Brexit Update – 21st April 2017

By April 21, 2017Brexit Updates

Top 3 developments

Theresa Snaps

In a shock announcement on Wednesday morning, the Prime Minister called a snap General Election, breaking her repeated promise not to do so.

May Meets Tajani

Theresa May has met with the European Parliament President Antonio Tajani to discuss Brexit.

Europe Wants Britain to Foot Brexit Bill

European Commission negotiating directives show that the EU wants Britain to foot the bill for any costs incurred as a result of Brexit.

UK Update

General Election 2017

The Prime Minister has called for a General Election on 8th June, despite saying that such a move would be “self-serving” at a time when the country needs stability. MPs voted on Wednesday afternoon by 522-13 votes to support May’s decision. She justified the U-turn by blaming opposition parties and the House of Lords for weakening her negotiating position with the EU. She said, “division in Westminster will risk our ability to make a success of Brexit”. Polls predict a heavy defeat for Labour, with dozens of Labour MPs on course to lose their seats if the result reflects current predictions. Meanwhile, Nicola Sturgeon has made it clear that continued support for the SNP in Scotland will be taken as endorsement for a second referendum; she said, “make no mistake, if the SNP wins this election in Scotland – and the Tories don’t – then Theresa May’s attempt to block our mandate to hold another referendum when the time is right, will crumble to dust”. The value of the pound initially climbed in reaction to the calling of the vote, with the expectation that the Prime Minister would use a larger majority to deliver a softer Brexit, and a phased transition approach to a UK-EU free-trade deal.

May Meets Tajani

Theresa May met with President of the European Parliament Antonio Tajani on Thursday morning to discuss the Parliament’s recently self-approved Brexit red lines. The meeting lasted 45 minutes, after which Tajani said that he and May agreed that the rights of UK and EU nationals should be resolved as an immediate priority. He said: “The message is a positive message. We want to strengthen the citizens’ rights – European citizens living in the UK and UK citizens living in the European Union. Mrs May underlined this position. Here we were both in favour of our citizens”. Tajani also said May’s decision to hold an early election would bring stability to the Brexit negotiations; he said, “to have a new government before the beginning of the official negotiations I think is good not only for the U.K. but also for us because we will have for the next years the same prime minister, the same ministers, the same negotiator”.

UK Insists on Keeping Hold of Two Major EU Agencies

The Government has refused to back down in its fight to keep two of the EU’s most prestigious agencies and their 1,000 staff located in Canary Wharf post-Brexit. The Brexit department has refused to acknowledge the increasingly vocal calls from EU Member States to move the European Banking Authority and the European Medicines Agency back to the EU after Brexit. A spokesman for David Davis said, “no decisions have been taken about the location of the European Banking Authority or the European Medicines Agency — these will be subject to the exit negotiations”. Yet, this ignores the fact that European Council President Donald Tusk will this month launch the competition for the relocation of the agencies. So far 20 cities have applied to host them (including Amsterdam, Milan, Stockholm, Barcelona) with Denmark and Copenhagen recently adding their name to the list.

IMF Upgrades UK 2017 Growth Forecast to 2%

The International Monetary Fund has positively revised the UK’s economic growth forecast. In its latest assessment the IMF predicted that the UK economy would expand by 2% this year – up from its 1.5% forecast in January. The IMF prediction mirrors the forecast of the UK’s own Office Budget Responsibility – the Government fiscal watchdog. The revision almost completely reverses the IMF’s degrading of growth forecast after the EU referendum vote, and places the UK as the world’s second fastest growing major economy for 2017 (second only to the US which is expected to grow by 2.3% this year). However, it is still below the 2.2% pre-referendum growth forecast. Next year’s growth prediction is less favourable, with 1.5% growth expected; this places the UK in joint fourth position amongst other G7 nations, with the US, Canada and France all predicted to grow more quickly in 2018.

UK Employers Will Take on Immigration Enforcement

Experts from King’s College London have warned that British employers will have to take more responsibility for enforcing immigration rules post-Brexit, as the Home Office comes to terms with resourcing cuts. Although the Government has not revealed specific details about what kind of immigration system will be implement after Brexit, it is already apparent that the Home office does not have the manpower to monitor EU migrants in addition to those coming from the rest of the world; according to Anand Menon, professor of European politics and foreign affairs at KCL, part of the burden will have to be assumed by “businesses, universities, and landlords”. This could involve a rating system in which organisations with a good record of compliance will be trusted to monitor the implementation of immigration rules. The shift in responsibility is needed because cuts to Home Office budgets mean the UK Border Force, whose enforcement resources are already stretched, will be unable to expand to deal with the increased monitoring requirements post-EU free movement.

UK Considers Post-Brexit Two-year Hospitality Visa for Young Europeans

Ministers are thought to be considering a new two-year visa aimed at young Europeans aged between 18 and 30 seeking work in the UK’s low-skilled sectors such as construction, social care, and hospitality. The visa is based on the Home Office’s currently youth mobility scheme which allows young people from countries such as Australia, Canada, New Zealand, and Monaco to work in the UK for up to 2 years. Like the current scheme, applicants would not be able to bring any dependents to the UK, or claim UK welfare benefits; neither will applicants be able to extend their stay when their visa expires. The visa is aimed at plugging the UK’s worker shortage. Data published last week by the Office of National Statistics show that migrants make up 14% of the workforce in the retail, hotel and restaurant trades, with more than half a million EU nationals working in these sectors.

 

European Update

Europe Wants Britain to Foot Brexit Bill

Draft of the European Commission’s detailed negotiating directives reveal that the EU wants the UK to foot the bill for any Brexit costs, including relocating agencies currently hosted by the UK. Moreover, the guidelines stipulate that the bill should be paid in euros, as to protect the Union against any unfavourable currency fluctuations. The guidelines read, “the United Kingdom should fully cover the specific costs related to the withdrawal process such as the relocation of the agencies or other Union bodies”. The guidelines still need to be approved by the European Council, who will meet on 29th April to discuss the guidelines. The guidelines come as yet another rebuttal to the claims of some UK ministers that Britain does not have to pay a penny.

 

Denmark Casts a Wide Net

Denmark has staked its claim to the “historical right” of Danish trawlers to catch fish in British territorial waters after the UK leaves the European Union. An official from Denmark’s Ministry of Foreign Affairs told The Guardian “Danish fishermen have historically been fishing across the North Sea”. He said it is on this basis that any Brexit deal must recognise the right of Danish fleets to exploit shared fish stocks.

 

Lloyds Moves to Berlin

Lloyds Banking Group – the only major British lender which does not currently have a subsidiary in another EU nation – has reportedly chosen Berlin as the location of its European hub after the UK leaves the Union. According to The Telegraph, Lloyds intends to submit an application to the German financial regulator to convert an existing Berlin branch of the business into an official subsidiary by the end of September. Lloyds is the latest of a number of businesses to create European operating bases in order to maintain a presence inside the bloc post-Brexit.

 

Timeline

  • 23rd April – First Round of French Presidential Elections.
  • 29th April – EU Brexit Summit.
  • 3rd May – Dissolution of Parliament.
  • 4th May – Local council elections.
  • 22nd May – European Governments set to approve final negotiating directives.
  • 8th June – UK General Election.