6 February 2019

Theresa May rejects idea of removing backstop entirely

Speaking in Northern Ireland yesterday, Prime Minister Theresa May said she was not planning to “persuade people to accept a [Brexit] deal that does not contain that insurance policy for the future” of the Irish border. She added, “What Parliament has said is that they believe there should be changes made to the backstop and it is… in that light, that we are working with politicians across Westminster.”

Earlier yesterday, May told the Cabinet that the Government was working to “secure a legally-binding way of guaranteeing we cannot be trapped indefinitely in the backstop,” according to her spokesman. The spokesman also said, “To achieve this we have launched urgent pieces of work examining alternative arrangements to the backstop and considering legal changes that could provide a unilateral exit mechanism or a time limit to the backstop,” adding, “Work has been taking place on all of the options and it is important for that to take place before we go to Brussels.”

Meanwhile, May will meet European Commission President Jean-Claude Juncker and European Council President Donald Tusk tomorrow, and is due to formally request reopening the Withdrawal Agreement in order to make changes to the Irish backstop clause. A European Commission spokesperson said yesterday, “While the Commission’s position is clear, we are waiting to see what the Prime Minister has to say.” Tusk is also meeting Irish Taoiseach Leo Varadkar today.

Separately, the Daily Telegraph reports that some Cabinet ministers are discussing plans to delay the Brexit date by two months if the Prime Minister’s deal is accepted by Parliament, to allow for time to adopt the necessary legislation.

Source: The Daily Telegraph I The Guardian I The Guardian II European Council The Daily Telegraph II

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Liam Fox suggests cutting tariffs on imports in No Deal Brexit

International Trade Secretary Liam Fox is considering a plan to cut tariffs on all imports to zero in a No Deal Brexit scenario in order to keep prices low for domestic consumers, he told a meeting with representatives of the ceramics industry on Monday. This would entail the use of executive powers to tweak the Trade Bill. Laura Cohen, chief executive of the British Ceramic Confederation, called the idea “foolhardy” as it could ruin the industry by “wrecking” the home market. A spokesman for the Department for International Trade stated that this was not official government policy, adding that Fox “said these are the options on the table and the government is looking at each one. The Prime Minister wants to exhaust each option.”

Elsewhere, Her Majesty’s Revenue and Customs (HMRC) announced that in a No Deal Brexit scenario, goods shipped to Britain from the EU will be waved through UK ports with “simplified importing procedures” for an initial period of one year. This follows a Treasury pledge last year that, in the event of No Deal, the Government would prioritise keeping trade flows rather than maintaining immediate tax collection.

Separately, former Brexit Secretary David Davis and a group of Brexiteers will today publish the draft text of a Free Trade Agreement between the UK and the EU. The plan is based on “mutual recognition” and is said to follow existing arrangements the EU has agreed with Japan and Canada.

Source: Financial Times I HuffPost UK Financial Times II The Daily Telegraph The Times

The Sun: Government considering 'Drive Through Border Concept' as alternative arrangement for Irish border

Leaked documents seen by The Sun reveal that the Department for Exiting the EU (DexEU) is considering a ‘Drive Through Border Concept’ plan for a technological solution that would allow for monitoring of vehicles going across the Irish border, in order to avoid hard infrastructure such as checkpoints after Brexit. The plans would also allow for tariffs to be payed online and for suspect vehicles to be identified by artificial intelligence. A DexEU spokesperson said, “As the Political Declaration makes clear, the UK and the EU have committed to exploring what alternative arrangements to the backstop might look like. We are also clear that those solutions cannot include new border infrastructures.”

Elsewhere, the Times reports that German Chancellor Angela Merkel is preparing to put pressure on Ireland to “work constructively” with the UK on future alternatives to the backstop. A German source told the Times that while Merkel saw “close to zero” chance that the backstop itself could be significantly altered, she was “very hopeful” that it would not need to be used if the UK produced “concrete proposals” on technological solutions for the border. This comes after Merkel, speaking in Tokyo yesterday, said that “from a political point of view, there is still time” to negotiate on the Brexit deal, particularly on the “precise problem” of the Irish border.

Separately, the Guardian reports that the Irish Government is discussing with the European Commission a plan for a Brexit emergency fund in order to compensate the losses that Irish food exporters would incur in a No Deal Brexit scenario. Irish Government sources are quoted as saying that Ireland will be seeking long-term financial assistance rather than a No Deal Brexit ‘bailout’ lump sum. A spokesman for the European Commissioner for Agriculture and Rural Development said that the Commission “explored the ways in which the EU could help Ireland and Irish businesses.”

Source: The Sun The Times The Guardian

Political uncertainty leads to a pause in UK economic growth

According to a survey made by IHS Markit published yesterday, political uncertainty about Brexit has resulted in the lowest economic growth in 6 years for the UK. IHS Markit’s chief business economist Chris Williamson commented, “The survey results indicate that companies are becoming increasingly risk averse and eager to reduce overheads in the face of weakened customer demand and rising political uncertainty. Such worries were in turn most commonly linked to heightened Brexit anxiety, though wider global political and economic factors were also seen to have been taking their toll on demand.”

Elsewhere, IHS Markit’s research reveals that businesses in the Eurozone have had their weakest expansion in almost 6 years as consumer demand has plummeted. Data suggests that in Germany alone, retail shopping had its most dramatic decrease in 11 years.

Source: Financial Times The Guardian Reuters

New Open Europe briefing: Options for renegotiating the backstop

Open Europe has published a new briefing, “Options for renegotiating the backstop.” Prime Minister Theresa May has set out her intention to renegotiate the Protocol on Ireland/Northern Ireland in the UK-EU Withdrawal Agreement – more commonly known as the Irish backstop.

In this briefing, Open Europe proposes a framework of commitments on the backstop, including:

  • The UK and EU should agree that the backstop, if applied, would create a common customs territory, with Northern Ireland-specific regulatory arrangements.

 

  • Both sides should agree a binding roadmap for scoping, testing and implementing other alternative arrangements that meet the objectives of avoiding a hard border.

 

  • The UK and EU should conclude a protocol with legally binding status which sets out that the backstop cannot be a permanent arrangement as a matter of EU law.

 

  • Both sides should commit to the working assumption that the temporary backstop should not be in place beyond 2029, unless there is joint agreement to extend.

 

  • The UK and EU should agree in the Withdrawal Agreement that the UK will seek the approval of the Northern Ireland institutions before taking a decision in the Joint Committee on the functioning of the backstop.

Read the full briefing here.