Brexit Update 21st June 2018

By July 5, 2018 Brexit Updates

Top 3 developments  

  • EU Withdrawal Bill passed
  • Airbus warns of no-deal
  • Questions over future of security partnership

UK Update

Clearing the hurdles

Theresa May breathed a huge sigh of relief this week, after the Government’s flagship Brexit Bill passed both houses of parliament on its way to become UK law. The Bill, which received a series of challenges from the opposition, the Lords and some of the Government’s own backbench MPs, will be followed by a series of supplementary bills to prepare for the UK’s exit. MPs will be looking to the trade and customs bills as the next decisive points of influence if the Government does not settle its trade relationship with the EU, with many worried about business supply chains and confidence in the event of no deal on customs being reached. At present the Government is considering remaining in a customs union with the EU until 2022, however with no real certainty over future customs arrangements or when possible technological solutions will be ready, that date could be extended, further igniting division between MPs over what course to take.

Fly me to the Louvre

Airbus has published its Brexit risk assessment, warning that it would be forced to reconsider its investments and ‘long-term footprint in the country’ if the UK finds itself in a no-deal scenario. Such a scenario is likely to see the UK outside both the customs union and single market, threatening supply chains and leaving companies to consider whether Government contingencies will be enough. Airbus COO Tom Williams went further to say that in any scenario Brexit would have “severe negative consequences” for the UK’s aerospace industry, with Conservative MP Stephen Crabb calling it a ‘wake-up call’ for the Government. As a pan-European company, Airbus stands as an example of the challenges faced by negotiators as they try and leave the EU but maintain stability, with supply chains making multiple frictionless crossings between borders necessary to business continuity. The UK and EU are both working towards a final deal, with the EU Withdrawal Bill passed, and the first stage of negotiations and the transition period agreed.

I didn’t do it, I didn’t do it

Chancellor Philip Hammond has shot down claims that the Treasury, under his watch, is the ‘enemy of Brexit’, in reference to the more cautious and sceptical approach taken compared to some of his colleagues in Government. He further went on to say that the UK must recognise that our European neighbours are our most important trading partners, but that did not mean we could not get a good Brexit deal that provided new opportunities. The Chancellor also sought to provide reassurances to the City, by announcing that it was not his intention for the UK to become a rule-taker in a future UK-EU relationship, something he believed would prevent the UK from maintaining its competitive edge in financial services in the long run.

The spy who shoved me

Following soundings from the European Commission that the future security relationship between the UK and EU cannot be maintained at current levels, CCHQ head, Jeremy Fleming has spoken out on what has been achieved in the past through close cooperation. The unprecedented move, which included quantifying the number of terrorist plots that have been foiled with UK intelligence’s help act as a reminder of the cost of weakening the relationship. European Commission Chief Brexit negotiator, Michel Barnier, has announced already that the UK will not be able to maintain membership of the European Arrest Warrant, and will be limited in its interaction with other EU security systems, including the Schengen II system that records those entering and leaving the Schengen zone. Negotiations are ongoing however, with many EU member states calling for a change in positioning to reflect the ongoing strategic partnership with the UK on security issues.

EU citizen settlement scheme announced

The Home Office has set out its post-Brexit settlement scheme, in a move designed to provide certainty to EU migrants living in the UK. The settlement scheme will include a ‘short, simple and user friendly’ application process that preferences accepting, rather than rejecting applicants who will hear back ‘in a matter of days, not months’ whether they have been successful. Applicants will also need to supply supporting documentation, as well as answer a series of questions to prove their residency. Those with a criminal record, with jail time beyond 12 months are likely to be rejected upon applying. Earlier this week, Guy Verhofstadt called upon other EU states to speed up preparations for UK citizens residing in their countries to be given settled status before Brexit.

Brexit dividend under fire

Theresa May was under fire this week after stating that the NHS would receive a £20.5bn boost by 2023, in part financed by money saved from no longer being an EU member, known as the Brexit dividend. Contributions to the EU topped £9bn net in the 2016-17 year, with the OBR saying the UK will save money from leaving the EU after March 2019. However, forecasts do not account for the costs of leaving, including the creation of new institutions, any economic impact, and any funds contributed to the EU to maintain part of agencies. Any additional funds for the NHS boost are to come from increased taxes, however it is yet unclear how the boost will be achieved if the Brexit dividend is cut. The announcement goes some way in settling the ongoing dispute over the promises made by the leave campaign in the referendum, which included promising millions more pounds a week for the NHS in the event of a leave win. The Government is expected to further outline its spending plans in the Autumn budget.

EU UPDATE

Two decades on

The European Parliament’s chief Brexit negotiator has warned MPs that EU ratification of the future UK-EU relationship agreement could take two decades unless a ‘precise blueprint’ is put forward in October. Giving his preference for an ‘association agreement’ similar to that shared between countries aspiring for EU membership, Verhofstadt said he was looking forward to the UK Government’s Brexit White paper which he hoped would clarify points around the Irish border. The Government is expected to publish its future relationship white paper in the coming weeks, setting out the framework it hopes to achieve with the EU as it leaves the bloc. EU27 states are continuing to negotiate behind closed doors on what level of a relationship they want to achieve, whilst the European Commission continues to set out the legal basis of any future relationship in line with EU law and the principles of negotiations. Both sides are currently aiming for October as a deadline of the joint statement on the future relationship, with the June Council summit next week likely to reveal what it may look like from the EU’s perspective.