Brexit Update 23rd June 2017

By July 7, 2017 Brexit Updates

Top 3 developments

Brexit u-turn bodes badly

Brexit negotiations started on Monday the 19th. David Davis had previously blustered that the order of Brexit talks would be “the row of the summer”. It was not: the UK immediately agreed to EU sequencing of the talks on the very first day. The EU wants “sufficient” progress on negotiations – money, the Irish border, citizenship, and so on – before it will discuss the terms of trade. The UK has accepted.

The Queen’s Speech

The Queen delivered what was deemed “the thinnest speech in years”. Northern Ireland got a mere two mentions, and May has still not reached an agreement with the DUP. May promised MPs she would deliver the bills in the Queen’s Speech “with humility and resolve”. The speech contained eight Brexit bills, and many key Tory manifesto pledges were stripped from it – grammar schools, a vote on fox-hunting, and an end to free school meals for infants all got the axe. 27 bills were announced in total, and the bulk of them focussed on Brexit.

The Repeal Bill

“The Great Repeal Bill” was downgraded to “The Repeal Bill”. The legislation will repeal the European Communities Act 1972 and convert EU legislation into UK law. Other Brexit bills include the Customs Bill, Trade Bill, Immigration Bill, Fisheries Bill, Agriculture Bill, Nuclear safeguards Bill, and International Sanctions Bill.

UK Update

“A difficult task just got a lot more difficult”

If Brexit-related legislation hasn’t been passed by the time of the UK’s scheduled exit (March 2019) then the country descends into legal limbo. “They have got to get the legislation through or there will be a legal hiatus when we leave the EU,” said Jill Rutter of the Institute for Government. She expressed pessimism about the election result’s bearing on Brexit: “A difficult task has just got a lot more difficult.” Leader of the House of Commons Andrea Leadsom has announced a two-year parliamentary session to push legislation through – and the Repeal Bill will form the central thrust of this. One of its core aims is to transpose EU law onto the UK statute book. The scale of this legislative task is totally unprecedented. The Institute for Government calculates that 1,200 EU laws affect the Department of Environment, Food and Rural Affairs alone. Many of them will have to be adapted once a Brexit deal is agreed.

How long can the doomed PM May-ntain her place in power?

May’s promise to “respond with humility” to the election result is clearly not enough to redeem her. Osborne spoke for many when he called her “a dead woman walking” – the question is not if May will leave Downing Street, but when.

Meanwhile, the Number 10 cleanout continues, with the departure of May’s head of policy, John Godfrey. Few of her pre-election policy staff remain. Sky News reported that at least 30 prominent Conservatives have indicated that they will not leave the EU without a deal. May is caught between the increasingly vocal pro-business remainers in her party, and the rebellious leavers.

The DUP-Tory bargain has yet to transpire – despite claims that the deal would be wrapped up by Thursday at the latest. The Telegraph reported that talks became so terse that the DUP refused to answer May’s calls for 36 hours. The DUP’s chief whip Sir Jeffrey Donaldson commented “I’ll say this about Ulster men and Ulster women, we’re no pushover.” Yikes.

Brexit not “like a cheese board”

In Philip Hammond’s belated Mansion House speech he continued to advocate for a ‘soft Brexit’. Some eyebrows were raised that he said that concerns about the UK potentially looking to model itself on a Singaporean economy – that is a low-tax, low-regulation financial sector – were “genuine and reasonable”, and stressing that trade regulation for goods and services with the EU must “reflect international standards”. He stressed the need for a “mutually beneficial” transitional arrangement when leaving the EU in order to avoid “dangerous cliff edges”; this runs counter to May’s repeated claims that “no deal is better than a bad deal”. His would be a Brexit deal that accounts for the global economy, and is outward-looking. Bank of England governor Mark Carney cautioned that there would be “weaker real income growth” post-Brexit. Both men took the time to make jokes, at the expense of George Osborne and Boris Johnson.

Few City economists predicted that voters would back Brexit; Societe Generale’s Brian Hillard was one of the exceptions. Hillard recently predicted that the chances of “hard Brexit” – in which the UK leaves the single market and customs union, and secures control over immigration and trade tariffs – sit at 70%. He forecasts a 15% chance of soft Brexit, and a 10% likelihood of no deal. Presumably the remaining 5% of uncertainty accounts for a future in which Britain sees sense and stays in. Boris Johnson, clearly limbering up for leadership, put the kibosh on soft Brexit, declaring that Brexit is “not like a cheeseboard” – it’s all or nothing.

We won’t Labour the point – the opposition may get bolshy over Brexit

Corbyn’s refusal to campaign enthusiastically to remain in the EU attracted substantial criticism; some claim the party leader’s lack of conviction and half-hearted support cost remainers the referendum. A great deal of Corbyn’s success is due to his ability to engage the youth vote, a demographic that overwhelmingly voted to remain, or supports Britain remaining in the EU. However, a sizeable proportion of Labour voters this time around are UKIP voters returning to the fold – a swing the Tories also benefited from.

Herein lies the problem: Labour has yet to come out with a substantive party line on Brexit because the party is trying to be all things to all voters. Corbyn has conceded that Brexit is inevitable and stressed the importance of a Brexit that prioritises jobs – but offered little in concrete terms. Meanwhile, over 50 Labour politicians have signed a statement claiming that young voters backed the party in order to “stop the Tories in their tracks” over Brexit. The group declare this is best achieved by “fighting unambiguously for membership of the single market”.

Time is ticking for Labour to form an official party line on Brexit. May’s unruly party – and the rampant EU-based factionalism within – leaves Labour ideally placed to challenge and influence Brexit. If it gets its act together.

The Brexodus begins – Eastern European migration to UK falls

The Oxford Migration Observatory found that the number of people applying to work in the UK from Eastern Europe has declined substantially since the referendum. A recent Resolution Foundation survey concluded that businesses are unprepared for what falling post-Brexit migration will mean for their businesses: over 47% of the 500 businesses surveyed have “totally unrealistic” expectations of what immigration policy and figures will look like post-Brexit. Meanwhile, The National Farmers Union estimate that 95,000 seasonal workers – the bulk of whom come from Bulgaria, Poland, and Estonia – will be needed by the agricultural industry by 2021. May has pledged that the net migration target will be 99,000 by 2022.

European Update

Dream on, May-te!

May has proposed that EU citizens who have lived in the UK for five years, and have “settled status” will qualify for the same healthcare, pensions, benefits and education rights as British nationals. May said that her offer to safeguard the rights of UK-based EU citizens were “fair and serious”. Apparently not. Jean-Claude Juncker has deemed them “not sufficient”. Merkel was more magnanimous, deeming the British offering “a good start”. Sadiq Khan pulled no punches, thunderously declaring that “It is unacceptable for the prime minister to be treating EU citizens living here and contributing to our economy and society as bargaining chips.” Back to the drawing board, Theresa.

I love EU, baaaaaybee!!!

Analysis of 10,000 Europeans by Pew Research Center found that support among EU citizens for the EU has jumped sharply since the Brexit vote. Britain’s vote to leave – and the obvious economic and cultural fallout that resulted – has helped to bolster a feeling of commonality and support for the EU amongst its citizens. Only in Greece do a majority of people have a negative opinion of the EU. The UK’s estimation of the EU has risen 10 percentage points to a 54% favourability rating.

Fears that the UK referendum would inspire a domino effect in the Union have proved unfounded so far. “My concern on June 24 was the contagion effect would be in play and winning out,” said Mario Monti, the former EU commissioner and Italian Premier. “Now it seems to me we can say that rather than a contagion, an antibody effect from Brexit prevailed. I for one have been surprised.” Centrism has triumphed in France, with Macron proudly flying the European flag. That is not to say that the EU is flawless, or that internal issues have miraculously vanished, but the EU seems stronger, more unified as a result of Britain’s decision, and the subsequent political chaos. The EU has little to lose by pushing the UK hard. Last month saw economic activity at a six-year high, and the appetite for populism is waning at the polls.

However, it may not all be plain sailing. European Commission minutes publishes yesterday reveal that EU countries that haven’t joined the euro will be facing fresh pressure to do so post-Brexit. The seven “Euro-outs” – Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, and Sweden – will be told to submit a “road map” outlining a schedule for joining under plans to attain economic and monetary union by 2025. Denmark is exempt. The vote may prove controversial. There are plans to create a Eurozone treasury within seven years.

Timeline

  • June 22nd – 23rd – European Council
  • 1st July – 3rd September – parliamentary recess
  • July 17th – second round of talks
  • 24th – 27th September – Labour Party Conference
  • 1st – 4th October – Conservative Party Conference
  • October 19th – EU Summit