstop to the whole of the UK, as the British government has called for.

This comes after the EU’s Brexit negotiator, Michel Barnier, wrote in an op-ed last week, “What the EU has proposed is that Northern Ireland remains in a common regulatory area for goods and customs with the rest of the EU. We are ready to improve the text of our proposal with the UK.” On the future relationship, he wrote, “Some UK proposals would undermine our Single Market which is one of the EU’s biggest achievements. The UK wants to keep free movement of goods between us, but not of people and services.”

However, The Times today reports that European leaders are preparing to negotiate a deal that would allow the UK to remain in the single market for goods, while not being subject to free movement of people. In return, member states are expected to call on the UK to follow all new EU environmental, social and customs rules. The proposal is expected to be discussed at the informal European Council summit in Salzburg, Austria, in September.

Elsewhere, The Irish Times last week reported that the EU may be willing to negotiate UK single market access for agricultural goods when talks recommence later this month.

Source: Financial Times European Commission The Times The Irish Times

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Chances of no-deal Brexit stand at 60-40, says International Trade Secretary

In an interview with the Sunday Times, International Trade Secretary Liam Fox put the chances of the UK leaving the EU without a deal at “60-40,” adding, “I think the intransigence of the [European] Commission is pushing us towards no deal…We have set out the basis in which a deal can ­happen but if the EU decides that the theological obsession of the unelected is to take priority over the economic wellbeing of the ­people of Europe then it’s a bureaucrats’ Brexit — not a ­people’s Brexit — [and] then there is only going to be one outcome.” Fox explained, “If they don’t like the one [deal] we have put on the table then it’s down to them to show us one that they can suggest that would be acceptable to us.”

The Guardian reports that Whitehall officials believe that there is little chance of the UK leaving without a deal, but that it is still important to step up preparations for a no-deal scenario. A government source is quoted saying, “We’ve been telling business for two years that no deal isn’t going to happen, and we still believe that it’s a very small chance, but it’s not a 0% chance so government has got to prepare. There is an awakening in Europe of the damage to them of no deal and that most member states have no plans for it, so it is rising up their agenda.”

Elsewhere, Prime Minister Theresa May held talks about Brexit with French President Emmanuel Macron last week, however no joint statement was issued after the meeting.

Meanwhile, according to Bloomberg, May is planning a Cabinet meeting in early September to discuss preparations for the possibility of leaving without a deal. This comes as a new poll by the ORB International Pollster suggests that public approval of Theresa May’s handling of Brexit negotiations has fallen to 22 percent.  The poll also suggests that the share of voters who doubt that May will get the right Brexit deal has risen to 60 percent, with 22 percent believing she will.

Separately, Bloomberg reports that the UK Government aims to agree a Brexit deal by late November, citing an unnamed source claiming that May’s team assumes the EU will be under pressure to present a united front to US President Donald Trump at the G20 summit on 30 November.

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Philip Hammond: UK needs a strategy to grow non-EU financial services market post-Brexit

In a meeting with financial services firms’ executives last month, Chancellor Philip Hammond warned about the need to develop “alternative pathways for growth” in case the EU decides to change its financial services regulations and the UK loses some access to European markets after Brexit, the Financial Times reports. Hammond reportedly argued, “It is important that the UK is able to display in parallel, a strategy to grow non-European financial services business, such that the threat to pull out of EU arrangements is seen to be real.” He also said that France was particularly interested in “politically motivated rule changes” in financial services, in an effort to gain business from the City of London after Brexit.

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Scottish First Minister seeks reassurance about Brexit deal from Theresa May

Prior to a meeting with Prime Minister Theresa May earlier this week, Scottish First Minister Nicola Sturgeon warned about the potential consequences of a no-deal Brexit, saying, “With every day that passes, the prospect of a no-deal Brexit or a Brexit with very, very little information about the future relationship seems to become more and more likely. Both of those outcomes would be completely unacceptable, absolutely disastrous for our economy, so I hope [Theresa May] can reassure me that neither of those things are going to happen.”

During the meeting, May said that Sturgeon should support the UK Government’s Brexit plan agreed at Chequers, adding, “I think it’s incumbent on the Scottish government to support the [Brexit] proposals, to be speaking up for those proposals in Europe, rather than sowing the politics of division…It’s important that as we work on this deal, we are working with those in Scotland to deliver for Scotland. A good deal for the UK is a good deal for Scotland.”

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Henry Newman: The ticking Brexit clock demands clarity from both sides, but also adds to the risk of No Deal

In his column for Conservative Home, Open Europe Director Henry Newman writes on Brexit negotiations, “It’s still most likely that both sides reach agreement on withdrawal terms before the end of Article 50 […] But although it’s likely, it’s not certain that an agreement will be reached. The EU’s intransigence over the Irish backstop, which is the insurance policy intended to keep the border open, may mean that both sides can’t sign things off.” He adds, “Political divisions in the UK, which have especially come to the fore since Chequers and the subsequent ministerial resignations, underscore the Government’s weak support base in the Commons, raising the possibility of a total deadlock.” He concludes, “If there’s no real breakthrough by the late autumn the chances of No Deal will be very high. But even if there’s no agreement on the withdrawal treaty, the UK and EU could tie off some discreet deals to avoid the maximum disruption of an acrimonious exit.”