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According to a leaked letter seen by The Times, the EU’s proposal to keep Northern Ireland in its customs union and regulatory area for goods will remain as a “backstop-to-the-backstop” in the event no future relationship is agreed, despite UK attempts for an all-UK customs backstop to replace this. In a letter to Democratic Unionist Party (DUP) leader Arlene Foster, and her deputy Nigel Dodds, Prime Minister Theresa May said the EU was still insisting a Northern Ireland-specific arrangement remains as a “backstop-to-the-backstop,” but that the UK government will ensure this never “comes into force.” The DUP have interpreted this to mean the EU’s proposal would still be included in the Withdrawal Agreement. The letter also noted that the government “does not expect regulations to diverge between Great Britain and Northern Ireland.” Foster said the letter “raises alarm bells for those who value the integrity of our precious Union and for those who want a proper Brexit for the whole of the UK.” A government spokesperson said, “[The Prime Minister] has been absolutely clear about…never accepting any circumstances in which the UK is divided into two customs territories. The government will not agree anything that brings about a hard border on the island of Ireland.”
Meanwhile, the UK and Ireland have both played down suggestions that a Withdrawal Agreement is imminent. UK Foreign Secretary Jeremy Hunt suggested it would be “pushing it” to expect a deal in the next week, while his Irish counterpart, Simon Coveney, said, “I would urge caution that an imminent breakthrough is not necessarily to be taken for granted, not by a long shot.” This comes after Austrian daily Der Standard yesterday reported that UK and EU negotiators could have an agreement by Monday, and a special summit of EU leaders could be convened on 25 November. Elsewhere, the Financial Times reports that the UK cabinet is prepared for a possible meeting on Saturday to approve a full draft of the Withdrawal Agreement.
Elsewhere, former Brexit minister Steve Baker said that the European Research Group (ERG) of Eurosceptic Conservative MPs would vote against a Brexit deal even if Prime Minister Theresa May manages to negotiate an exit clause from the Irish backstop in the Withdrawal Agreement. Baker said, “In the end, it’s not really about the backstop.The tearing frustration is that the UK has been negotiating with itself. Many of us have long believed that the row over the backstop is at least partly confected in order to have an orchestrated breakthrough.” He added that MPs would be focusing on the political declaration outlining the future relationship, explaining, “Conservative MPs expect to get some commitment for the money. The overwhelming attitude of Conservative MPs is that paying £39bn for nothing is totally unacceptable.”
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Speaking to reporters yesterday, the International Trade Secretary Liam Fox said that the UK must have the ability to end a backstop arrangement after Brexit. Fox said, “It has to be a mechanism… where that decision ultimately lies with the sovereign British government… that decision can’t be sub-contracted to somebody else.” Fox also said that future trade arrangements should ensure that “no part of the United Kingdom can be treated differently from any other part of the United Kingdom.” Asked about the Attorney General’s legal advice on the Withdrawal Agreement, Fox replied that the Cabinet needed to have the “fullest possible information” before deciding whether to back a proposed Brexit deal.
Speaking at a meeting of the European People’s Party (EPP) in Helsinki yesterday, the Irish Taoiseach, Leo Varadkar, said that Ireland wants the future relationship between the EU and UK “to be as close as possible” but added that it “must provide a level playing field and the integrity of our single market must be upheld.”
Elsewhere, Reuters reports that the European Commission also stresses the importance of such a commitment, quoting one EU official explaining that “It is important that Britain would not undercut our own products on our own market in the all-UK Irish backstop.”
Meanwhile, Cabinet Brexiteers have reportedly warned Prime Minister Theresa May that obligations on a level playing field “would mean a single market through the backdoor.”
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The EU demands continued access to British fishing waters in return for allowing the UK to remain in a temporary customs union with the EU after Brexit, The Telegraph reports. The newspaper cites an unnamed EU diplomat, saying, “It is paramount the UK gives assurances on the access of the European fleet to UK waters before the EU can agree to a UK wide backstop.” Another EU diplomat is quoted, “There can be a customs union, but there must be rules to ensure that EU fisherman will be able to continue to fish in UK waters, otherwise there is no point in having a customs union.”
European market regulators are planning to grant exemptions to prevent disruption to uncleared derivatives contracts if the UK leaves the EU without a deal, the Financial Times reports. The European Securities and Markets Authority (ESMA) said yesterday that it planned a year-long reprieve, which would affect certain types of interest rates and credit derivatives. ESMA added that these measures are their only contingency plan to address any legal uncertainty created by Brexit. Steven Maijoor, ESMA chairman, said, “The proposed regulatory change supports counterparties’ Brexit preparations and maintain a level playing field between EU counterparties, while addressing potential risks to orderly markets and financial stability.”
European Commission forecasts released yesterday predict that the UK economic growth will fall to the lowest in the bloc, joint with Italy, next year. The forecast is based on a negotiated Brexit and predicts economic growth would fall to 1.2% in 2019 and 2020.
The European People’s Party (EPP) yesterday elected the German MEP Manfred Weber as its lead candidate for the upcoming European Parliamentary elections in 2019. He received 79 percent of the vote, beating his competitor the former Finish Prime Minister Alexander Stubb. Weber said on his plans for change in the EU, “Many people see the EU as a project of the highly skilled, the multilinguals, those who spend some years in London, then Brussels and Madrid – the elites. The Europe of today needs to become a Europe of the citizens.”
Elsewhere, the EU chief Brexit negotiator Michel Barnier yesterday told the EPP conference, “We need a strong Europe that speaks in one and the same voice. We need an EU that is capable and credible when it comes to security, defence, cyber-security and civil protection,” adding, “The European project is fragile, it is under threat, it is perishable and at the same time it is vital. We all have to fight against those who want to demolish Europe with their fear, their populist deceit, their attacks against the European project. There is now a [Nigel] Farage in every country.”
A new European Commission economic forecast has challenged the Italian government’s growth predictions, saying it expects GDP in the country to grow at 1.2 percent in 2019 and 1.3 percent in 2020. This comes after the Italian government had forecasted 1.5 percent in 2019, and 1.6 percent in 2020. The European Commission warns that Italian growth “is subject to high uncertainty amid intensified downside risks,” adding, “Uncertainty about government policies might affect sentiment and domestic demand… the planned rollback of structural reforms bodes ill for employment and potential growth.” The Italian Finance Minister, Giovanni Tria, said in response to the Commission’s forecasts, “[They] are in stark contrast to our own [forecasts] and are due to a superficial and partial analysis of our draft budget plan… we are sorry to assess the Commission’s technical failure, but this won’t influence our constructive dialogue.” Prime Minister Giuseppe Conte added that his government “will go ahead based on its own forecasts, not the Commission’s.”