Brexit Update – 26th January 2017

By January 26, 2017Brexit Updates

Top 3 developments

Theresa and the Supremes: The Supreme Court’s verdict this week forced the Government to introduce a Bill that Parliament must approve before Article 50 can be triggered. Whilst the Bill presents some problems for the Government, as opposition parties will attempt to amend it with certain conditions, Number 10 will be greatly relieved that the nightmare scenario of the devolved Parliaments also having to approve Article 50’s triggering has been avoided. The Government’s 138-word Bill is expected to be passed by mid-March, allowing Article 50 to be triggered before the end of March as previously pledged.

White On Time: The PM used Prime Minister’s Questions to announce a surprise U-turn, confirming that – despite the denials of the Brexit Secretary a day earlier – the Government will publish a white paper for Parliament to discuss prior to withdrawal negotiations beginning.

Trump to meet his Maggie: The new President is due to meet the Prime Minister tomorrow and discussions are expected to focus on a post-Brexit UK-US trade deal. The Prime Minister, who Trump has begun referring to as ‘My Maggie’ in reference to Reagan’s close relationship with Thatcher, will become the first world leader to meet the new President, demonstrating her clearing willingness to develop closer ties to the US post-Brexit.

UK Update

May’s plans March on

On Tuesday, the Supreme Court ruled by a majority of eight to three that Parliament must pass an Act of Parliament before Article 50 can be triggered. Whilst this verdict was expected, it is still a considerable blow to the Government. Today the required Bill was brought before Parliament and, whilst there is little doubt that May has the majority for the Bill to be passed and there is little chance of the Lords voting it down, it does provide an opportunity for pro-Remain MPs to table amendments which offer conditions to the triggering. Both the Lib Dems and SNP have pledged to make substantive amendments to the Bill, and Labour has also pledged to make amendments that hold Government to account, however, their position is slightly more fraught. Whilst the Labour leadership has pledged to support the vote, Corbyn is facing a rebellion from some of his MPs in pro-Remain constituencies, who may defy the whip and vote against triggering Article 50.

The European Union (Notification of Withdrawal) Bill was presented in the House of Commons today, and under the current expected timetable it will pass by mid-March, allowing May to meet her deadline of triggering Article 50 by the end of that month. However, this will depend greatly on the Bill not being held up at any stage and, whilst Parliament has pledged not to block it, that may not stop pro-Remain forces attempting to stall May’s plans, especially in the Lords.

Sturgeon swims against the tide in English waters

There was, however, one key positive outcome for the Government from the Supreme Court ruling. The Judges agreed with the Government on the matter of devolution and ruled that the devolved legislatures do not have a veto on the UK’s decision to withdraw from the EU. Following the ruling, Scottish First Minister Nicola Sturgeon again raised the prospect of a snap independence referendum. Arguing that Scotland was being taken out of the EU against its will, Sturgeon promised to press the case for a compromise deal on Scottish access to the EU when she meets May for talks on Brexit on Monday.

All white, all white, all white

Following previous refusals, May caved to mounting pressure on Wednesday and pledged that the Government would publish a formal policy paper setting out her plan for leaving the EU. The Prime Minister revealed that the Government would bring forward a white paper after a threatened rebellion by Conservative MPs. However, Government have refused to say when it would bring forward the document, leading to opposition from Labour who believe MPs and peers should have access to the information before Parliament is asked to vote.

May & Trump: Brussels are watching

Number 10 were delighted to secure a meeting between the Prime Minister and President Trump on Friday, with May becoming the first world leader to do so. However, things are not going completely to plan. May, who after a tense few weeks with Brexit, and more tense days to come next week, will want to demonstrate that the UK is in fact at the ‘front of the queue’ in agreeing a UK-US free trade deal. However, the President’s desire to hit the ground running, including coming out in support of torture, has led to May being pressured to raise Britain’s disapproval with him at their first meeting, something she will be reluctant to do. The pressure is on for May as if she is able to secure something concrete whilst meeting with Trump it will send a clear message to Brussels and other EU members that Brexit means thrive. It will also take some of the heat off before the Brexit white paper is released.

Jeremy Hunt’s bad day

Jeremy appeared before the Health Select Committee this week and it hasn’t helped the Brexit cause. He explained that Britain may have to leave the European Medicines Agency (EMA), which is used by drug companies to get a quick route to marketing medicines across the UK. He also seemed to renege on a manifesto promise that more GPs would be in place by 2020. Hunt came under fire from the Committee for appearing to be relaxed in the face of Brexit and the NHS losing staff, not having enough trained doctors and losing membership of the EMA.

European Update

Trading Places

The UK’s potential future trade deal with the EU and London’s status as a financial centre were the focus of European discussion this week. EU Trade Commissioner Cecilia Malmström warned that trade deal negotiations could not take place in parallel with Brexit negotiations, and that Britain would have to trade on World Trade Organisation rules until a new trade deal with the EU was complete. She noted that the EU was already “busy” negotiating 15-16 trade deals at present. The Government meanwhile continued to explore trade deal options with countries outside of the EU with the Australian finance minister optimistic of a deal “very quickly” only for the European Commission Margaritis Schinas to warn that whilst such talks could take place, deals could only be signed after Brexit. All of which serves to underline the possibility of the UK seeing a transitional period to ensure that the economy and businesses do not suffer in the period between Brexit and the finalisation of new trading arrangements.

Theresa May’s rhetoric about the UK being forced to turn towards a new economic model (by lowering tax to attract investment) if the EU played hardball in negotiations continued to attract scorn. Claude Bartolone, Speaker of the French lower house of Parliament, called on the EU to avoid a “conciliatory” approach and will have fuelled fears that France may be amongst the most awkward actors in forthcoming Brexit negotiations. Leading Leavers took the opportunity this week to warn that the German economy will pay a “high price” if its leaders make it difficult for the UK to strike a Brexit deal. You can expect to see much of this tit-for-tat between pro-leave campaigners and major European political figures.

London calling!

With politicians of all colours descending on Davos, London’s continued status as a global financial centre was the source of much debate. The Prime Minister reiterated the sector’s importance to the economy and will have been warmed by German Finance Minister Wolfgang Schauble’s belief that London’s importance will endure. London Mayor Sadiq Khan also sought to back London’s banks, warning EU leaders that their countries will suffer if London is not permitted privileged access to the single market after Brexit. Meanwhile, two major banks brought conflicting news this week with Barclays’ optimism not shared by Goldman Sachs.

Another court case may attract the Ire of Leavers

Finally, whilst the Government will have been glad to have finally heard the Supreme Court’s decision, a further legal decision may shift the shape of Brexit negotiations. In Dublin, a legal challenge is under way and is designed to force the European Court of Justice to rule on whether Article 50 is irrevocable. In other words, once Article 50 is triggered, could it subsequently be withdrawn if Britain were to change its mind about Brexit.

Timeline

  • 31 January & 1 February Commons Second Reading of the European Union (Notification of Withdrawal) Bill
  • 3 February European Council – informal meeting of the 27 heads of state or government
  • 6,7 & 8 February Committee Stage of the European Union (Notification of Withdrawal) Bill
  • 8 February Commons Report Stage and Third Reading of the European Union (Notification of Withdrawal) Bill
  • March Article 50 to be triggered