Brexit Update 21st December 2018

By January 7, 2019 Brexit Updates

Top 3 Developments 

·         Immigration White Paper Published

·         EU outlines “no deal” contingency plans

·         May announces w/c 14th January for meaningful vote

Immigration White Paper 

The much-delayed Immigration White Paper has been published this week following repeated reports of disagreement within Cabinet. The most striking reversal is the non-inclusion of a longstanding Conservative policy ambition of bringing net immigration below 100,000 per year, with Home Secretary Sajid Javid confirming that there “is no specific target” for skilled workers; however, a proposed minimum salary threshold of £30,000 has been suggested for those seeking five-year working visas.

The temporary visa is designed to act as a “safety valve” for employers adjusting to the end of free movement for EU nationals. However, this has failed to win over business groups who are concerned over the turnover of short-term workers. The CBI has stated that the new proposals would be a “sucker punch” for companies across the country, “making people and regions poorer”.

The Immigration and Social Security Co-ordination (EU Withdrawal) Bill brings about four key changes to UK law in time for the UKs withdrawal from the EU: ending free movement, protecting the rights of Irish nationals in the UK, setting out a new framework for the UK’s immigration policy and aligning benefit rules after Brexit.

 

No Deal, No Problem?

So here we are, a little less than 100 days to go and the UK and EU are really beginning to ramp up their no-deal contingencies. The EU released a contingency paper setting out key points, aimed at protecting EU member states from the immediate risks and vulnerabilities of a no-deal Brexit. Note that all contingencies made are unilateral – meaning they are directed by the EU without the agreement or consent of the UK, and thus can be withdrawn at any time.

  • EU Commission urges member states not to strike bilateral deals with the UK.
  • UK flights allowed to fly into and over the EU for 12 months to ensure ‘basic connectivity’
  • UK hauliers allowed to carry freight by road into the EU for a 9-month period without needing permits.
  • Equivalence granted to certain areas of UK financial services, including derivatives for one to two years.
  • EU Commission urges the EU27 to take a ‘generous’ approach to residency rights of UK citizens in the EU in a no-deal Brexit scenario.
  • Visas not required for UK citizens stays under 90 days, for stays beyond that a residence permit or long-stay visas will be required. Those who have resided for over 5 years must be granted residency status.

Some of the consequences of a no deal Brexit, tabled by the Commission include:

  • Delays at borders due to the need for checks on UK live exports and the application of customs duties and taxes between the UK and EU.
  • End of the guarantee of the continuation of all existing air transport links.
  • UK financial services operators will lose their passporting rights, which allow them to provide their services across the 27 EU member states.
  • Pet passports for the EU will no longer be valid.

The EU has also strongly urged EU27 states from making their own deals with the UK, given the potential damage it could do to the EU’s negotiating position when it comes to re-enter talks with the UK. Although there are currently no plans for the EU to enter negotiations with the UK in a no-deal scenario, including to agree ‘mini-deals’ to avoid the view pre-Brexit that a bilateral ‘managed no-deal’ will be forthcoming.

The UK has introduced its own additional measures aimed at preparing the UK for no-deal and has release billions of pounds of funding for departments to prepare, whilst directing businesses to implement their contingency plans. 140,000 firms have been contacted to direct them how they should respond, whilst 3,500 military personnel have been placed on standby to assist with preparations if needed – mostly administrative staff to supplement the civil services operations.

 

Running down the clock

Theresa May has been accused of ‘running down the clock’ by the SNP and opposition parties, following moves to step up no deal plans and push the meaningful vote back to the week commencing 14th January. Whilst some have said a no deal outcome appears ‘the most likely outcome’ based on a lack of agreement in Parliament for May’s deal, and possibly no majority support for any other deal, there continues to be a concerted push to remove the no-deal option.

Yvette Cooper has placed an amendment to the Finance Bill coming before the House in early January, which is aimed at stopping the Government proceeding with no-deal if Parliament cannot come to a decision on another option. The Bill is supported by other parties, as well as Nicky Morgan and other Conservatives who want to stave of no-deal and compels the Government to seek Parliamentary support for a no-deal. In the meantime, May is continuing to work towards new assurances from the EU to get her deal over the line, however with the Christmas period ahead and the threat of a no-deal and opposition to it increasing, her chances of success look limited. Clock or no clock, the situation is very likely to heat up early next year as Parliament and the country prepares for the unknown if May fails.

 

Amber Rudd Promotes a Second Referendum 

Amber Rudd has become the first Cabinet Member to publicly advocate for a possible second referendum. She stated, on Peston’s ITV show this week, that if the Withdrawal Agreement is rejected then “there would be a plausible argument for it.” Rudd has been praised by campaigners of the People’s Vote, however her fellow Cabinet members have been less positive. Jeremy Hunt stated that a second referendum would be “dangerous for the fabric of democracy” and “disastrous for the Conservative party” if Brexit is delayed or derailed. Additionally, Andrea Leadsom stated that a second referendum is not Government policy. The confusion and lack of agreement in Cabinet emphasised the uncertainty around the Government’s plans if May’s deal fails, as well as a lack of confidence from business and the public.

 

Return to Poland, urges Morawiecki

Prime Minister Morawiecki visited the UK this week, reiterating the close unity of the two countries. In the joint press conference held after talks with Prime Minister May, Morawiecki urged Poles living in the UK to return to Poland. May had just prior said that Poles in the UK “can feel safe, can be sure that their rights and social rights will be respected”, comments Morawiecki welcomed but followed up by saying that “our economy is blooming [and] we would like to encourage citizens to consider returning to Poland, although we respect everyone’s personal choices”.

He also said that the UK-EU Withdrawal Agreement was ‘the best that could be obtained’ and acted as a ‘window to the future’ in the realms of international policy, security “and all those areas of the utmost importance to us”.

EU Update

EU goes Phishing 

The European Union’s diplomatic communications network has been “hacked for years”, the New York Times reported earlier this week. The hackers have been “downloading thousands of cables that reveal concerns about an unpredictable Trump administration and struggles to deal with Russia, China and the risk that Iran would revive its nuclear program.”

Area 1, the company that discovered the breach, stated that the hackers were able to gain access to the European Union’s diplomatic communications through a phishing campaign aimed at Cyprian diplomats. Once the hackers were in the system, they gained access to passwords that were needed to connect to the European Union’s entire database of exchanges.

The hackers are a group known as APT 10, who are alleged to have acted on behalf of the Chinese Ministry of State Security to carry out malicious cyber campaign targeting intellectual property and sensitive commercial data in Europe, Asia and the US.

 

Belgian Prime Minister Resigns 

The Belgian Prime Minister, Charles Michel, handed his offer of resignation to King Philippe on Tuesday. His resignation came in response to a dispute with his coalition party, the N-VA, over the UN Global Compact on Migration. This left Michel with a minority government and, once several parties declared that they would not support him should he ask for a confidence vote, prompted his decision to step down as Prime Minister. The royal palace has declared that King Philippe will hold off on deciding on Michel’s offer of resignation for now, with the likelihood being that Belgium remains in political limbo until the elections in March next year.

 

No Rest for France 

Yellow Jacket protesters in France gathered for a fifth weekend of protest. However, only 3,000 people mobilised to participate in the protest, compared to 10,000 the week before. Prime Minister, Edouard Philippe, admitted that the Government did not listen to the people and has made mistakes, stating: “I remain persuaded that [the Yellow Jackets] want us to transform the country. I tell them that I share their impatience.”

The Government are aiming to find the money to alleviate the deficit that will stem from measures taken to assuage the Yellow Jackets protesters. One method that the Government hope will reduce this deficit is national tax on digital giants including Google and Facebook that will enter force on January 1, 2019. This is the tax that was originally drafted by the EU, but France is the first, and currently only, country taking measures against the tech giants using the EU’s recommendations.

More Protests across Europe

Brussels 

The UN Global Compact on Migration has also received a negative backlash in Brussels when 5,500 people marched against the pact earlier this week. Authorities had to resort to the use of water cannons to disperse the crowd after the protest turned violent, with 90 people being detained by the police.

Vienna

There were anti-government demonstrations in Vienna to market the first anniversary of Austria’s right-wing coalition. The total number of the protest saw up to 17,000 people out onto the streets.

Budapest

Thousands demonstrated in Budapest over the weekend, after the Hungarian parliament approved a law on extra overtime hours. More of the public are also calling for “democracy, rule of law, republic”, after a controversial change to the judiciary that critics say undermines checks and balances.

 

Upcoming Key Dates

  • w/c 14th January: ‘Meaningful Vote’ on the UK/EU exit deal
  • 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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