Brexit Update 19th October 2017

By November 1, 2017 Brexit Updates

Top 3 developments  

  1. EU leaders poised to declare insufficient progress as EU summit gets underway.
  2. Government’s flagship Brexit legislation is delayed by Tory opposition in the Lords.
  3. PM holds hastily arranged working dinner with Barnier and Juncker ahead of summit meeting.

UK Update

“The next Brexit-Line Bill will arrive in approximately three weeks”

The return of the Government’s EU withdrawal legislation to the House of Commons (from the Lords) has been delayed this week as ministers struggle to persuade rebel Tory Peers to drop their support for hostile amendments. The Bill had been expected to return to the Commons next week, but the Government is now setting aside more time to respond to the 300 amendments tabled. The Bill is now not expected to be debated in the Commons again until after the Autumn recess on 13th November. Commons Leader Andrea Leadsom said it is “taking a bit of time to have proper, thoughtful, well-considered responses”. However, the delay is widely thought to be down to a reported Cabinet split over how to deal with the amendments, and how far to back down on key issues. Nonetheless, Government also maintains that the bill is not technically delayed, because a date for the next stage was never set – despite widespread expectation in Whitehall that the Bill would be returned to the Commons straight after the Conference season. Shadow Brexit Secretary Keir Starmer said, “Theresa May cannot unite her Cabinet or her party behind this deeply flawed Bill. There are now serious questions about whether the Prime Minister can deliver Brexit”.

May’s dinner diplomacy

The Prime Minister flew to Brussels for a 90-minute working dinner with the most senior members of the EU Commission on Monday, in an attempt to win agreement to open trade talks ahead of this week’s EU summit. The Prime Minister met with Commission President Jean-Claude Juncker, his chief of staff Martin Selmayr, and EU chief negotiator Michel Barnier, alongside her top aide Olly Robbins and Brexit Secretary David Davis. Unlike May’s last working dinner, no leaks have emerged about exactly what was discussed at the meeting. However, it is understood to have failed to produce any substantive movement. A joint statement from Juncker and May following their dinner said little more than that “efforts should accelerate over the months to come”. There was no agreement – or even hint – that either side would make concessions on the divorce bill in order to progress talks. Speaking about the meeting on Tuesday Barnier said, “I’m ready to accelerate the rhythm, but to speed up, it needs to be two”. No. 10 failed to mention the planned meeting last week, and it did not appear in Juncker’s diary – fuelling speculation that the meeting is a last-ditch attempt by the Government to make progress before the crunch vote at the EU summit on Friday. Yet, Juncker and Barnier are not the only beneficiaries of the Government’s whirlwind diplomacy. Earlier this week the Prime Minister called German Chancellor Angela Merkel, EU Council President Donald Tusk, and Dutch PM Mark Rutte. The Foreign Secretary also hosted eight EU foreign ministers at his country estate over the weekend, in a bid to woo European leaders.

OECD warns of Brexit damage

An influential City group, the Unite workers’ union, and the European Infrastructure Bank (EIB) have all issued warnings this week about the potentially damaging affects Brexit could have on the UK economy. TheCityUK, the main lobby group for financial services companies, warned that the City requires “urgent clarity” on transitional arrangements, saying, “a transitional deal is of diminishing value… The longer it takes to secure, the less beneficial it is”. The Unite union echoed this, saying that the supply chains of manufacturers will be severely disrupted unless a “meaningful” transition deal is in place by the end of the year. The EIB has meanwhile claimed that Brexit could damage the Bank’s ability to fund UK infrastructure projects; “project promoters are less interested in what we do because they do not know what kind of legal relationship we will have after Brexit”.

The warnings come as the OECD published a report claiming that reversing Brexit would boost the economy. The group say that a “referendum” or “change of majority [government]” leading to the UK staying within the EU” would have a “significant” positive impact on the country’s economic growth. The Treasury flatly rejected the OECD’s suggestion of a second referendum, issuing a statement which read “we are leaving the EU and there will not be a second referendum”. The report also warns that a no-deal scenario would result in investments falling, the pound shrinking in value and the country’s credit rating being cut. Chancellor Philip Hammond said he would consider the report, but took the opportunity to reiterate that the UK would benefit from a transition period, saying “by delivering a time-limited transition period, avoiding a disruptive cliff-edge exit from the EU, we can provide greater certainty for businesses”.

McDonnell: Labour in talks with Tories to block no-deal Brexit

Shadow Chancellor John McDonnell has said Labour is in talks with Tory MPs to agree a parliamentary veto to prevent the UK from leaving the EU without a deal. Speaking on the BBC’s Andrew Marr Show, McDonnell said that discussions were taking place “right the way across the House” – including with Tory MPs.

European Update

European leaders discuss Brexit at EU summit The Prime Minister has met with the EU’s 27 heads of state at a summit meeting in Brussels. Today and tomorrow leaders will discuss migration, defence and the digital economy. This evening Theresa May will address the leaders during a working dinner. In the speech she is expected to emphasise the reconciliatory tone used in her Florence speech, as she updates her counterparts on the progress made in the negotiations thus far. Downing Street has accepted that the Council will agree on Friday that sufficient progress has not yet been made in the process; as such, neither the EU nor Theresa May are expected to offer any new concessions. Nonetheless, the Prime Minister will hold bilateral meetings with other EU leaders in order to press the case for moving on to the next phase of talks as quickly as possible. Tomorrow Brussels is expected to reject the UK’s position gently and encouragingly, as not to further weaken May’s position, and thereby undermine her ability to conduct the negotiations.

The message from Brussels to London was clear from the moment leaders arrived; the divorce bill is still the main stumbling block, and it is up to the UK Government to act. This week European Parliament President Antonio Tajani dismissed the UK’s €20bn offer as “peanuts”. He went on to say the UK’s negotiating position was “not realistic”. Meanwhile, David Davis has accused Brussels of having a “complete obsession with money”. Addressing the House of Commons, Davis said “the simple truth is… they are using time pressure to see whether they can get more money out of us – that is what is going on, as is obvious to anybody”. That said, there were some encouraging signs of progress. As she arrived at the summit, German Chancellor Angela Merkel told reporters that enough progress had been made to entertain the idea that the EU could “take the work forward and then reach the start of the second phase in December” – though this still relies on more progress being made in the meantime.  Council President Donald Tusk seemed somewhat less optimistic, saying “I don’t expect any kind of breakthrough… we have to work really hard between October and December to finalise this so-called first phase”.

EU looks set to discuss trade and transition Leaked draft conclusions for this week’s EU Council summit show that the EU27 leaders are preparing to discuss amongst themselves an agreed position on transition and trade before the end of the year, in what the EU have called “internal preparatory discussion”. Brussels wants to be ready for trade and transition talks, should the UK unexpectedly make sufficient progress before Christmas. Whilst this may be welcome news for London, the documents also reveal that France and Germany have pushed for a tough negotiating position. Berlin and Paris are “perfectly aligned” in their approach to Brexit, and support a tough position. After meetings between Macron, Merkel and EU officials last week the conclusions were redrafted to contain stronger language. The revised draft demands progress on the divorce bill, citizens’ rights and the Northern Irish border. The document also includes a reference to the ECJ’s continued jurisdiction over the issue of EU citizens’ rights in the first paragraph of the document – a clear reminder of the complexity of the negotiations. The pair’s refusal to progress talks until greater progress has been made on the divorce settlement impelled May to call them both on Sunday and Monday to discuss the impasse. France and Berlin’s steadfast positions have come as a rebuttal to the oft-cited predictions of some Brexiters that the French and German governments would be quick to preserve their access to the UK market; indeed, thus far neither government has offered London solace.

Corbyn’s big day out Labour leader Jeremy Corbyn met with EU chief negotiator Michel Barnier and Antonio Tajani today, alongside Shadow Brexit Secretary Keir Starmer and Shadow International Trade Secretary Barry Gardiner. Corbyn said the aim of his visit was to “help move the talks forward”. Criticising Chancellor Philip Hammond for describing the EU as “the enemy”, Corbyn said “let me be clear, the British Labour party does not see anyone in Europe as an enemy. We see people across Europe as friends. You are our colleagues, our partners, our comrades and our friends”. He also called on both sides to move past the stalemate and build a new cooperative relationship, saying “the UK and the European Union must take steps together. There is no need for insults or divisive posturing”. He also held bilateral meetings with the Italian, Swedish and Portuguese prime ministers, and attended the Party of European Socialists’ pre-Council meeting.

Timeline

  • 19th – 20th October – EU Summit
  • 14th December – EU Council Summit