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The government yesterday avoided defeat on a key customs union amendment to the Trade Bill by 307 to 301. The amendment, tabled by Conservative MP Stephen Hammond, would have forced the government to negotiate to stay in a customs union with the EU if agreement for a UK-EU free trade area had not been achieved by 21 January next year. 12 Conservative MPs voted against the government. One rebel MP later said that Conservative whips had threatened to “pull the third reading of the Bill and call a vote of confidence” if the amendment passed. The government was defeated on a separate amendment to allow the UK to participate in the European Medicines Agency.
Separately, recent YouGov polling shows Labour on 41%, five percentage points of the Conservatives, on 36%.
Elsewhere, International Trade Secretary Liam Fox yesterday said that the government’s Chequers proposal was “not dead,” despite amendments to the Taxation (Cross-Border Trade) Bill on Monday, which he said were “very close to the wording in the Government’s White Paper.” On the government’s overall Brexit proposal, he said, “We can’t please everybody. We have to have a compromise position that enables the country to get an agreement with the European Union. Here in Britain there is far too much negative, self-doubting pessimism in this process. In a speech in London today, Fox will set out the UK’s targets for post-Brexit trade deals, saying, “The Government is determined not only to seek deals with key existing partners, but to break new ground: putting the UK at the heart of the world’s fastest growing regions.”
According to RTÉ, Irish Taoiseach Leo Varadkar has warned, “We can’t make assumptions that the Withdrawal Agreement will get through Westminster. It’s not evident, or not obvious, that the [government] of Britain has the majority for any form of Brexit quite frankly.” This comes as the Irish cabinet are today expected to step up preparations for a “no deal” Brexit, although a government spokesperson said, “We are not preparing for a hard border between north and south.” Varadkar also said that the recent amendment to the UK Taxation (Cross-Border Trade) Bill, which would prevent a customs border between Northern Ireland and Great Britain, “shouldn’t give us any reason to change our position” in negotiations. The EU and Ireland are currently proposing a backstop that would ensure Northern Ireland remains in the EU customs territory, creating a customs border in the Irish sea.
Separately, the Irish Department of Foreign Affairs yesterday warned, “It is fully accepted and understood that there can be no Withdrawal Agreement without a legally operable backstop ensuring that there will be no hard border.” The Department added, “The UK has also repeatedly committed to avoiding a hard border on the island of Ireland, most recently in last week’s White Paper… It is not for the Irish Government to comment on the internal politics and legislative processes of the UK…What matters is that the British government is able to engage in serious negotiations with the [European] Commission.”
Elsewhere, The Times reports that the EU’s chief Brexit negotiator Michel Barnier is not convinced the UK government’s White Paper proposal will the basis of the future UK-EU economic relationship. One source told the paper, “No one sees this as a real landing zone, apart from the Brits…The priority is Ireland and getting the Withdrawal Agreement over the line for autumn.” A European ambassador also said, “It will be a balancing act. To push for more evolution in Britain’s position without further destabilising the Prime Minister.” Separately, a European diplomat quoted in Le Monde has said, “The [UK] White Paper should not be considered as the basis for negotiations, it is rather meant for internal political use. If we pull it apart too much, we will break the dynamic of discussions.” This comes as the European affairs ministers of the EU27 will meet on Friday to discuss their response to the UK’s proposals for the future relationship with the EU.
Bank of England Governor Mark Carney yesterday said that a ‘no-deal’ Brexit would be a “material event” that would require the Bank to reassess the economic outlook and interest rates, adding, “Speaking very narrowly about the financial services side, in the event of a no-deal scenario… There would be big economic consequences. We might have a lot of idle bankers as there is not a lot of demand for their services.” Carney also explained that the Bank of England “will have to give our view on whether or not the [Brexit] arrangements are consistent with our ability to fulfill our statutory responsibilities.” He added however, “It’s premature for us to make a judgement on the White Paper and the outcome of these negotiations. It’s also not clear which activities are going to be in scope.”
The Office for Budget Responsibility (OBR) yesterday released its biannual Fiscal Sustainability Report, estimating that the government’s plan to raise the NHS annual funding by £20,5bn would increase the UK’s long-term deficit by 1.5 percent of GDP per year. Should the government not increase taxes or shift spending, the OBR warns, public sector debt may increase from 80 percent of GDP in 2022 to more than 250 percent by 2067. In its report, the OBR also criticises the government’s claim that the increase in NHS funding would be financed “in part by a ‘Brexit dividend’, although our provisional analysis suggests Brexit is more likely to weaken than strengthen the public finances overall.” The OBR adds, “There will be direct savings from the net contributions to the EU budget that the UK will no longer have to make, but it is unclear how much will be available after payments towards the agreed withdrawal settlement and other Brexit-related spending commitments.”
Meanwhile, a spokesperson of the Treasury responded arguing that the extra money for the NHS “will be partly funded by lower contributions due to the European Union,” adding, “[Prime Minister Theresa May] has made clear that taxpayers will need to contribute a bit more in a fair and balanced way. This will also require prioritisation and further efficiencies within non-health expenditure to keep the growth in total spending on a sustainable long-run trajectory.”
Airbus and Rolls-Royce yesterday criticised the government over its handling of the Brexit negotiations, and announced that they were considering stockpiling production supplies in case of an unfavourable Brexit outcome. Airbus’ Chief Operation Officer Tom Williams said, “It would be criminal if we were to see [Airbus’ European success story and competitiveness] destroyed.” Rolls-Royce Chief Executive Warren East said they were “talking about stockpiling,” which he said would be “inconvenient and costly.” East said on the government’s Brexit white paper, it was “incrementally positive in terms of context but it still leaves loads of unknowns and we have a business to run. We have to take contingency measures and will continue to do so,” adding, “It’s time to start negotiating something – and that’s on both sides of the fence.”
The Daily Telegraph
According to The Daily Telegraph, the European Parliament’s chief Brexit negotiator Guy Verhofstadt earlier this month sent a letter to Home Secretary Sajid Javid, demanding “free” registration for all EU citizens in the UK after Brexit. Verhofstadt reportedly also asked that “a short cut-off date should be defined after which the absence of response should be taken as acceptance of the registration.” This comes as, according to the paper, sources had previously reported that the European Commission had accepted the UK’s decision to charge EU citizens £65 for their registration process.
UK wage growth fell from 2.8 percent to 2.7 percent in the three months to May. This comes as UK employment figures reached a record high of 75.7 percent. This could dampen expectation of a rise in interest rates when the Bank of England’s Monetary Policy Committee meets next month.
Xavier Bertrand, a former French minister and president of Hauts-de-France region, said that the ports of Dover and Calais are facing an “economic catastrophe” because of Brexit, urging the French and UK governments to bypass the European Commission and to hold bilateral talks, the Guardian reports. Bertrand argued, “We need to pressurise the French parliament and [French] President Macron of the need to talk to the UK directly,” adding, “It is against the negotiating rules at the moment but not to talk is an error. The French and British governments have to talk to each other to find a solution, otherwise we are heading for something catastrophic.”