Brexit Update 12th April 2019

By April 24, 2019 Brexit Updates

Top 3 developments 

  • Tensions rise between France and Germany around the extension deadline.
  • The UK has secured an extension of Article 50 until 31 October 2019.
  • Cross-party talks have continued with no sign of a consensus.

UK Update 

May’s Fright Night

After a six-hour summit, EU leaders accepted the Prime Minister’s request for an extension of Article 50. The Prime Minister initially requested an extension until 30 June 2019, but EU leaders instead agreed on a six month ‘flextension’ until 31st October 2019 allowing the UK to leave the EU if a deal is ratified before this date. There are numerous conditions to this extension involving the UK participating in the EU elections if it remains a member after 22nd May and a review after the elections on June 30th. The review will allow for the EU to have a clear sense of Parliamentary negotiations and whether a deal is in sight or not.

The EU27 reiterated that the Withdrawal Agreement is not open for renegotiation, emphasising that the focus for the UK Parliament should be on the Political Declaration. Unsurprisingly this has resulted in a severe backlash from some Tory backbenchers. Hope now rests on whether cross-party talks can find a compromise over the Political Declaration and allow for a parliamentary majority through another round of indicative votes. However, it will be interesting to see whether focus will be on Brexit, with local elections occurring when Parliament returns from Easter recess and the Spring party conferences just before the new deadline date.

Tough Crowd

The Prime Minister made a statement to the House of Commons yesterday announcing the outcome of the EU Council Summit on Wednesday. Unsurprisingly, MPs weren’t particularly happy to see her, having cancelled their Easter recess and then returned from Brussels with an extension that a lot of backbenchers bitterly oppose. It didn’t help that after the Summit the Prime Minister refused to apologise to the public and insisted that she had voted three times to leave the European Union, implicitly laying the blame on the current impasse at the feet of MPs who have refused to deliver Brexit.

After her statement to the House, Jeremy Corbyn criticised May’s ‘diplomatic failure’ as the EU refused to concede to her demand of an extension to the 30th June, but welcomed the constructive talks Labour were now having with the Government.

Conservative backbenchers were less amicable however, as the Prime Minister faced familiar cries of ‘abject surrender’ and calls for resignation by members of the ERG. Former Brexit Secretary David Davis and senior backbencher Iain Duncan Smith MP have both outlined that the PM needs to set her departure date. The feeling amongst these MPs is that a new Prime Minister is not only needed to lead the second phase of the negotiations, but a new PM is needed now to break the current logjam. Should a new leader emerge there will be significant uncertainty over the next stages of negotiations as it is likely that a Brexiteer would pursue an entirely different approach, for example a no-deal Brexit. However, Brexiteers do not have the mechanism to replace May until December following their failed attempt last year and will most likely spend the next six months attempting to sabotage the leadership  from the side lines.

Take a chance on Barclay

Talks between Labour and the Government have continued this week as they attempt to find a Brexit solution that is mutually palatable and could gain a Parliamentary majority. The Brexit Secretary Steve Barclay said on Thursday that while the talks had been useful so far, the Prime Minister would try to find a ‘consensus’ in the Commons if the cross-party talks could not reach a compromise agreement. This suggests that Parliament could undergo a third set of indicative votes if Labour cannot agree a Brexit deal with the Government.

Importantly, the Prime Minister said that if there were further indicative votes, the Government would abide by any decision that could command a majority. The option most likely to succeed would be a permanent customs union, which lost by just three votes on 1st April. However, this is the option that the Labour Frontbench have outlined as their preferred outcome. It is worth considering that it is probably more politically beneficial for the Conservative Party to implement an option that was put forward by Parliament (and by Ken Clarke, a Tory MP) than trying to claim that they are the Party that has delivered Brexit… with the help of Labour.

But it is clear that the Government does not want to stray too far away from the original political declaration, as Steve Barclay highlighted that he did not believe a permanent customs union was a ‘good way forward’. It is difficult to predict whether these talks will be fruitful, but the only thing that is certain is that the PM is certainly looking beyond her Government towards the Labour frontbench and to all backbench MPs to find a Brexit solution.

This Just In – No-deal is Bad

The IMF published findings this week which have predicted a two-year recession for Britain in the event of a no-deal. The report outlines that if trade barriers are swiftly put in place between the UK and the EU, without an agreement in place, then the UK economy would only have a growth of 1.2% in 2019 and would be 3.5% smaller than expected by 2021. It stressed that “a no-deal Brexit that severely disrupts supply chains and raises trade costs could potentially have large and long-lasting negative impacts on the economies of the United Kingdom and the European Union”.

This insight does not come as a shock to many and much has been done within Parliament to prevent the UK leaving the EU without a deal. The Cooper-Letwin Bill was granted Royal Assent this week, which calls on the Government to seek an extension rather than leave the EU without a deal due to growing fears within Parliament the dangers of a no-deal. Additionally, the ‘flextension’ that was granted this week means that a no deal would not be possible until 31st October. That being said, six months is not necessarily a great deal of time in parliamentary terms and with MPs as divided as they are over the Brexit negotiations, no-deal remains a possibility.

EU Update

Trick or Treat

Following a six-hour Summit conference, the President of the EU Commission, Donald Tusk announced that the EU has granted the UK a six-month extension. In a statement at 2am on Thursday he urged the UK “please do not waste this time”. He has been rather optimistic that this is enough time to allow a deal to be ratified but has not ruled out another extension, stating “I am too old to exclude another scenario…I think still everything is possible”. Tusk went on to admit that he would prefer that the delay would result in a second referendum and the UK revoking Article 50, but was swift to state “this is obviously not my role – but it’s my personal, quiet dream”.

31 October is symbolic as 1 November is when the new European Commission is appointed. The EU are attempting to resolve the never-ending Brexit issue in time for this change, to ensure that Brexit does not dominate the new Commission’s agenda. It is clear that the EU are losing patience with the UK over these negotiations, with the Dutch Prime Minister, Mark Rutte, stating “at the end of October we are sixth months down the road, so it will be increasingly difficult to grant extensions.” It will be interesting to see how the negotiations develop and whether the UK will be able to test the patience of the EU27 further or whether a deal can be agreed ahead of time.

What a load of scallops

Franco-German tensions were revealed on Wednesday evening as French President Emmanuel Macron and German Chancellor Angela Merkel erupted in argument over the terms of an Article 50 extension. Over dinner with fellow EU leaders, Merkel and Macron clashed over their positions on Brexit. But this was not just about Brexit, as their argument can also be seen as Merkel’s attempt to secure her legacy conflicting with Macron’s ambition.

Macron believes that a no-deal outcome is preferable to a ‘dysfunctional’ EU that would be destabilised by the UK remaining a member for a prolonged period. This is a particularly important issue for Macron because he has a radical agenda to revitalise the EU, and he is correct that Brexit is proving to be an active roadblock in pursuing these changes. Macron has banked his political reputation on achieving momentous reform to the EU, so it is no surprise that he wants an immediate solution to end the Brexit uncertainty.

On the other hand Merkel, taking a longer view of the issue, was steadfast in her resolve to give the UK the time it needs to secure an orderly withdrawal from the EU. She commented that history would not look favourably upon the EU if it did anything to push the UK towards a no-deal Brexit. She knows that this would poison UK-EU relations and it would have a negative economic impact on the EU27. Considered to be the most powerful EU leader, Merkel’s premiership will not be singularly defined by Brexit, but there is no doubt that a smooth and orderly Brexit is hugely important to cement her legacy. The eventual offer of a six-month extension can be seen as a compromise between Macron’s hard-line stance of a one-month extension and Merkel’s offer of an indefinite extension.

Upcoming Key Dates

  • 22nd May: Deadline to leave the EU without participating in the EU elections.
  • 30th June: Brexit review if the UK is still a member of the EU.
  • 31st October: Current Brexit Deadline

 

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