Brexit Update – 19th January

By January 19, 2017Brexit Updates

Top 3 developments

No ‘half-in, half-out’ Brexit Theresa May delivered a key speech this week which outlined the UK negotiating objectives for Brexit. Security and trade were the two major themes of the speech with May stressing that whilst the UK would be exiting the EU, they wanted to retain a close friendship in terms of trade and law enforcement. May also committed to a Parliamentary vote on the final deal, and revealed that the UK would not be looking for full membership of the Currency Union, a point which she reiterated later in the week at the World Economic Forum in Davos.

Mixed reactions for May in Europe Following May’s speech, reaction from Europe was mixed, European Council President Donald Tusk praised May’s words on European integration as being closer to Churchill’s rather than of President-elect Trump’s. However, the European Parliament’s chief Brexit negotiator Guy Verhofstadt warned that it was an “illusion” that the UK could be permitted to leave but opt back into “the best parts of the European project”.

Stoke-ing the flames of dissent This week saw Tristam Hunt, MP for Stoke Central, stand down in a move that many saw as a reaction to Corbyn’s leadership. Following a strong leave vote in the constituency, UKIP will be hoping to capitalise having come second in the constituency in 2015. Elsewhere, Corbyn indicated today that he would be imposing a three-line whip on Labour MPs to back the triggering of Article 50 if Government loses the supreme court challenge and brings a Brexit bill to Parliament. As formerly one of the most rebellious backbench MPs, many have highlighted this move as hypocritical, and may not go down well with MPs in some of the strongest voting remain constituencies.

UK Update

May’s Brexodus
This week’s Brexit news was dominated by the Prime Minister’s speech delivered on Tuesday. The speech provided a significant level of clarity to the Government’s negotiating objectives – setting out 12 key priorities, and would not be seeking a ‘half-in, half out’ deal with the EU, but would instead be looking to make a clean break. Notably, this confirmed that the Government would not be looking to retain membership of the Single Market, thereby allowing the Government to limit immigration from the EU, and also that the Government would not be seeking full membership of the Customs Union due to its desire to negotiate bilateral trade agreements with other nations.

Key themes of the Prime Minister’s speech included trade and the desire to become ‘a truly global Britain’ and a nation which is ‘one of the firmest advocates for free trade anywhere in the world’. May’s desire to see the UK retain free trade with European markets and develop new trading relationships with other nations was a central message of the speech. This message was reiterated in May’s speech to the World Economic Forum in Davos later in the week.

The Prime Minister also issued a firm warning to those within the EU who may wish to punish the UK in order to prevent other Member States leaving, stating that ‘no deal for Britain is better than a bad deal for Britain’. A statement that suggests that the Government would be happy for the UK to default to World Trade Organisation rules if they were not able to reach a satisfactory deal with the EU.

In a move that eased some concerns amongst the business community, particularly in the City of London, of a so-called ‘cliff edge’ Brexit, the Prime Minister announced that a transitional arrangement would be sought. The Brexit Secretary, David Davis, has since indicated that he expects such a phase to last a maximum of two years.

The Iron Lady or the Irony Lady?
May’s landmark speech prompted a wave of reaction from across the political, business and media communities. Reaction from the Prime Minister’s own party to the speech was almost entirely positive, with Leave supporting figures united in their praise of the speech despite the inclusion of a desire to see a transitional agreement.

Jeremy Corbyn criticised May for outlining her Brexit plan at a press conference rather than in front of Parliament, stating at Prime Minister’s Questions that her decision to announce that she was restoring parliamentary sovereignty to the UK in this manner meant she was not the Iron Lady but in fact the ‘Irony Lady’. Lib Dem Leader and advocate of a second referendum, Tim Farron, described the speech and the decision to leave the Single Market as a ‘theft of democracy’ and claimed that the UK electorate had not voted for this.

May’s announcements had an immediate effect on the markets with sterling experiencing its largest single-day rise against the dollar since 2008. Some attributed the rise to the broadly conciliatory tone of the Prime Minister’s speech, the lack of any surprises, the end to the months of uncertainty surrounding the Government’s plan and also the decision of May to give Parliament a vote on the negotiated deal – which was interpreted as providing an opportunity to limit some of the more extreme desires of Brexiteers.

Who can solve a problem like Boris?
One certainty in life is that when Boris Johnson is asked to comment on something the odds of him saying something that will offend, or worse, actually insult someone is about 50/50. His last blip, shortly before Christmas, was insulting the King of Saudi Arabia. Now his attention has turned to the president of France, François Hollande, warning him not to respond to Brexit by trying to “administer punishment beatings” in the manner of “some world war two movie”.

It is highly unusual for a Foreign Minister to speak out and so regularly criticise other countries and their leaders. Johnson’s latest outburst couldn’t be more embarrassing for the prime minister, as it comes just days after her speech outlining her plans for Brexit, in which she said that “every stray word and every hyped-up media report” damages Britain.

Gove gets Trump(ed)?
Michael Gove’s return to The Times last year was done shortly following his failed attempted to become leader of the Conservative Party, which backfired on Gove and he was accused of stabbing Boris Johnson in the back. Needless to say, Gove is taking strides, one article at a time, to rebuilding his reputation. However, despite landing such an important interview with President-elect Trump that was published earlier this week, things quickly came crashing down. Despite Trump’s interesting sound bites from the interview – praising Brexit as a ‘great thing’ and saying that the US would move ‘very quickly’ to get a new trade deal with the UK – Gove’s questions were by no means probing and ended with him posing with Trump underneath a Playboy cover framed on the wall of the President-elect’s office.

The promotional train that Gove set out on after the interview was published was a bit of a disaster – he came under heavy criticism from Radio 4 and BBC2’s Daily Politics for a weak interview. A cynic could say that Gove seemed more interested in promoting himself and the fact he had an hour with the President-elect, rather than concerning himself with journalist integrity.

Labour get ready to cling on
The resignation of Tristram Hunt as Labour MP for Stoke Central came as a slight surprise, but many felt that the writing was on the wall in light of his public disagreements with Corbyn, coupled with the looming boundary changes that will affect the seat. There will now be a by-election in this strong Leave-supporting constituency, and whilst in 2015 Hunt won with 5,000 votes, UKIP came second and will look to capitalise off the back of the referendum vote.

Many names are being thrown about as possible UKIP candidates for the seat, but rumour has it that it will be Paul Nuttall, UKIP leader. Labour seem to be the likely winners, having increased their majority in by-elections this Parliament more often than not. The Conservatives will also be hoping that Labour win, therefore helping sure up Corbyn’s leadership until 2020.

European Update

European reaction to May’s speech
Theresa May’s speech understandably caused reverberations around the EU. Whilst many praised her for providing clarity, some reiterated the difficulty of the forthcoming negotiations. European Council President Donald Tusk praised May’s words on European integration as being closer to Churchill’s rather than of President-elect Trump’s, who has vociferously criticised the EU and German Chancellor Angela Merkel. Whilst he tweeted about the “sad process” and “surrealistic times” he praised the Prime Minister’s “more realistic” announcement, later citing her admission that curbs on the freedom of movement were incompatible with single market membership as evidence of this. European Commission President Jean-Claude Juncker, meanwhile, said that neither him nor Michel Barnier, the Commission’s Chief negotiator were “in a hostile mood”. The European Parliament’s chief Brexit negotiator Guy Verhofstadt warned that it was an “illusion” that the UK could be permitted to leave but opt back into “the best parts of the European project”.

The European newspapers’ reaction was markedly less forgiving – German paper Die Welt’s headline was ‘Little Britain’ and The Spiegel titled their coverage with ‘I want, I want, I want’.

Messy divorce?
The British peer who helped to draft Article 50, Lord Kerr of Kinlochard, predicted that “serious negotiations” would not start until the autumn, well after Article 50 is triggered, as initial discussions would focus on how much money the UK would have to be paid to the EU after Brexit. Such a ‘divorce bill’ is expected to be between £50-60 billion. Joseph Muscat, the Maltese Prime Minister who will chair the EU’s rotating presidency for the next six months, made it clear that those divorce terms would be prioritised over any future trade deal. Which serves to underline that the UK is not divorcing just the EU, but 27 separate nations and negotiations are likely be messy at times.

No independence day for Scotland
Meanwhile, the Vice-Chair of the European People’s Party, Esteban Gonzalez Pons, cast doubt on Scotland’s bid for independence and continued membership of the EU. In a meeting with members of the House of Lords, Pons said that Spain would not accept special treatment for Scotland and Gibraltar during the Brexit negotiations.

Timeline

24 January 2017
Supreme Court decision on Brexit challenge issued
Reported publication date for the Industrial Strategy
3 February 2017 European Council – informal meeting of the 27 heads of state or government
March 2017 Article 50 to be triggered