Brexit Update 17th January 2020

By January 31, 2020 Brexit Updates

Top 3 developments

  • Five candidates have made it through to the first round of voting in the Labour leadership contest.
  • Boris Johnson has formally rejected Nicola Sturgeon’s request for a second referendum.
  • Boris Johnson has promised to formalise a trade deal with the EU before the end of the year.

UK Update

And then there were five…

Only five candidates for the Labour leadership contest began the week by making it through the first round of voting. Keir Starmer, Rebecca Long Bailey, Lisa Nandy, Jess Phillips and Emily Thornberry made it through, with Clive Lewis pulling out due to a lack of nominations from MPs. The candidates must now secure the support of affiliate organisations, such as unions and constituency Labour parties, in order to progress to the postal ballot round. Candidates need to secure the support of 5% of local parties or three affiliate organisations – including two unions – by the 14th February. Clearly some candidates will have better a Valentine’s than others…

Some candidates are already making positive progress in reaching these milestones. Lisa Nandy has already secured the backing on the National Union of Mineworkers, while Starmer has Sera (a Labour-affiliated environmental campaign group) and Unison, meaning he is only one endorsement away from securing his place on the final ballot – with one month to spare. Long Bailey won the backing of Momentum on Thursday, gaining 70% of the vote. However, only 7,395 people took part, a long way away from the 40,000 strong membership that Momentum said that they had last April.

However, this segment of the Party is not totally representative of the entire Labour membership. Indeed, senior Labour figures have been urging people to sign up and vote for the next leader ahead of the 20th January deadline so that this wing of the Party is not the overarching voice of Labour. Party Chairman Ian Lavery and Shadow Cabinet Secretary Jon Trickett both issued a rallying cry this week to Northern, working-class voters to re-join the Labour Party to rebalance the Party, away from its Southern, metropolitan majority. They will both no doubt be disappointed that only 14,700 people had paid the £25 to register as a Labour supporter to vote for the next leader, a mile away from the 180,000 people that registered to vote when Corbyn was challenged by Owen Smith in 2016. It is also interesting that both Lavery and Trickett are backing Long Bailey, instead of Nandy, who has perhaps made the most compelling case for representing these voters in the race so far.

Although a relative outsider in the leadership contest, Nandy impressed this week in her interview with Andrew Neil by offering a blunt assessment of Corbyn’s leadership and in standing up to Neil’s bullish interviewing tactics. In the wide-ranging interview, Nandy criticised the Remain campaign for being overly negative, but also defended freedom of movement. She said that as Labour leader she would abolish tuition fees and renationalise Royal Mail, but would also renew Trident. Finally, she said that Labour was consumed by the Brexit question and criticised Corbyn’s handling of the Salisbury nerve agent attack. These views no doubt appealed to many Labour voters who accept that the Party must radically change to become a Party of Government. Despite the assumption that this contest is a two-horse race between Starmer and Long Bailey, the appeal of candidates such as Nandy and Phillips should not be underestimated by the silent majority of Labour supporters and the flocks of new people joining to vote for the new Leader.

Political stagnation for the nation

After the Scottish National Party’s impressive performance during the General Election last year, Nicola Sturgeon wasted no time and wrote to Boris Johnson on 19th December to request the powers to legally stage another referendum, at the same time calling for the Scottish Parliament to be given permanent powers to hold subsequent referendums on independence from the UK. This week Boris Johnson formally responded and rejected Sturgeon’s request. The Prime Minister has argued that “another independence referendum would continue the political stagnation that Scotland has seen for the last decade, with Scottish schools, hospitals and jobs again left behind because of a campaign to separate the UK”.

Unsurprisingly, Sturgeon has not been disheartened by Johnson’s rejection, arguing that “democracy will prevail”. Next steps from the Scottish Government will be outlined next month, though Sturgeon has already ruled out holding an unofficial referendum similar to the disputed one in Catalonia in 2017, as the results would not be recognised by the international community. Reports suggest that the SNP’s Finance Minister will use the Government Expenditure and Revenue Scotland (GERS) figures to argue the case that independence will benefit Scotland economically.

As it stands, Boris Johnson is committed to keeping the union intact, promising to build a stronger United Kingdom once Brexit is done, and will not be swayed to grant another referendum. The Conservatives strong majority of 80 will make Sturgeon’s campaign for independence more difficult, but she has outlined that she will continue to demand a referendum, especially with the Government committed to taking the UK out of the EU.

Deal or no deal 

Assuming the UK leaves the EU on the 31st January, the transition period to negotiate a trade deal will begin. Michel Barnier has expressed that a comprehensive trade deal between the parties is ‘very unrealistic’ by the deadline on 31st December. Moreover, Guy Verhofstadt, the European Parliament Brexit Coordinator, has also stated that it will be impossible to complete a free trade deal in less than a year. However, despite this view, Johnson’s Government has insisted that there will be no extension to the transition period. This was a key factor that persuaded Nigel Farage to stand down his Brexit Party candidates in Conservative held seats before the election.

If no deal is agreed, the UK and EU will trade on World Trade Organisation (WTO) terms from the start of 2021. It is the view of some experts that leaving on WTO terms will lead to an economic shock, unemployment and instability. Consequently, and fortunately for Mr Johnson, it is in the interest of both sides to agree a deal before this date.

The Conservative Government is hoping to negotiate a deal similar to that agreed between Canada and the EU (the CETA). This would mean that tariffs wouldn’t exist, but regulatory barriers may. However, despite Mr Johnsons optimism, it is worth remembering that whilst the UK only has 11 months to secure a deal, the Canada deal took approximately seven years to fully implement. Consequently, if any deal is struck it is likely to be a ‘bare bones’ deal meaning details would remain unagreed going into 2021. Whilst, this may not be an ideal position for the EU, politically it would enable Mr Johnson to have delivered Brexit by January the 31st, negotiated a deal by December 31st and consequently employ Brexit as a campaigning tool in the future.

EU Update

To deceive and make believe 

Whilst, the Brexit deal gives the UK unfettered market access to goods moving from Northern Ireland (NI) to Great Britain (GB), the situation of goods moving from GB to NI is somewhat more complex. Following a visit to Stormont, Mr Johnson expressed that ‘the only circumstances in which you could imagine the need for checks coming from GB to NI, as I’ve explained before, is if those goods were going on into Ireland and we had not secured, which I hope and I’m confident we will, a zero tariff, zero quota agreement with our friends and partners in the EU’.

However, comments by Michel Barnier, whilst speaking to the European Parliament, appear to challenge this statement. He said, ‘implementation of the NI protocol foresees checks and controls for goods entering the island of Ireland’. This position holds validity due to the Brexit agreement’s primary commitment to have no hard border in Ireland and therefore, keep NI and the Republic of Ireland (ROI) in a ‘single regulatory zone’. Consequently, due to ROI’s continued European Union (EU) membership, goods entering the ROI from NI will need to comply with EU rules. However, the absence of checks between NI and ROI, means that checks on goods entering the ROI originating in GB will have to made elsewhere. Subsequently, it seems difficult to comprehend how Johnson is imagining that there will be no checks between NI and GB.

Upcoming Key Dates

  • 31st January: Departure date from the European Union.
  • March: Future relationship talks begin.
  • 4th April: Result of the Labour Leadership Contest.
  • 31st December: End of the transition period.

 

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