4 October 2019

After a long-standing commitment to remove the contentious backstop from the Withdrawal Agreement, the Government has finally sent the EU its alternative proposals for upholding the Good Friday Agreement.

The proposal would see Northern Ireland join an “all-Ireland regulatory zone”, aligning on agri-food and manufactured goods, which would create regulatory divergences between Northern Ireland and the rest of the UK – while enabling the whole of the UK to leave the EU Customs Union at the end of the transition period. The continuation of this protocol would require the consent of Northern Ireland institutions every four years, addressing complaints that Northern Ireland would be legally bound by rules it has no say over – echoing Prime Minister Boris Johnson’s earlier calls for “a process of renewable democratic consent.” Johnson’s letter to Commission President Jean-Claude Juncker makes clear that these proposals are intended to serve as “the basis for rapid negotiations towards a solution” rather than a final offer.

At present, the proposals have been warmly received by the DUP, the ERG, and a handful of Labour MPs. Yet they have received a lukewarm reception from the EU. Irish Taoiseach Leo Varadkar has said the proposals “fall short in a number of aspects,” while the European Commission insists that “further work is needed [to address the problematic points in the proposal], but that work needs to be done by the UK and not the other way around.”

The EU response does not come as a surprise. Fundamentally, they are being asked to choose between negotiating a deal they believe does not deliver all the objectives of the backstop, or delaying a decision while the UK Government is forced to request an extension to Article 50. Johnson cannot force upon the EU a ‘take it or leave it’ choice when the counter-factual is almost certainly an extension and an election, rather than No Deal. It is easy to see why the EU believes it is better off deferring their decision, in the hope that something better turns up.

But ultimately, Brexit can only end in one of three ways: ratifying a deal, leaving with No Deal or revoking Article 50. With YouGov’s recent poll placing the Conservatives well ahead of Labour, it is easy to see how an election could deliver a majority willing to leave without a deal, rather than one in favour of Remain or a softer Brexit as some in the EU hope.

To that end, Open Europe has today published a report on the consequences of a No Deal Brexit and an action plan for the Government. It is our view that No Deal will not be painless, either for the UK or the EU, and that a negotiated exit is a preferable outcome. That said, No Deal remains a manageable outcome provided the right policy responses are pursued. Our report can be read here.

News in Brief

1. Court document: Government will ask for extension if no deal reached by 19 October

A government document seen by a Scottish court suggests that the Prime Minister will ask the EU for a further extension if he is required to do so by the so-called ‘Benn Act.’ However, Downing Street sources said the Government would be able to comply with the law without requesting a delay.

2. Government sends proposals on backstop alternative to the EU

On Wednesday, the Government sent the EU its proposals for a new Protocol designed to replace the Irish backstop. Prime Minister Boris Johnson, writing to the outgoing President of the European Commission, Jean-Claude Juncker, described the proposals as “a reasonable compromise: the broad landing zone in which I believe a deal can begin to take shape.”

Democratic Unionist Party leader, Arlene Foster, described the proposals as a “serious and sensible way forward”, adding that they allow “the people of Northern Ireland a role which they didn’t have [under the previous backstop proposals].” Meanwhile, Chairman of the European Research Group, Steve Baker, who voted against the previous deal three times, told Newsnight “It could well be that we emerge with a deal that I could proudly vote for.”

3. Irish Government: UK proposals “fall short”

The Irish Taoiseach Leo Varadkar said yesterday that the UK Government’s proposals “fall short on a number of aspects,” adding, ““I don’t fully understand how we can have Northern Ireland and the Republic of Ireland in a separate customs unions and somehow avoid there being tariffs and checks and customs posts between north and south.” His deputy, Simon Coveney, said, “If that is the final proposal, there will be no deal.”

Elsewhere, former Taoiseach Bertie Ahern said yesterday that Johnson’s proposals should not be dismissed out of hand, adding, “It is incumbent on the Irish Government and the EU to clarify issues. If I was Leo [Varadkar] I would set out clearly the Irish position, it should be restated that the Customs Union was not the issue in the Referendum in 2016.”

4. Centre-right wins Austrian general election as far-right declines

On Monday, Austria’s conservative People’s Party, led by Sebastian Kurz, won 37.1% of the vote in the country’s general election, the largest share of any party, followed by the Social Democrats on 21.7%, the far-right Freedom Party on 16.1%, the Greens on 14% and the liberal New Austria party on 7.8%. Kurz’s party managed to increase its share of the vote from 31% at the previous 2017 election, while the Freedom party saw a sharp fall from 27%. Kurz will now look for a coalition party member before forming a Government.

5. Eurozone manufacturing falls to lowest level since 2012

The IHS Markit Eurozone Manufacturing index for September fell to its lowest level since 2012 earlier this week, with Germany seeing its worst score in 123 months.


Open Europe in the media

Discussing Open Europe’s new No Deal report in an article for Times RedBox, Dominic Walsh writes, “Dire warnings on one side and misplaced complacency on the other risk misleading the public about what it would really look like. The disruption [of No Deal] may be material — but that doesn’t mean it’s unmanageable.” In the Telegraph, Stephen Booth writes, “the domestic political heat currently being generated by Brexit is disproportionate to its economic significance, particularly if Government does all it can to prepare effectively.” And in ConservativeHome, David Shiels writes, “A No Deal exit could have the effect of resetting the negotiations with the EU so that both parties find their way back to the negotiating table. But the EU may expect the UK to make commitments it cannot accept, such as a return to the backstop.” Open Europe’s report was also cited in the Sun, the Express, and Politico’s London Playbook newsletter.

Responding to the Government’s proposals for replacing the backstop, Open Europe’s David Shiels writes in the Telegraph, “Until now all sides have agreed in theory that the UK could leave the Customs Union but have not confronted what this means in practice… The key question for Dublin is whether they are prepared to accept a deal which sees Northern Ireland outside the EU’s Customs Union. The key question for the EU is whether it is prepared to show flexibility on how and where customs checks take place.” Shiels also wrote about the consent principle in Northern Ireland for Brexit Central and examined the Irish Government’s position for Conservative Home.

Elsewhere, Open Europe’s Pieter Cleppe spoke to CNBC about the Government’s recent proposals on an alternative to the backstop and was quoted in the Express regarding Austria’s recent general election result.

Separately, Open Europe’s Anthony Egan spoke to Spanish daily La Razón about the likelihood of Johnson’s proposals convincing the EU.