Top 3 Developments
Little revealed by Government: Brexit Secretary David Davis warned that Brexit may be “the most complicated negotiation of all time” as he confirmed that the Government intends to keep key details of the withdrawal negotiations secret from Parliament.
Juncker comes out fighting: President Juncker confirmed in his State of the Union address that European integration will continue despite the Brexit vote, stating that the integration programme must not “bow to interests of individual Member States”. He outlined plans for EU Member States to adopt a more robust foreign policy, including an EU military headquarters.
Positive economic data: Fears of an immediate post-Brexit recession calmed following a wave of unexpected positive economic data released this week, including strong August retail figures and a slight drop in unemployment. However, the Bank of England continued to warn that it is likely to cut interest rates further in the coming months.
Mixed week for May as Davis reveals little on Brexit
A busy week for the Government saw Theresa May and her top team on the back-foot somewhat. International Trade Secretary Liam Fox MP’s comments about British business being too “fat and lazy” were slapped down and the Government’s grammar schools policy has caused consternation across the political spectrum.
Brexit Secretary David Davis MP begin the week in front of a Lords Committee declaring that Brexit “may be the most complicated negotiation of all time”, warning that the Government would keep key details about the negotiations secret from Parliament. Davis also gave evidence to the Foreign Affairs Committee distancing himself from the Leave campaign’s claims that Brexit would boost NHS coffers – opening a further chasm with the Foreign Secretary Boris Johnson MP.
In other Select Committee news, it has been announced that there will be two new Parliamentary Select Committees on International Trade and Brexit to shadow the new Departments. The Brexit Committee will be chaired by a Labour MP, with former Shadow Foreign Secretary Hilary Benn having already thrown his hat into the ring, and the International Trade Committee will be chaired by an SNP MP.
David Cameron’s resignation caught much of the headlines and the Prime Minister’s support for grammar schools may have been the straw that broke the camel’s back. His resignation came at a time when the proposed changes to parliamentary boundaries were announced, a move that will reduce the number of MPs from 650 to 600 and will pit party colleagues, especially Labour ones, against one another as they fight to retain their seats. Another issue that may rumble on is that of the Hinkley Point C project. The project has been given the green light officially but expect debates about its cost and questions about national security to continue.
The focus now turns to Conference season. With Brexiteers becoming increasingly agitated, the Prime Minister will be under pressure to deliver a strong performance.
Labour Leader Jeremy Corbyn spoke at Bloomberg to outline his vision for Britain and his ideas for Brexit negotiations. He argued that the UK Government should try to gain access to the European single market but without requirements to liberalise and privatise pubic services and to protect social, employment, and environmental rights. He also made it clear that he believed any deal would need to be ratified by Parliament.
His speech follows on from Labour’s final leadership hustings last night, where Brexit once again proved to be a key battleground for the two leadership contenders. Owen Smith and Corbyn clashed when discussing Article 50, with Smith accusing Corbyn of being insincere about his feelings on the Referendum and the triggering of Article 50. Smith went on to accuse Corbyn of lacking the ‘hunger’ to beat the Conservatives at the next election, after the Labour Leader gave an incorrect figure for the number of seats Labour needed to win. The Hustings concluded with Corbyn, the current overwhelming favourite, pleading for the party to come back together after the members deliver their verdict. However, many accused his words of ringing hollow when hours earlier his camp accidentally released a list singling out 14 Labour MPs it claims abused the leader and his allies.
Positive economic data allay fears of recession
This week has seen a wave of stronger than expected economic data, suggesting that the UK economy has not yet experienced as significant a post-Brexit shock as many had predicted. Retail sales figures published today for August showed a drop of 0.2% from July, with sales figures up 6.2% from August 2015.
This followed yesterday’s news showing a slight fall in the unemployment rate which prompted a number of economists, including John Hawksworth, Chief Economist at PwC, to state that the jobs data showed “no immediate impact from the Brexit vote”. In summary, the unemployment rate was 4.9%, down from 5.5% a year ago.
Today also saw the Bank of England’s Monetary Policy Committee (MPC) unanimously decide to keep interest rates at a historic low of 0.25%. Although the Bank acknowledged in the minutes of the meeting that “a number of indicators of near-term economic activity have been somewhat stronger than expected”, it also stated that it is still likely to cut interest rates further in the coming months.
The uncertainty around whether the UK economy is in fact slowing down provides a number of daunting challenges for the Chancellor ahead of the Autumn Statement on 23rd November.
State of the Juncker
European ‘State of the Union’ addresses rarely attract significant media coverage in the UK, but Jean Claude Juncker’s this week was the most important one in years. Ahead of the Bratislava meeting to look at the future of the bloc, Juncker said the next 12 months are crucial for the survival of the union, urging Member States to come together to fight common challenges, recognise pan-European values and oppose nationalism. As well as outlining a major investment programme, Juncker mused on the EU’s place in the world, calling not only for a more muscular and outgoing foreign policy (backed up by a military force), but also common positions on issues from EU Member States at forums like the G20. In the follow up debate, he was criticised by UKIP and Conservative MEPs for saying “European integration cannot bow to interests of individual Member States” and MEPs kept calling on Britain to immediately start the withdrawal process.
UK Commissioner Confirmed
Sir Julian King has been confirmed by the European Parliament as the UK’s European Commissioner, with responsibility for security and counter-terrorism. The vote was tense, with 244 MEPs abstaining or voting against the appointment, due to concerns he will oversee rules that won’t apply to the UK. His appointment comes after the previous Commissioner resigned and he has pledged to serve the ‘European interest’.
Brexit could cost Europe billions, according to a European Commission study into the budgetary ramifications of Brexit. The UK currently pays in a net €12.7bn to Brussels coffers, so after Brexit the EU will need to slash costs budget (an option preferred by national Governments), or redistribute the membership fee among the remaining members. It will also mean an increase in fees from larger EU states – which could see German taxpayers asked to pay an extra €4.5bn.
Europe gears up for Bratislava
A meeting is taking place in Bratislava this weekend for all EU Member States except Britain to look at the small matter of the future of the EU. Some infighting is expected as different camps call for investment, austerity and powers to be returned to national parliaments, but the meeting will be dominated by dealing with migration and Brexit. With the EU set to start negotiating internally on its ‘red lines’, former European Council President Herman Van Rompuy said political negotiations would not start until after the German election in September 2017.
- 17-18 September Summit of the 27 remaining countries of the European Union
- 24 September Labour leadership election result
- 1 October Michel Barnier takes up duties as European Commission’s Chief Brexit Negotiator
- 23 November Chancellor to give the Autumn Statement
Party Conference dates
- UKIP 16- 17 September, (Bournemouth) – the party’s new leader will be declared
- Liberal Democrats 17 – 21 September (Brighton)
- Labour Party 25 – 28 September (Liverpool)
- Conservative Party 2 – 5 October (Birmingham)
- SNP 13 – 15 October (Glasgow)