9 January 2020

The UK’s departure from the EU on 31 January is now certain. Later today, the House of Commons is expected to approve the Withdrawal Agreement Bill, before it proceeds through the final stages of the legislative process next week. Despite the tabling of several amendments to the Bill, none have passed, demonstrating the grasp Prime Minister Boris Johnson has over Parliament after last month’s election returned him to office with a majority of 80. This change has been acknowledged in the EU, with one German journalist writing today, “The UK now has a Prime Minister who wields more power than any Downing Street resident has had for a long time. The Commission president, meanwhile, will have a much harder time of things than her predecessor, [owing to divergent interests between the EU27].”

Both the UK and the EU will now be strategising for the next phase of Brexit negotiations. Yesterday, European Commission President, Ursula von der Leyen, gave a speech at the LSE in which she said that whilst a comprehensive UK-EU partnership would be “impossible” to negotiate before the end of the transition, the EU is willing to “sign up to a deal based on “zero tariffs, zero quotas,” but conditional on “zero dumping [of exports that undercut EU standards]” on the Single Market. Later in the day, von der Leyen met with Johnson in Downing Street. A No. 10 statement said that during the meeting, Johnson “was clear that the UK would not extend the implementation period beyond December 31, 2020; and that any future partnership must not involve any kind of alignment or ECJ jurisdiction… [and that] the UK would also maintain control of UK fishing waters and our immigration system.” It seems movement from either corner, or both, will be necessary to reach an agreement.

In the meantime, attention has turned to the structure of the negotiations on the UK-EU future relationship. The Government has said that the “nothing is agreed until everything is agreed” approach that dominated negotiations over the Withdrawal Agreement is not one it wishes to pursue this time around. Resisting this approach is seen by the Government as necessary to prevent the EU forcing concessions from the UK in areas where the UK has more leverage, such as fishing. Instead, the Government’s preference is for a sector-by-sector approach, which would enable the UK to secure sectoral deals over the course of the negotiations, preventing the EU from forcing the UK into concessions at the eleventh hour.

The UK’s desired approach seems to have gained some traction. Given the narrow negotiating window, reports suggest the Commission sees this sector-by-sector approach – which would cover a more limited number of areas, such as trade and aviation – as a means of lowering the risk of having no agreement at all. The logic being that by securing deals in certain areas, even if the negotiations are not fully concluded by the end of the transition, there will at least be some agreements in place; even if this falls short of the EU’s ambitions for a more comprehensive deal. Meanwhile, some have raised concerns regarding whether such a sectoral approach would be classified as a “mixed” agreement, requiring ratification by national parliaments across the EU. This constraint is likely to slow the ratification of a deal significantly, as it did with the EU-Canada trade agreement.

It is uncertain what the ultimate structure of talks will be, but this question is likely to remain in greater focus over the next few weeks, as both sides strive to steer the process towards their interests.

 

News in Brief

1. UK, Germany and France issue joint statement on de-escalation in Iran

Prime Minister Boris Johnson, German Chancellor Angela Merkel and French President Emmanuel Macron issued a joint statement on Monday in response to increasing tensions over the assassination of Iranian general Qasem Soleimani by the US, saying, “There is now an urgent need for de-escalation. We call on all parties to exercise utmost restraint and responsibility. The current cycle of violence in Iraq must be stopped.” Iran has since retaliated with a stream of missiles launched at a US airbase in Iraq.

 

2. Bank of England Governor warns against outsourcing regulation to EU in trade deal

In an interview with the Financial Times, outgoing Governor of the Bank of England Mark Carney expressed optimism regarding the City’s post-Brexit prospects, adding that in a future UK-EU trade deal, “It is not desirable at all to align our approaches, to tie our hands and to outsource regulation and effectively supervision of the world’s leading complex financial system to another jurisdiction.” Elsewhere, Chancellor Sajid Javid has announced that the Budget will take place on 11 March.

 

3. Spanish Parliament approve minority government in confidence vote

Spain’s caretaker Prime Minister and leader of the Socialist PSOE party, Pedro Sánchez, wona confidence vote by 167 to 165 enabling him to form a minority Government with far-left Podemos, after elections in November returned a hung parliament. The abstention of Catalan and Basque MPs played an important role in the outcome of the vote. Separately, Austria’s Green party will forma new coalition government with Sebastian Kurz’s conservative People’s party to form a new government led by Kurz.

 

4. Result of Labour leadership contest to be announced on 4 April

The Labour party’s ruling body has confirmedthat the result of its leadership race, which will commence on Tuesday, will be announced on 4 April. Currently, candidates requirethe nomination of at least 22 Labour MPs and MEPs by Monday in order to stand. So far the following candidates have put themselves forward (number of nominations in brackets): Keir Starmer (42), Rebecca Long-Bailey (21), Jess Phillips (16), Lisa Nandy (14), Emily Thornberry (3) and Clive Lewis (2). Barry Gardiner is also reportedly considering entering the race. Polling by YouGov suggests Starmer to be the favourite among Labour party members, who will vote on candidates between 21 February and 2 April.

 

5. UK Productivity statistics increased by 0.1% in Q3 2019

UK productivity in the third quarter of 2019 increased by 0.1% compared with the same period of 2018, according to figures published by the Office for National Statistics yesterday. This follows contractions in each of the previous four quarters.

 

Open Europe blogs and media 

Writing for ConservativeHomeOpen Europe’s Acting Director, Stephen Booth, examines what lies ahead for the next phase of the Brexit negotiations, arguing, “Together, these six issues – market access, rules of origin, level playing field, regulatory alignment, fishing, and governance – are likely to form the building blocks of a UK-EU deal.” Booth also argues, “the UK has always sought to strike a delicate transatlantic balance and, given the current circumstances, any strategy that either the US or the EU perceived as being played against one another would be very high risk indeed… This will be a delicate tightrope to navigate and Britain will need to tread very carefully.”

Pieter Cleppe wrote for The Spectator’s Coffee House on what to expect from European politics in 2020, arguing, “It is very possible that Boris simply will go for ‘full regulatory divergence’ from 2021. Perhaps the resulting disruption may end up being a lot less disastrous than some predictions foresee.” Cleppe also wrote for The Telegraph and spoke to BBC Radio 4 and US Courthouse News Service about negotiations on the future UK-EU relationship.