6 July 2018

May: Brexit plan discussed at Chequers will bring “substantial way forward”

Speaking during a press conference with German Chancellor Angela Merkel, Prime Minister Theresa May yesterday said that during today’s Cabinet meeting at her Chequers country estate, ministers will “discuss and decide a substantial way forward which will enable the pace and intensity of the [Brexit] negotiations to increase.” May added that the Brexit plan discussed today will form the basis of the White Paper published next week and that it will be in the interest of both the UK and the EU.

Elsewhere, key papers distributed to ministers ahead of the meeting reportedly state that “the UK should maintain a common rulebook for all goods including agri-food,” and that “the UK will make an upfront choice to commit by treaty to ongoing harmonisation with EU rules on goods.” The document also says that the UK “would strike a different arrangement for services, where it is our interests to have regulatory flexibility, recognising this will result in reduced market access,” adding that this “would not allow the UK to accommodate a likely ask from the US in a future trade deal” as the commitment to align with EU regulations “would not allow the UK to accommodate” the US’s “array of standards.” Theresa May’s spokeswoman however said yesterday, “It is categorically untrue to suggest that we will not be able to strike a trade deal with the US.”

Meanwhile, The Times and The Daily Telegraph report that a group of Brexit-supporting cabinet ministers will say the Prime Minister’s Brexit deal is “not acceptable” and could “destroy the government.” The group of six ministers – including Foreign Secretary Boris Johnson, Brexit Secretary David Davis, and Environment Secretary Michael Gove – could present Theresa May with an alternative proposal for a Canada-style agreement. But an ally of May has said, “This is…about the future of the Union. The plain fact is you can’t have a Canada-style deal without some special treatment for Northern Ireland.” International Trade Secretary Liam Fox had been expected to join the rebel ministers, but sources say he is “content” with the proposal following “personal reassurances” from May.

Separately, May yesterday urged the Cabinet to agree to the proposed plan for the future relationship with the EU, writing in a statement, “We have a great opportunity – and a duty…To set an ambitious course to enhance our prosperity and security outside the European Union – and to build a country that genuinely works for everyone.” May adds, “We want a deal that allows us to deliver the benefits of Brexit – taking control of our borders, laws and money and by signing ambitious new trade deals with countries like the US, Australia and New Zealand. This is about agreeing an approach that delivers decisively on the verdict of the British people – an approach that is in the best interests of the UK and the EU, and crucially, one that commands the support of the public and Parliament.”

Source: City AM The Spectator The Guardian The Times The Daily Telegraph BBC News

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Austrian Chancellor hints towards possible extension of Brexit negotiations

Austrian Chancellor Sebastian Kurz yesterday said that the EU should “keep negotiating” with the UK even if the Irish border question is not resolved, in order to avoid a hard crash out. He said, “Our goal is to reach an agreement with the UK but if that’s not possible we have to avoid a hard Brexit.” According to an Austrian government source cited by the Telegraph, however, this might be limited to managing a no deal. According to the source, Austria wants “to avoid a crash, but have not given a definite answer on the prolongation of Article 50 or the creation of a small parachute [a short extension of Article 50 negotiations].”

Elsewhere, at yesterday’s press conference with Theresa May, German Chancellor Angela Merkel warned that time is running out for a UK-EU agreement to be reached, adding, “Negotiations will now enter a crucial phase… Time is growing short and the political framework has to be declared already in October, so the British government’s decisions over the next few days will be important.” Meanwhile, Bloomberg cites a German official saying that the German government sees May’s new customs proposal as unworkable.

Separately, a leaked letter sent by German Interior Minister Horst Seehofer to the European Commission states that “ensuring the security of citizens in Europe should take precedence over all other aspects of [Brexit] exit negotiations,” the Financial Times reports. The letter, which was not coordinated with German Chancellor Angela Merkel and represents a substantial divergence from Berlin’s official line in the negotiations, calls for a “full security partnership with the UK” that must encompass “the entire EU security architecture,” warning, “Weakening the European security architecture would affect all EU citizens and undermine their fundamental need for security. The ever present threat of cross-border terrorism shows the need for unlimited co-operation in future.”

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Conservative MPs urge Theresa May to listen to businesses on Brexit

46 Conservative MPs have written a letter to Theresa May calling for her to “listen to the voice of business”  when deciding the Government’s Brexit plans at the Cabinet meeting today. The letter reportedly states that “A Brexit deal without our trading, enterprising and innovative businesses and their employees at its heart will miss the point and make a Global Britain harder to achieve.” The MPs also write, “We urge the Cabinet to recognise that the time for debating is over and that a model must be found which supports your ambition for a future partnership with the EU which allows for frictionless trade to continue, avoids a hard border… and enables business to flourish.”

Elsewhere, May’s spokesman yesterday said, “The PM has been very clear that we take the views of business seriously and we also know the importance of providing certainty as we leave the EU.” This comes as Business Minister Greg Clark said he was “confident” that the Cabinet could reach a common position on post-Brexit customs arrangements with the EU, adding, “I think everyone is clearly focused on making sure the deal we get is one that is going to support the jobs right across the economy…I think it’s right that [the discussion] should be informed by the evidence of businesses.”

Meanwhile, German firms yesterday said they are putting investment in the UK on hold due to uncertainty in Brexit negotiations. A spokesman for German Industry UK (GIUK) said, “There is some reluctance from German business to invest in the UK, with projects on hold because of the uncertainty about the future, and with only nine months left before the UK leaves the EU, time is running out.”

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Sturgeon urges May to back remaining in the EU customs union

Ahead of the Cabinet’s Chequers meeting today, Scotland’s First Minister Nicola Sturgeon has urged the Prime Minister to support remaining in the EU customs union instead of putting forward an “unworkable” alternative solution, inviting May to “face down the hard-line Brexiteers in her cabinet” and get “to a position that’s one of common sense.” Criticising the model the PM is planning to present to her ministers, which would reportedly be a combination of the customs partnership and ‘max-fac’ models, Sturgeon said, “It looks as if it has taken two completely incredible and undeliverable plans and put them together to pretend it’s something new and more workable.”

This comes as the Scottish government sent to London proposals for the upcoming Brexit White Paper ahead of a meeting  between Cabinet Office minister David Lidington, Scottish Constitution Secretary Mike Russell and Welsh Finance Secretary Mark Drakeford yesterday. Russell said, “Brexit is only a matter of months away, but we still have not seen the UK Government position on key issues such as customs arrangements, emerging options for negotiation positions or the full draft White Paper,” adding, “We continue to make the case for continued membership of the European single market and the customs union as a compromise that respects the democratic decision of both Scotland and other parts of the UK.”

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BoE Governor says he is confident UK economy is bouncing back

Speaking in Newcastle yesterday, the Bank of England Governor Mark Carney said that “Indicators of household spending and sentiment have bounced back strongly from what increasingly appears to have been erratic weakness in Q1. The UK labour market has remained strong, and there is widespread evidence that slack is largely used up.” Carney also said that “an ongoing tightening of monetary policy over the next few years” was “appropriate to return inflation sustainably to its target.” The comments leave the possibility open for an interest-rate increase later this year. Carney remained however cautious due to the international context, stressing that tariffs worldwide could still undermine the economy in the upcoming months.

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Transport Secretary: “Too early” to assess post-Brexit impact on UK ports

Transport Secretary Chris Grayling yesterday said it was “too early” to assess in detail the impact of the UK’s post-Brexit trade on the country’s ports, adding that ports were prepared for different scenarios.  Speaking in the House of Commons, Grayling said, “UK ports are adaptive and market-orientated. They are ready to facilitate growth in trade when we leave the EU. Over the medium and longer term, patterns of maritime and island traffic may be affected by the trade agreements we reach with the EU and countries elsewhere. It is too early to predict in detail what those patterns will be, but ports nationwide are prepared for all likely eventualities.” He also said the Government does not intend to “impose any hard border in Dover” and to “put in place measures that would create long queues incoming at our ports.”

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German government agrees on migration plan

German Interior Minister and leader of the Bavarian CSU party, Horst Seehofer, yesterday “very happy” after a joint meeting of the three coalition partners CSU, Christian Democrats (CDU) and Social Democrats (SPD). The three sides reiterated that asylum seekers should only be sent back to their country of first entry or Austria if there were bilateral agreements in place, with CDU Secretary General Annegret Kramp-Karrenbauer saying this ensured Germany was “not acting unilaterally, without consultation, or to the detriment of other countries.”

Elsewhere, ahead of a meeting with Seehofer, Austrian Chancellor Sebastien Kurz said the EU would first “have to determine whether or not what Germany wants to do is within the legal framework.” He added, “Our goal is a Europe without internal borders but with external borders…A Europe without internal borders will only be possible if there are functional external borders.” After the meeting Kurz warned, “There will be no measures taken by Germany at the expense of Austria.”

Separately, according to a document presented during an informal meeting of EU28 national experts and seen by French newspaper Le Monde, the Austrian government suggests to consider a new European “protection system” under which “no asylum demand would be made on European soil,” with the goal to grant asylum only to those “who respect EU values and its rights and freedoms.” The paper cites a source as saying that the proposal was not well received by some of the other member states’ delegations, with national experts pointing out the illegality of some of the Austrian proposals.

Meanwhile, Austrian Foreign Minister Karin Kneissl yesterday told reporters, “We feel that instruments [on migration] don’t meet anymore exigencies of today…Instead of making people cross the Mediterranean, let’s move authorities to people, not people to authorities.”

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Merkel “ready to support negotiations” on lowering EU car tariffs

German Chancellor Angela Merkel yesterday said she “would be ready to support negotiations on reducing [EU] tariffs [on cars], but we would not be able to do this only with the US,” adding that tariffs would have to be “negotiated with all the countries we trade with in the automotive sector.” This comes as the US ambassador to Germany told German car manufacturers that Washington would end the trade dispute on cars with the EU if both sides abolished tariffs on automotive imports from each other.

Elsewhere, the President of the Eurogroup, Mario Centeno, yesterday said that the threat of a tariff war with the US “is a major risk …for the global economy and certainly for the relationship between the US and Europe.” He added, “We don’t know exactly how it will evolve, but I agree with those that see this process as an unnecessary test to the economic recovery [of the Eurozone], and actually to the [economic] expansion that our economies were experiencing.”

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