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In a speech in Florence today, Prime Minister Theresa May is expected to call for a two-year transitional deal after the UK leaves the European Union in March 2019. The Times reports that this will be a flexible or staggered transition, which allows different sectors of the economy to adapt to new post-Brexit arrangements at different speeds. She is also expected to make an “open and generous offer” to the EU regarding the UK’s financial settlement, but is unlikely to put forward an actual figure. Previous reports suggest the UK is prepared to offer at least €20bn to honour its budget commitments until 2020, the end of the current multiannual budget period. But one minister has warned against committing to a large sum at this stage, noting, “It’s our only leverage.” The Financial Times also reports that May will pledge to strengthen legal protections for EU citizens in the UK, with the relevant terms of a citizens’ rights deal expected to be directly enforceable under an exit treaty, rather than transposed directly into domestic law. She will also restate her intention to strike a bespoke future UK-EU trade deal, and will rule out a Canada or Swiss-style arrangement and say it is “in all of our interests for our negotiations to succeed… so I believe we share a profound sense of responsibility to make this change work smoothly and sensibly, not just for people today but for the next generation who will inherit the world we leave them.”
This comes after May yesterday chaired a two-and-a-half hour cabinet meeting to brief ministers on the contents of her speech. The Work and Pensions Secretary, David Gauke, told reporters after that May “has the backing of all of [the cabinet].”
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Michel Barnier, the EU’s chief Brexit negotiator, told the Italian parliament that he was anticipating British Prime Minister Theresa May’s speech in Florence on Friday in a “constructive spirit”, but criticised “major uncertainty” on key issues, adding that the EU “expect[s] clear commitments from Britain.” He set out the three main issues as being EU citizens’ rights, the financial settlement, and the question of the Irish border. He added, “A rapid agreement on the conditions of the UK’s orderly withdrawal, and a transition period, is possible… For that to happen, we would like the United Kingdom to put on the table, as soon as next week, proposals to overcome the barriers.”
Addressing the Dáil as part of a tour of the Republic of Ireland and Northern Ireland, Guy Verhofstadt, the European Parliament’s Brexit coordinator, said, “Ireland must not pay the price for Brexit… The imposition of the border between Northern Ireland and you is not your fault. Northern Ireland should remain part of the customs union. The UK will have to come up with solutions. The European position is the Irish position.” To a gathering of parliamentary committees, Verhofstadt added, “The UK position that the border can be solved by new technology is not convincing.”
The ONS has reported that the UK’s deficit in August stood at £5.7 billion, down 18 percent compared with last year. Helped by record sales tax revenues, the positive figures were better than forecasted. Chief economist at PwC John Hawksworth said “All of this suggests that the chancellor should have room for some easing of austerity in his budget in November.”
In a blog on the German elections this Sunday, Open Europe’s Leopold Traugott argues, “Angela Merkel’s Christian Democrats (CDU) and their Bavarian sister party CSU are poised to govern Germany for another four-year term. Her main electoral competitor, the social democratic SPD, lags far behind at 23%.” The real race is thus over who comes in third place, with “The remaining four parties expected to enter the German parliament this time – Free Democrats (FDP), Greens, far-left Die Linke and far-right AfD (Alternative für Deutschland) – all fluctuating between 8-11%”. Merkel will face a tough challenge in forming a coalition, as “Contrary to past elections, there is no “Wunschkoalition” (ideal coalition) on offer this time”. The selection of a new junior coalition partner will have important implications on Germany’s support for Eurozone and domestic reform. Whereas “SPD and Greens embrace most of Macron’s demands [on Eurozone reform]” for example, “and would likely shift a German government to a more amicable position towards Paris […] The FDP openly opposes Macron’s reform proposals”. Meanwhile, “the rise of the AfD signals a dramatic change in Germany’s political landscape”. Together with Die Linke, “around 20% of Sunday’s vote will go to anti-establishment parties. In some German states, such as Saxony, support for the two parties is projected at up to 40%.”
Leopold also appeared on TRT World’s Roundtable yesterday discussing the upcoming elections.