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The Institute for Fiscal Studies (IFS) has described Monday’s Budget as “a bit of a gamble” given the “huge amounts of uncertainty” associated with the improved financial forecasts, “not least given Brexit.” The IFS Director, Paul Johnson, said yesterday that the Chancellor’s spending plans would “go out of the window” if there is a No Deal Brexit, as they were based on a “fairly smooth, softish kind of Brexit.” Johnson predicted that in a No Deal scenario, “The Chancellor would probably try to support the economy by cutting taxes or increasing spending immediately — but would then have to claw that back through potentially another prolonged period of austerity.”
Elsewhere, speaking at a press conference in Oslo, Prime Minister Theresa May denied that the Budget was designed to pave the way for a snap election. “We are not preparing for another general election. That would not be in the national interest,” she said.
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UK-EU negotiations have resumed this week, with Prime Minister Theresa May’s Europe adviser Oliver Robbins and European Commission deputy chief negotiator Sabine Weyand meeting in Brussels. Meanwhile, the Commission and EU27 ambassadors are privately meeting today to discuss the impasse over the Irish backstop and the next steps in Brexit negotiations.
Separately, former Brexit Secretary David Davis yesterday said at an event hosted by the Institute of Economic Affairs that there would likely be a Brexit deal, predicting, “Terror will win. The fear of no deal, the irrational fear of no deal, will win.” He added, “It [the deal] may take two passes, there may be a deal [which] passes in Brussels and fails in Westminster… but it will pass.”
Norwegian Prime Minister Erna Solberg yesterday said it would be “difficult” to accept the UK temporarily joining the European Free Trade Association (EFTA). She said that Norway “would welcome any good cooperation with Britain,” but added, “I don’t think it’s easy to think that you should enter into an organisation you are preparing to leave at the same time.” This comes amid domestic debate in the UK over the merits of former minister Nick Boles’ plan for the UK to seek membership of EFTA on a temporary, interim basis.
Meanwhile, Solberg and UK Prime Minister Theresa May also announced yesterday that UK citizens living in Norway and Norwegians living in the UK will have the right to remain residents in the event of a No Deal Brexit.
The immigration minister, Caroline Nokes, has said that during any Brexit transition period employers will be expected to verify that EU citizens have the right to work in the UK. This contradicts an earlier briefing by the Home Office, which indicated such checks were not required. Nokes made the comments while giving evidence to the Commons Home Affairs Committee. While acknowledging that such checks were difficult for employers, she said that it was necessary to distinguish between those who are entitled to “settled status” and those who are not.
Elsewhere, Lynne Owens, the head of the National Crime Agency (NCA), told the same committee that she would be “deeply concerned” about the security implications of a No Deal Brexit, as the UK would leave justice and police cooperation instruments such as the European Arrest Warrant (EAW). Asked if some foreign criminals could relocate to the UK in order to avoid the reach of the EAW, Owens said, “That is certainly one of the intelligence judgements that we have to make.” Meanwhile, Richard Martin, a senior Metropolitan police officer, warned, “We should not play with security. We need to keep our security safe across the whole of Europe, and if we were to not get a [Brexit] deal, then we are not going to be as safe as we currently are.”
Separately, the Times reports that the number of UK citizens applying for Irish passports has almost doubled since the EU referendum.
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Standard and Poor’s (S&P), a prominent global credit rating agency, has said that a No Deal Brexit would lead to a recession and the loss of a million jobs in Britain. In a report published on the Brexit process, S&P said that in the event of No Deal, by 2021 economic output would be “5.5 per cent less than what would have been achieved in a scenario with an orderly exit and transition period for the UK.”
Separately, patent lawyers have warned that a No Deal Brexit could curtail the establishment of the Unified Patent Court, an international court for settling patent-related disputes due to be set up next year. “Without the English judges and their influence – and I’ll be frank – without the economic contribution to the budget, there is a real risk that it won’t work, and that would be a tragedy,” Kevin Mooney, chairman of the committee responsible for drafting procedures for the court, told the House of Lords EU justice sub-committee yesterday.
Elsewhere, Spanish Prime Minister Pedro Sanchez yesterday urged Spanish businesses to prepare contingency plans in case the UK leaves the EU without reaching an exit agreement.
Bloomber Brexit Bulletin
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Senior figures in the Ulster Volunteer Force (UVF), a loyalist paramilitary organisation in Northern Ireland, have warned that North-South relations could be “poisoned” by the Irish Government’s perceived “Brit-bashing” over Brexit. The comments, reported in the Guardian yesterday, were made at a secret meeting held between UVF representatives and Irish officials two months ago. The loyalists also told officials that they were opposed to the EU’s backstop proposals, and said there was “serious disquiet” in the Unionist community at Irish leaders referring to republican attacks on border posts in their warnings against a hard border on the island of Ireland.
Elsewhere, the DUP MP, Sammy Wilson, has said that he would “not even for a second” contemplate voting for a Withdrawal Agreement which treated Northern Ireland differently from the rest of the UK. Speaking on the BBC’s World Business Report, Wilson dismissed the suggestion that the backstop would never be used, saying “If it is not needed, then don’t put it in place… when you put that arrangement into… an internationally binding treaty…there is no incentive for the EU to say ‘Well, we’ll come to some different arrangement,’ so we’re locked in.” He added that he did not expect any deal which included different arrangements for Northern Ireland to get through the House of Commons, since, along with the DUP, a “sizeable proportion of the Conservative Party” and “a few members in the Labour Party” would not accept it.
Writing for ConservativeHome, Open Europe’s Henry Newman argues that “a political intervention is just what is needed to unblock the Northern Ireland backstop deadlock [in Brexit negotiations],” outlining twelve reasons why “the current mess needs a fresh look.” He writes, “Avoiding a hard Irish border is important, as both sides have acknowledged. But so are dozens of other aspects of Brexit… All these are threatened by No Deal, which now is most likely to be caused by an inability to agree the backstop.” He concludes, “There’s still just about time to find a way through. But as it stands the EU’s version of the backstop is… worse than No Deal.”