21st July

By October 12, 2016Brexit Updates

brexit-update

Top 3 Developments

Corbyn launches leadership campaign– Angela Eagle withdrew from the Labour leadership on Monday, which leaves Labour supporters and MPs to choose between Owen Smith and Jeremy Corbyn. Results from the leadership contest will be announced at the start of the Labour Party Conference on September 24th.

May’s First PMQs – Theresa May and Jeremy Corbyn went head-to-head on Wednesday in a much anticipated PMQs – being her first. Not only was she confident and seemed like she had been doing it for years, but she managed to take several swipes at Corbyn, who was criticised by his own side for his performance.  Many commenters felt that May was portraying traits of Thatcher during her appearance.

Merkel backs May – Angela Merkel agreed with Theresa May when they met in Berlin yesterday that the UK should not trigger Article 50 this year. Merkel said that Britain should ‘take a moment’ to decide what it wants before taking this step.

May’s First Week

It has been just over a week since Theresa May entered Number Ten, and what a week it has been. So far, the new Prime Minister has already met the leaders of Scotland, Wales and Germany, with France lined up for this evening, comfortably won a Parliamentary vote on the renewal of Trident, made her PMQs debut and attempted to clarify a number of key policy positions.

Commentators have generally agreed that it has been a strong start for the new PM, with May looking comfortable both in the House of Commons and whilst rubbing shoulders with global leaders. Her assured performance has seen the Conservatives receive a 10% boost in the most recent opinion poll, now leading Corbyn’s party by 11%.

Her time in Germany with Angela Merkel yesterday and today has been seen as a success, with the two leaders appearing to have an amiable introduction, and Merkel conceding that it was “understandable” that the UK needed a period of time before beginning formal withdrawal negotiations. May is expected to have a tougher time with President Hollande in France. Ahead of next year’s French Presidential elections, Hollande is keen to “punish” the UK in an attempt to quell the rise of the Eurosceptic Leader of the Front National, Marine Le Pen, and is also hoping that Brexit will give him a chance to lure financial services companies from the City to Paris.

At home, the PM’s performance at Prime Minister’s Questions was praised with many remarking on the similarities between her delivery and that of Margaret Thatcher. However, it has not all been plain sailing for May as she was forced to clarify the Government’s position on its immigration target following unclear statements from a number of Cabinet Ministers. The PM has since reaffirmed her commitment to reducing net migration to 100,000 but acknowledged that it may take some time to reach this level.

Changes to Whitehall signal May’s focus

The Prime Minister has undertaken substantial changes to the machinery of government with two new departments, one merged department and a transfer of functions between two departments:

  • The Department for Exiting the European Union, headed up by Brexiteer David Davis MP, will oversee preparations for the withdrawal of the UK from the EU and lead work to establish the UK’s future relationship with the EU.
  • The Department for International Trade, led by Liam Fox MP, another Brexitier, will develop, coordinate and deliver a new trade policy for the UK, including preparing and negotiating Free Trade Agreements and market access deals with non-EU countries. The Department is hiring trade negotiators to negotiate these deals but the UK cannot sign any trade deals while it is still an EU member.
  • The functions of the former Department for Business, Innovation and Skills (BIS) in respect to higher and further education policy, apprenticeships and skills have been transferred to the Department for Education.
  • The Department for Energy and Climate Change and the remaining functions of BIS have merged to form the Department for Business, Energy and Industrial Strategy, led by Greg Clark MP. The new Department brings together responsibility for business, industrial strategy, and science and innovation with energy and climate change policy. One of the most eye-catching changes is the addition of ‘industrial strategy’ to this rebadged department which will allow Clark to intervene to support particular industries or companies – a significant move away from previous Conservative administrations, and indeed Cameron and Osborne.

Smith VS Corbyn: Labour on the brink  

It’s been another turbulent week in the Labour Party, with the leadership contest finally kicking off in earnest. On Monday, Owen Smith officially launched his leadership bid, forcing himself and Angela Eagle to face off in Party hustings to decide on the ‘unity candidate’ to challenge Corbyn. Following a day of voting, it became apparent that Smith had more support with MPs and MEPs and Eagle ended her campaign, remarking that she would be backing Smith ‘with all her might and enthusiasm’.

Meanwhile, Corbyn continued on with his duties as leader of the Opposition, clashed against Theresa May for the first time in PMQs, in a lukewarm performance. Following this, Corbyn today launched his own campaign, expressing his confidence in his own leadership and urging these unsupportive MPs to get behind the Party. He added that he wouldn’t rule out reselection of fellow MPs before the next election, in a move that may serve to divide the fractious Party even more.

Smith and Corbyn will now go head-to-head in the leadership contest over the next two months, with the winner due to be announced on 24 September ahead of the Party Conference.

Market update: Signs of resilience post-Brexit vote

Sterling and the markets have responded positively to a recent report from the Bank of England showing the UK economy has not shown any signs of slowing down in the wake of the Brexit vote. The report highlights that the majority of the organisations surveyed are not planning to cancel investment plans or significantly reduce recruitment plans. Sterling strengthened against both the dollar and the euro in response to this news.

Both the FTSE 100 and FTSE 250 have continued to recover from their rapid falls in the days immediately after the referendum result. The expedited departure of David Cameron and the prompt establishment of Theresa May’s first cabinet would have both helped to settle markets and reduce the political uncertainty unleashed by the Brexit vote, Cameron’s resignation, Labour infighting and the (thankfully short and sharp) Conservative leadership election.

European Update

Article 50 set for 2017

UK Government lawyers have revealed that Article 50 will not be invoked until 2017. This came out during an EU court hearing and is a stance supported by Angela Merkel, who met Theresa May in Berlin today. Merkel said it was ‘understandable’ that the UK needed time to prepare for negotiations, and both leaders expressed a desire for continued co-operation and ‘the closest possible links’.

France wants swifter Brexit

Theresa May will get a frostier reception when she meets with President Hollande at the Elysee Palace tonight. Aware of the electoral threat posed by the far right Eurosceptic National Front, Hollande apparently wants to ‘punish’ the UK for leaving the EU and wants to know why withdrawal proceedings cannot begin immediately. Hollande also held a press conference today saying the UK needs to ‘accept the consequences’ of the decision and will not be revealing much of their position until the UK invokes Article 50.

No ‘Madame President’ for May

Downing Street confirmed the UK will not take up its 6-month rotation of the European Council Presidency in 2017 and the rotation will now be served by Estonia. The Presidency sets the half yearly policy agenda for theCouncil and has power to get things done, however the Prime Minister felt it inappropriate for the UK to be President of an organisation they were preparing to leave.

Schulz battles to save his position as European Parliament President

A potential shake up of EU bigwigs could take place next year as current EU Parliament Martin Schulz battles to keep his job. Schulz apparently agreed to stand down in favour of a centre-right EPP candidate in 2017, but German Vice-Chancellor Sigmar Gabriel of Schulz’s SPD party and Commission President Jean Claude Juncker want him to remain in post. Gabriel said a new Parliament President will create more uncertainty (and possibly a need for new Commission and Council heads), however his position is more about maintaining SPD influence in Brussels and in Berlin, where the SPD are junior partners in Angela Merkel’s CDU led coalition.

‘Lame duck’ UK MEPs could be side-lined

The 73 UK MEPs in the European Parliament could potentially lose voting and committee rights and key positions due to Brexit. A number of UK MEPs hold roles as Rapporteurs, Committee Chairs and in leadership positions and there have been hushed discussions about whether UK MEPs should be able to “take the EU hostage” and set rules their country will not have to live with. The MEPs are said to be ‘in limbo’ while it is determined exactly what status they should have, with options ranging from abstaining on issues not affecting the UK to being reduced to ‘observer’ status where they can contribute to policy discussions, but unable to vote.

Timeline

Labour Leadership Contest

  • July 20-August 15, 12pm– Supporting nominations (MPs and MEPs announcing their support for candidates) open
  • July 22-September 16– Hustings period
  • August 22– Ballots mailed out
  • September 21, 12pm– Ballot closes

September 24 – Result announced

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