9 October 2018

UK Government downplays rumours of breakthrough in Brexit talks

The UK Government yesterday downplayed rumours of an imminent breakthrough in Brexit negotiations with the EU. A Government spokesperson said, “There is a difference between people talking optimistically about a deal and a deal being done,” adding, “There can be no withdrawal deal without a precise future framework.” He said that the government was “working hard for a deal this autumn,” but did not specify whether this meant the upcoming October summit of the European Council or the later summit in November. It was also confirmed that Brexit Secretary Dominic Raab is not scheduled to visit Brussels for talks this week, despite earlier reports that he would.

Elsewhere, EU diplomats have told Politico that, with the exception of the Irish backstop, there has been significant progress recently on other outstanding withdrawal issues. One said, “There was positive engagement of the UK as regards [British military bases in] Cyprus and Gibraltar, as well as governance and readiness to discuss geographical indications [legal protections for luxury food names].” On governance, a second diplomat said the Commission is working on a dispute resolution mechanism that would involve the European Court of Justice (ECJ) in similar way to the EU’s association agreement with Ukraine.

Separately, the European Commission is no longer expected to publish its draft text on the future UK-EU relationship this Wednesday. The Times reports that instead of an “annotated” draft declaration, the EU is working on a joint text that will highlight areas of mutual agreement and disagreement over the broad future trade and security relationship. A diplomat is cited as saying, “[EU chief negotiator Michel Barnier] sees movement on the British side and wants a text that reflects those talks.”

Source: The Telegraph Bloomberg RTE Politico The Times

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Ian Blackford: SNP will cause “maximum disruption” to May government over Brexit

The leader of the SNP MPs at Westminster, Ian Blackford, has said that the Prime Minister is “running out of road” in the Brexit negotiations and “needs to accept that Chequers [the Government’s proposal for the future UK-EU relationship] has bounced.” Speaking to the SNP conference in Glasgow, Blackford reaffirmed that “the only deal we will accept is one that keeps Scotland in the single market and the customs union.” He added that “if contempt continues to be shown to the people of Scotland and our Parliament – SNP MPs will not hesitate in causing maximum disruption to this Tory Government’s agenda when and where Scotland needs us to.”

Meanwhile, the First Minister of Scotland, Nicola Sturgeon, has told Sky News that she has concerns about the implications of any backstop arrangement which would see Northern Ireland remaining inside the single market while Scotland was outside it. When asked if she wanted to see a similar arrangement for Scotland, Sturgeon replied: “I think that would be my position.” Sturgeon said she envisaged circumstances where Glasgow and Belfast might find themselves in competition for inward investment in the future under the terms of the current backstop draft. She added that “any responsible First Minister of Scotland is going to say ‘that’s a big worry for us’.” She stated that she did not want to see checks on the Scotland-England border.

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Ulster Unionist leader: Irish Sea border as bad as ‘no deal’ for Northern Ireland economy

The leader of Northern Ireland’s Ulster Unionist Party (UUP), Robin Swann, said yesterday that “in terms of the economic well-being of Northern Ireland any border along the Irish Sea would be as harmful as a no-deal Brexit.” This comes as Swann travels to Brussels to meet with EU chief Brexit negotiator Michel Barnier, together with other politicians from the UUP and the Democratic Unionist Party (DUP), following previous meetings between Barnier and nationalist parties last week. Swann, whose party backed Remain in 2016, said that he “will be making it clear to Michel Barnier that there is a significant cross section of society in Northern Ireland who are deeply concerned at the current proposed backstop,” adding that “unionists who voted to remain… did so on a UK-wide basis. I speak to remain-voting unionists every day who are deeply concerned at the prospect of Northern Ireland facing any border between us and the rest of the United Kingdom.”

This comes as The Times and The Spectator suggest the Democratic Unionist Party (DUP) may be softening their opposition to the current Irish backstop proposals. DUP leader Arlene Foster yesterday emphasised her party’s “red line” that Northern Irish exports to Great Britain should face no barriers. Under the EU’s proposals, checks would be necessary for goods moving from Great Britain to Northern Ireland. This comes as Foster begins three days of talks with EU chief negotiator Michel Barnier.

Meanwhile, YouGov polling conducted for The Future of England Study has found that Leave voters in all parts of the UK put Brexit ahead of the peace process in Northern Ireland. 84% of Leave voters in Wales, 83% in England and 73% in Scotland said that the unravelling of the peace process in Northern Ireland was a “Price worth paying for Brexit”. 87% of Leave voters in Northern Ireland also took this view.

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Four metro mayors demand devolution of structural funds post-Brexit

The metro mayors for Greater Manchester, the Liverpool and Sheffield city regions, and the Tees Valley yesterday published a joint statement calling for the devolution of spending powers under the UK Shared Prosperity Fund. The fund, which will be worth £2.4bn a year, until at least 2020, is set to replace EU structural funds after Brexit. The metro mayors claimed that if the phrase “to take back control… is to mean anything, it must mean substantial devolution of power and resources out of Westminster to the English regions.” Metro mayor for the Tees Valley, Ben Houchen, stressed, “Post-Brexit, we need to ensure that EU funding comes directly back to metro mayors so we can direct investment most effectively to meet the needs of local people and local businesses.” They also warned that a consultation on the fund’s exact design, promised by the Government in July, was “becoming urgent if we are not to be left with a damaging gap between the ending of EU structural funds and the setting up of the Shared Prosperity Fund”.

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Non-market economy clause could be applied to future trade agreements with the US

A non-market economy clause similar to the one included in the new NAFTA free trade agreement signed last week by the US, Canada and Mexico could be replicated in future trade negotiations with the US, including a potential deal with the UK after Brexit. The NAFTA deal includes a provision that requires one member to notify the other two if it conducts trade negotiations with a non-market economy such as China. If those negotiations lead to a free trade deal, this could allow the two other parties to terminate the NAFTA agreement. A senior US government official is quoted in the Financial Times as saying that this measure will be a precedent for future free trade agreements, adding, “It is important that we make sure that any agreements we enter into do not ultimately get undermined and [that] China does not find a backdoor way to gain access to the US market.”

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Aerospace body warns Chancellor of cashflow problems in event of a ‘no deal’ Brexit

ADS, a leading aerospace and defence industry body which represents companies such as Airbus and Rolls-Royce, has advised the Chancellor, Philip Hammond, to prepare emergency measures to prevent a cashflow crisis in the event of a ‘no deal’ Brexit. In a letter seen by Sky News, ADS chief executive Paul Everitt warned that a ‘no deal’ Brexit would “create significant cashflow problems for any companies that rely on just-in-time European supply chains,” and urged the Treasury and the Bank of England to “begin contingency planning with banks to ensure there is enough liquidity in the financial system to support cashflow needs.”

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IMF: Uncertainty in Brexit negotiations poses risk to global economic growth

The International Monetary Fund (IMF) yesterday warned that uncertainty over the result of Brexit negotiations, as well as over trade policies, particularly tensions between the US and China, presents a risk to the world’s economic growth. The IMF’s World Economic Outlook report said, “Uncertainty over trade policy is prominent in the wake of US actions [or threatened actions] on several fronts, the responses by its trading partners, and a general weakening of multilateral consultation on trade issues”, adding, “The possible failure of Brexit negotiations poses another risk.” The organisation also downgraded global economic growth to 3.7% for both 2018 and 2019, which is 0.2% lower than predicted in April.

The UK economy is expected to grow by 1.4% this year, a revision from April’s forecast of 1.6%, due to the “anticipated higher barriers to trade following Brexit.” The IMF also advised the UK Government should adopt a flexible monetary policy in order to cope with the economic impacts of a possible ‘no deal’ Brexit. In case of a ‘soft’ Brexit, the IMF said the Bank of England should pursue its “well-communicated, data-dependent normalisation of monetary policy.”

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Italian Deputy PM criticises EU austerity amid dispute over budget

Italian Deputy Prime Minister Matteo Salvini said at an event held with National Rally leader Marine Le Pen yesterday, “We are against the enemies of Europe – Juncker and Moscovici – shut away in the Brussels bunker… The politics of austerity of the last few years has increased Italian debt and impoverished Italy.” The Italian government has until 15 October to send a draft budget to Brussels, which is estimated to increase Italy’s budget deficit to 2.4% of GDP. However, the Head of the European Stability Mechanism Klaus Regling said, “The fiscal targets announced by the new [Italian] government that came into office a few months ago are out of line with the agreed fiscal framework that Euro-area countries have given themselves unanimously.”

Speaking at the same event, French far-right leader Marine Le Pen downplayed reports that former Donald Trump aide Steve Bannon would play a major role in a pan-European nationalist movement ahead of elections to the European Parliament in 2019. “Bannon is not from any European country, he is American,” said Le Pen. “His movement will offer studies, surveys and analysis … but the political force behind the EU elections is only us and us alone.”

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Spain requests more EU aid for Morocco to reduce migrant flow to Europe

The Spanish authorities have increased their demands for EU aid to be given to Morocco to help combat the flow of illegal migration to Europe. It is hoped that this would combat the actions of human trafficking gangs based in Morocco, which have been partly responsible for Spain receiving more North African migrants than Italy or Greece this year.

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