Brexit Update 14th February 2020

By February 28, 2020Brexit Updates

UK Update

‘No Self-Respecting Minister’

The Prime Minister conducted his first major reshuffle since the Conservative Party won an overall majority of 80 in the Commons in December last year. The reshuffle was expected mainly to involve tinkering at the junior ministerial level. However, Sajid Javid’s decision to resign as Chancellor after reported pressure from Number 10 to dismiss his advisers and accusations of a Number 10 power grab dominate the headlines.

It was expected that Sajid Javid would remain as Chancellor through the reshuffle and deliver the budget on 11th March. Yet a rumoured power clash between Number 10 and Number 11 caused Javid to resign as Chancellor, and Rishi Sunak to be appointed a mere 15 minutes after. It is reported that Number 10 stated that Javid could remain in the role of Chancellor on the condition that he remove all of his advisors. Javid denied this request, stating that “no self-respecting minister” could accept this.

Sunak then did what apparently “no self-respecting minister” could and was promoted to the role of Chancellor. Rumours suggest that Number 10 will be able to have more of a sway on Number 11 now, with complete control over the advisors appointed, as it appears that this was a reason for the previous clash with Javid in the first place. It then begs the question as to whether the Budget will go ahead on 11th March and if so, whether some unexpected announcements from Cummings will find their way into the speech. Much of the tension between Javid and Cummings is thought to have stemmed from Javid’s opposition to increasing public spending to the extent that Cummings wished. With Sunak now in place, it is expected that a raft of new spending commitments will be unveiled at the Budget.

Aside from Javid, Boris Johnson has kept the rest of his top-team related to Brexit, of Liz Truss (International Trade Secretary) and Michael Gove (Chancellor of the Duchy of Lancaster), intact. This means that post-Brexit deals are expected to continue as normal and as hoped by Number 10.

From Chequers to Checks

Michael Gove, who remains the Chancellor of the Duchy of Lancaster following the Cabinet Reshuffle, has this week warned businesses that border checks are ‘inevitable’ following a Brexit deal which takes the UK out of the single market and customs union. Through his speech delivered to delegates at a Border Delivery Group stakeholder event in London, he cautioned that traders in the EU and GB will have to submit customs declarations and be liable to goods checks.

Looking back three years, Gove’s vision offers a very different reality to the Brexit promises of free and seamless trade with the EU. It also highlights a shift in position from Theresa May’s Chequers Proposal which prioritised frictionless trade. Whether this is a negotiating tactic or a realistic policy position, it would mean a vast increase in the amount of red tape for trade between the UK and EU. Whilst technology may be able to help ease this in the future, this is not going to be something that will be in place by the end of December.

Justifying the Government’s plans for import controls, Gove reasoned that it would: guarantee border safety; ensure all trading partners are treated equally; and allow the UK to collect the right customs, VAT and excise duties. He also argued that the EU has will enforce checks on British goods, so it was a reciprocal measure.

It is known that Johnson’s Government is targeting a trade agreement similar to that secured by Canada in the EU’s Comprehensive Economic and Trade Agreement (Ceta), a deal which removed 98 per cent of tariffs between the two parties. Whilst it therefore fails to be completely tariff free it also doesn’t cover services including financial services, a vastly important sector for the UK and in particular the City of London. However, even this agreement is looking like a distant dream given comments from Elizabeth de Jong, the UK’s policy director of the Freight Transport Association, who said that ‘frictionless trade has been kicked into the touchline’.

For now, both the EU and UK are involved in a game of chess trying to outmanoeuvre each other to become the dominant negotiating party. This is best demonstrated Johnson’s Greenwich speech, which was timed to coincide with the European Commissions publication of their draft negotiating mandate. By doing so, Johnson avoided separate scrutiny on the Commissions mandate and guaranteed that the initial debate was not led by those in mainland Europe.

EU Update

Fein-ishing on top

In a break of precedent, Sinn Fein, became the largest party in terms of popular vote in the Ireland Election held on the 8th February. Sinn Fein saw a surge in support resulting in a hung chamber in the Dáil, the lower house and principle chamber of the Oireachtas (the legislature of Ireland). In what is being branded as a historic result, Sinn Fein gained the same number of seats as the centre right party, Fianna Fáil, one of Ireland’s traditionally major parties. Fine Gael, another centre right and traditionally large party won 35 seats, two seats less than Fianna Fáil and Sinn Fein whilst the remaining 50 seats were spread across seven other parties.

Whilst the route to power is still complex and will necessitate complex coalitions, Sinn Fein have a very realistic chance of being able to enter government for the first time in Ireland. Brussels have already expressed concern over Sinn Fein’s clear opposition to the deal struck between the British Government and Leo Varadkar, the leader of Fein Gael and Taioseach of Ireland. This will create an interesting dynamic with Northern Ireland where Sinn Fein has also gone back into a power-sharing agreement with the Democratic Unionists. Consequently, concerns have been raised over the ability for Dublin to act as an ‘honest broker’ in the preparations for the Irish backstop. Additionally, it may strengthen Sinn Fein to make for a greater push for Irish reunification, a demand already made by Ruairí Ó Murchú.

However, in the immediate future, uncertainty is guaranteed. A coalition may be a fair way off given the reluctance of the other two major parties to form a coalition with Sinn Fein. Mr Varadkar has already ruled out a coalition with Sinn Feil, whilst Micheál Martin, Fianna Fáil,’s leader is still to take sides on the issue despite ruling it out before the election.

Upcoming Key Dates

  • March: Future relationship talks begin.
  • 4th April: Result of the Labour Leadership Contest.
  • 31st December: End of the transition period.