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Cabinet Office Minister David Lidington yesterday confirmed that the UK will take part in the European Parliament elections on 23 May, adding that the Government aims to ratify the Withdrawal Agreement before Parliament’s summer recess at the end of July. He said, “We will be redoubling our efforts and talks with MPs of all parties to try to make sure that the delay after that is as short as possible. Ideally we’d like to be in a situation where those MEPs never actually have to take their seats at the European Parliament, certainly to get this done and dusted by the summer recess.”
Elsewhere, Chancellor Philip Hammond said, “The European elections are going to be difficult in the circumstances… But we have to do this, we are legally obliged to do it and we will get on with it.” Commenting on the ongoing cross-party talks between the Government and the Labour Party, Hammond said, “The most important thing is that we put in place arrangements which allow us to have as low-friction trade as possible between the UK and the European Union after we have left the EU. Of course we should talk to the Labour Party about how to do that.”
Meanwhile, Foreign Secretary Jeremy Hunt said he did not believe “in a customs union [with the EU] as a sustainable long-term solution,” adding, “I think this is a time when we have to be willing to make compromises on all sides because the message of last week was that voters for both main parties are very, very angry about the fact Brexit hasn’t been delivered.”
Shadow Brexit Secretary Sir Keir Starmer commented about the cross-party talks, “ I think the time has now come to a crunch time where the Government has to decide whether it’s serious about significant changes capable of actually carrying a majority in the House of Commons.” The talks will resume today.
This comes as Downing Street confirms that Sir Graham Brady, the Chairman of the Conservative Party’s backbench 1922 Committee, held a meeting with Prime Minister Theresa May last night. The Telegraph reports that Brady asked May to set out a “roadmap” for her departure ahead of a meeting of the committee’s executive this afternoon.
Separately, in an article for CapX, Open Europe’s Dominic Walsh writes that the European Parliament elections will “be a much more concrete test of public opinion” on Brexit than last week’s local elections, adding, “While selecting MEPs has its shortcomings as a gauge of voters’ views… you cannot caveat these elections as not being about Brexit.” Walsh concludes, “It’s true that the backlash against the two main parties in last week’s local elections primarily benefited parties that support Remain. But that was in an election where neither Brexit nor the Brexit Party were on the ballot paper. A victory for Farage – in elections which, by definition, are about the EU — will send a rather different signal as to what the public thinks about Brexit.”
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The European Commission has released economic forecasts for the rest of 2019, predicting that GDP will grow at 1.4% in the EU and 1.2% in the euro area. Growth is expected to be highest in the Eastern European member states, with Poland expected to increase its GDP by 4.2% in 2019. Both the United Kingdom and France are expected to grow by 1.3%; Germany by 0.5%; and Italy by just 0.1%. The forecasts also indicate a decline in unemployment across the EU, along with a slight decline in inflation.
The Commissioner for the Euro and Social Dialogue, Valdis Dombrovskis, said, “The European economy is showing resilience in the face of a less favourable external environment, including trade tensions… Yet risks to the outlook remain pronounced. On the external side, these include further escalation of trade conflicts and weakness in emerging markets, in particular China. In Europe, we should stay alert to a possible ‘No Deal Brexit’, political uncertainty and a possible return of the sovereign-bank loop.”
Meanwhile, the Commission’s forecasts also showed that Italy is again set to breach EU spending rules in 2020. The Italian budget deficit is expected to reach 3.5% of its GDP next year, exceeding the EU’s limit of 3% of GDP.
Separately, Dutch Finance Minister Wopke Hoekstra told the Financial Times that the failure to attract Europe’s richer nations to play a full part in the EU was putting it at “smouldering risk of implosion.” He said, “Countries like Norway and Switzerland, which are fantastic places to live with great economies and have a lot going for them, have decided not to join the Union. Sweden and Denmark have decided not to join the euro.” Hoekstra added, “If you lack the ability to attract [those countries] and you lose the UK, then it’s time to look in the mirror. We haven’t inspired these four to join or join in full. It is something we simply cannot ignore.”
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The Chief Executive of the Financial Conduct Authority (FCA), Andrew Bailey, warned yesterday that the UK being part of a customs union with the EU after Brexit would not be beneficial for the financial services industry. He explained, “An agreement on a customs union would tie down the goods model, but it wouldn’t tie down the services model,” adding, “We’ve got to settle these issues well before negotiation [with the EU on the future relationship].”
The UK and Irish Governments will today sign a Memorandum of Understanding on the future of the Common Travel Area (CTA), ensuring that the CTA will remain in place even if the UK leaves the EU without a deal. In addition to securing free movement between the two countries, the Memorandum will also guarantee rights to health, social security and education. The agreement will be signed by Cabinet Office Minister, David Lidington, and Irish Foreign Minister, Simon Coveney, in London ahead of a meeting of the British-Irish Intergovernmental Council.
Elsewhere, the British and Irish Governments held talks with the political parties in Northern Ireland yesterday in an effort to restore the power-sharing Executive. The Governments have announced that the talks will continue during this month and a series of working groups have been established to deal with five key areas of concern.
The Bank of England (BoE)’s Chief Economist, Andy Haldane, yesterday said that the BoE is planning to monitor real-time road traffic near the UK’s ports in order to assess the impact of a potential No Deal Brexit on the UK’s economy. This comes as Brexit Secretary Stephen Barclay reportedly told the Cabinet that the Government must continue preparations for a No Deal Brexit scenario, which could happen on 31 October.
Separately, a survey by UBS Global Wealth Management reveals that 41% of high net worth investors in the UK believe Brexit will have a positive impact on the UK economy, with 35% thinking it will be negative. Moreover, 44% of business owners said Brexit would have a positive effect on their business.
The European Council will this week call for a new batch of proposals for defence integration projects within the framework of its Permanent Structured Cooperation (PESCO) initiative, following the launch of 34 existing PESCO projects. EU sources said that the existing proposals are at a very initial “incubation phase,” and that 12 of these are estimated to reach initial operational capability by 2022.
Danish Prime Minister Lars Løkke Rasmussen announced yesterday that Denmark will hold a General Election on 5 June. Rasmussen said, “We will have plenty of time to discuss Europe and domestic politics [until the election date],” adding, “I want to use all of my will, competence and experience to continue to lead Denmark.”
In a draft paper with proposals for the future of the EU ahead of tomorrow’s European Council summit in Sibiu, the Spanish government will call for a “common unemployment insurance” that would be “complementary to those of member states” and “would protect our citizens and counter economic cycles.” Politico reports that Madrid will also recommend a “binding gender-equality strategy for the European Union, reinforcing common tools to fight youth unemployment,” as well as a “true” Eurozone budget, “with a stabilising role and adequately resourced.”
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In a new blog, Open Europe’s Anna Nadibaidze examines the state of the debate over rules in EU foreign policy decision-making ahead of Thursday’s European Council Summit in Sibiu, Romania, where EU27 leaders will discuss the future of the Union. She writes, “For the Commission and several member states, strengthening the EU’s ability to be quick and effective on the global stage, especially after the UK leaves, is a priority. However, this issue has been on the agenda for several years and several member states – even with the UK gone – remain reluctant to make institutional changes. Even if they do it at a time when political conditions are favourable, taking decisions by qualified majority voting (QMV) can lead to further issues which EU governments are not willing to face.”