Brexit Update – 16th December

By December 16, 2016Brexit Updates

Top 3 Developments

  • Committee revelations: Two of the Cabinet’s leading figures, the Chancellor and the Brexit Secretary, revealed some further details on the timings of the Brexit process as they appeared in front of two influential Parliament committees.
  • Theresa No Maytes: The Prime Minister appeared isolated in a video from the EU Council Summit in Brussels this week. Whilst Brexit was discussed, it was only on the periphery of discussions as EU leaders focused on other pressing issues for the bloc.
  • Peers of the year: The Lords EU Committee provided five early Christmas presents for fans of Brexit parliamentary reports, publishing a report on Brexit every day this week, covering a range of subjects from security issues, to UK-Irish relations. Merry Christmas!

UK Update

Davis and Hammond’s Brexit Brexpectations

This week, some further hints on the timings and process around Brexit were revealed as two of Government’s most important players were questioned by influential parliamentary select committees.

Brexit Secretary David Davis appeared in front of the Brexit Committee and revealed that, whilst the Government will not publish its Brexit plan until February, he believed that they should be able to complete negotiations in 18 months. He also made it clear that the UK would reject any EU control over immigration policy, but may accept immigration for low-skilled work such as fruit picking. When questioned whether there was a chance that the UK may revoke the decision to trigger Article 50 he said it would be extremely difficult but acknowledged that there was a possibility. Meanwhile, Sir Ivan Rogers, the UK Ambassador to the EU reported to the Government that a number of EU leaders believe a post-Brexit UK-EU trade deal might take ten years to negotiate and could still fail – a statement that the Chancellor has subsequently played down.

Philip Hammond appeared to slightly contradict the Brexit Secretary’s timetable this week. Appearing before the Treasury Committee, Hammond explained that the UK would likely need a transitional deal to help smooth the Brexit process, indicating a belief that it may take longer than two years to complete the Brexit negotiations. Hammond is widely regarded as the Cabinet’s leading advocate of a ‘soft Brexit’, being much more favourable to the UK retaining membership of the Single Market and the Customs Union than many of his colleagues. His performance in front of the Treasury Committee only served to enhance these credentials.

All I want for Christmas is….Brexit reports

The House of Lords European Union Committee published a report every day this week detailing what Brexit might look like for the UK. The reports have been well received, offering insight into possibilities that the Government, for the moment, refuses to discuss. The report on acquired rights will have raised some eyebrows in Number 10, with the suggestion that the Government should assure EU nationals that they can continue to live, work and study in the UK after Brexit. The Prime Minister has repeatedly said that without the guarantee from other EU countries that UK nationals can continue to reside in their countries she is unable to offer similar guarantees to EU nationals.

The latest report to be released by the Committee is on the impact of Brexit on financial services. According to this report, London is at risk of losing its status as a hub for the financial technology (FinTech) sector, if new and strict immigration rules are introduced following Brexit. This is due to a large number of EU nationals working in financial services in London. This finding underlines the differences between London which voted overwhelmingly to Remain, and the rest of the country.

This report coincides with the chancellor, Philip Hammond, visiting Japan to try to quell the Japanese Government’s Brexit concerns. Their concerns primarily focus on the potential impact on the ‘EU banking passport’, which currently allows Japanese banks based in London to operate freely across Europe’s financial markets.

The Committee’s final report on security and police cooperation highlights that the ‘UK and those in the EU will have a mutual interest in sustaining police and security cooperation after the UK leaves the EU’. However, as with all things Brexit, the future of the UK’s relationship with the EU in relation to each of these areas rests on the negotiation power of Theresa May and Brexit Secretary David Davis.

European Update

Theresa No Maytes

Despite an awkward video emerging of European leaders apparently isolating the British Prime Minister at the EU Council Summit in Brussels, Theresa May used the meeting to stress that the Government wants an early deal on the status of Britons in Europe and EU citizens in the UK. EU leaders explained that the negotiations would be conducted in a “spirit of trust and unity”, with some also claiming that the video of a lonely May was misleading.

Despite, May and some EU leaders making a number of comments on Brexit, the issue only featured on the periphery of the Summit as other subjects, including the humanitarian crisis in Syria and migration were the key focus.

Michel Barnier confirmed as negotiator as Parliament feigns outrage

A further development at the Council Summit was the formal agreement by the EU’s 27 leaders that Michel Barnier would lead negotiations from the EU side. The agreement emerged despite internal positioning from the European Parliament regarding the upcoming negotiations. In an unsurprising news, President of the Parliament, Martin Schulz, warned that MEPs could decide to veto the Brexit deal if they feel they have not been fully involved in the negotiations.

Prior to the Council Summit, Schulz wrote to the President of the Council, Donald Tusk, expressing his disappointment at the suggestions that MEPs would have their influence relegated behind that of the Commission and warned that Parliament risked being shut out of negotiations which could result in the “hardest of Brexits … to the detriment of everybody”.

This week’s manoeuvrings demonstrate the lack of unity amongst EU institutions in their approach to the forthcoming Brexit negotiations. The European Parliament, and lead Parliament negotiator Guy Verhofstadt, in particular, have demanded a more influential role in the negotiations.

Timeline

  • 20 December 2016 The Prime Minister gives evidence to the Liaison Committee on Brexit
  • 21 December 2016 House of Commons rises for Christmas recess
  • 9 January 2017 House of Commons returns from Christmas recess
  • 3 February 2017 European Council – Informal meeting of the 27 heads of state or government
  • March 2017 Article 50 to be triggered