Brexit Update 15th February 2019

By February 28, 2019 Brexit Updates

Top 3 developments 

  • May defeated in Parliament last night over her negotiation strategy.
  • Olly Robbins created a stir suggesting that there could be an extension of Article 50 as opposed to a no-deal Brexit.
  • Labour frontbenches call for a second referendum.

UK Update

Parliament Loves May….Parliament Loves May Not

The Prime Minister gave a statement to the House outlining her Brexit negotiations and next steps on Tuesday. In her statement, Theresa May said that she needed “some time” to get changes to the backstop and promised to give a further statement to MPs on 26th February if she had not got a deal through Parliament by then and then to lay an amendable business motion for debate and votes on 27th February.

An amendable Business motion, endorsing the Government’s negotiation strategy, was laid for the House to debate yesterday. MPs tabled amendments to the motion, though there is strong opinion that the ‘big’ amendments which might tie the Prime Minister’s hands one way, or another are being held off until 26-27th February.

In an unsurprising result, the Prime Minister was defeated by 303 to 258, this being her 11th defeat in 14 months. Whilst the defeat has no legal force on the negotiation strategy, there have been reports this morning that the UK will begin softening their stance over Irish backstop concessions as Stephen Barclay meets with the EU ambassadors today. A softer stance will only continue to enrage the ERG and DUP, limiting any chance of a sway in May’s favour. The continuing defeats for the Prime Minister raised concern about whether there will be a Withdrawal Agreement that both Parliament and the EU27 could support, increasingly the likelihood of either an extension of Article 50 or a no deal.

An EU Official, Brexit negotiator and journalist walk into a pub…

The PM’s chief Brexit negotiator Olly Robbins found himself at the centre of controversy on Tuesday evening after he was overheard reportedly saying that MPs had a choice of either backing the current deal or facing a lengthy extension to Article 50. This undermined the Prime Minister’s public position, which is that no-deal remains a viable option and that the Brexit process would not be extended. Theresa May refuted Robbins’ comments, as she urged her colleagues to not trust what was “overheard by someone else, in a bar.” Similarly, the Brexit Secretary Stephen Barclay MP stated that these claims were not Government policy.

Robbins’ comments will most likely give hope that attempts to extend Article 50, as championed by Nick Boles MP and Yvette Cooper MP, could be successful. They also added fuel to the fire to rumours that the Prime Minister is deliberately running down the clock to force MPs into backing her deal.

Interestingly, Robbins also made a series of revelatory claims about the Irish backstop. He outlined a proposal to satisfy Tory backbenchers by amending the Withdrawal Agreement so that the Good Friday Agreement would be less of an obstacle to the backstop being superseded by future trade deals. He also seemingly confirmed longstanding Brexiteer fears that Number 10 viewed the backstop as a “bridge” rather than a “safety net”. Again, this contradicts May’s public position, as it implies that a form of customs union membership was originally seen as the long-term ambition for the UK’s trading relationship with the EU.

Not very quiet on the Labour Front(benches)

It was reported on Thursday that Jeremy Corbyn faces up to 10 resignations from his frontbench if he does not support a second referendum. They cite their Party Conference, which states that ‘Labour must support all options remaining on the table, including campaigning for a public vote’, should a general election attempt to be unsuccessful. Labour have already failed to secure an election, and the PM has rejected Corbyn’s call for the customs union, so they believe that he should be far more forthcoming about supporting a second referendum. It is true that the Labour Conference policy does mean that Corbyn should not theoretically take a second referendum off the table. However, on the other hand, the Labour Party Manifesto in 2017 stated that it would ‘accept the referendum result’.

This dilemma exposes the fragile coalition that the Labour Party holds; between old-school unionist Labour supporters who are largely Brexiteers, and the socially progressive Labour supporters who are overwhelmingly young, pro-EU and urban based. With 61% of Labour constituencies having voted leave, any attempt for Corbyn to block or frustrate Brexit could lead to a mass exodus from traditional supporters. However, there is potential that helping to facilitate Brexit would be seen as a betrayal by the new influx of members. It will be interesting to see whether Corbyn calls his frontbenchers’ bluff or cave to their demands.

Trade off?

Adding to the ‘project fear’ surrounding the Brexit process, a secret tally has been leaked to the press outlining the limited progress that has been made on trade deals to be secured after March 29th. The Government initially promised to continue with 40 different EU free trade deals with 70 different countries. Four of these deals – Switzerland, Chile, an Eastern and Southern African block and Faroe Islands – have already been signed and six are on track for the Brexit exit day. However, this leaves 30 trade deals left to be confirmed, only drawing attention to the Government’s lack of preparedness for the exit day.

EU Update

Going Dutch

The Dutch PM made the news this week, saying that the UK was a “more diminished” country compared to what it was a few years ago, and claimed that after Brexit, Britain would be “too small” to stand alone on the world stage. These are comments that directly challenge the British exceptionalism that has guided a lot of the rhetoric of purist Brexiteers.

It is interesting that the Dutch PM has made these remarks, as he himself highlighted that Brexit has so far been beneficial for the Netherlands. 42 companies have relocated to the Netherlands so far, creating an extra 1,923 jobs and €290m in investment. Although there would no doubt be eventual consequences of a no-deal, considering the close trading links between the UK and Netherlands and the importance of Rotterdam as a trading port, a number of big companies relocating to the Netherlands could easily counteract this economic hit. Nevertheless, the Dutch PM has continued with project fear warning that a no-deal could be “devastating”.

Italy going solo?

With a lack of agreement in sight Italy have begun drawing up an emergency bilateral deal with the UK, in order to preserve financial stability and flow of trade. As Italy is dependent on income from the UK and already in a temperamental financial situation, the Lega-Five Star collation is reportedly worried that an unresolved Brexit could only have further negative consequences for Italy’s economy. Claudo Borghi, the Lega’s economic spokesman and Chairman of the budget committee in parliament, stated that Italy wants “the closest possible bilateral ties with the UK and certainly don’t agree with any idea of punishment”. However, it is unclear how productive or effective the negotiations over trade and finance will be, as they will inevitably be dependent on the EU’s rule when they are eventually set.

The Negotiations So Far

Where are the negotiations at now?

  • After MPs passed the Brady amendment last month calling for the Irish backstop to be replaced with “alternative arrangements”, the prime minister pledged to renegotiate with Brussels in an effort to secure the changes she said Parliament had demanded.
  • A motion endorsing the Government’s negotiation strategy was defeated by a majority of 45 last night. The defeat – which was mainly due to Conservative ERG members abstaining due to their desire to see assurances that the PM still backs leaving on 29th March even if a deal has not been agreed – is not legally binding and the Prime Minister is expected to return to Brussels in the coming days to resume negotiations.

What/who are the main barriers to an agreement?

  • Labour – Several Labour MPs have made clear they could not support another referendum and might consider backing a deal, if the government could offer stronger reassurances on workers’ rights and environmental standards.
  • People’s Vote – There is a call within Parliament to offer a vote on ‘Brexit reality over Brexit fantasy’, with those supporting the vote arguing that the reality of negotiations does not reflect what has been originally promised. This week, 10 Labour MPs from the frontbenches have threatened resign if Corbyn does not support a Second Referendum. However, the number of MPs backing a second referendum still falls a long way short of a majority.
  • ERG – ERG hardliners expressed their deep unhappiness with the wording of yesterday’s Government motion, which said Parliament “reiterates its support for the approach to leaving the EU expressed by the House on 29 January”. The problem is that the view expressed by the House that day included not just the pledge to seek “alternative arrangements” to the backstop, but also a motion saying no deal must not happen.
  • No-deal – May wants to keep the prospect of a no-deal Brexit on the table as a way of putting pressure on Brussels to finalise a revised exit deal after the House of Commons emphatically rejected her withdrawal agreement last month. However, May’s advisers admitted that a move led by former Labour minister Yvette Cooper and Conservative grandee Oliver Letwin to take a no-deal Brexit off the table was likely to win the backing of MPs in a key vote on February 27. Europhile ministers argue that May’s threat of a no-deal Brexit is causing serious damage to British business before the scheduled departure date of March 29.
  • Backstop – The DUP do not want a permanent hard border within Ireland, but there has yet to be an alternative customs arrangement to appease the EU27. The leaders of the European Union’s institutions have also refused to offer concessions of the temporary nature of the backstop.

What are the next steps?

  • May is expected to return to Brussels to resume negotiations to try to gain further concessions on the Irish backstop, although reports suggest that the negotiations will take a softer stance after last night’s defeat.
  • May now has until 26th February to return to the House of Commons with a new withdrawal bill and get it passed. If she fails to do so, she must lay another amendable motion down for 27th February. It is expected that MPs will attempt to amend this motion to prevent a no-deal Brexit.

Upcoming Key Dates

  • 26th February: May returns to House of Commons with a new withdrawal bill
  • 27th February: MPs vote on an amendable motion if the Withdrawal Bill does not pass Parliament
  • 13th March: Spring Statement
  • 29th March 2019: UK planned exit from the European Union
  • 30th March 2019: UK planned transition period.
  • 31st December 2020: UK planned exit from the transition agreement

 

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