Brexit Update 23rd February 2018

By March 10, 2018 Brexit Updates

Top 3 developments  

  • Theresa May reaches Brexit consensus
  • Corbyn to set out Labour’s Brexit policy on Monday
  • ERG and EU Commission seek to influence UK Government’s position

UK Update

Theresa May plays Chequers

Following a six-hour meeting between the Government’s Brexit Subcommittee at Chequers, a consensus appeared to have been reached on the negotiating objectives for the UK’s future relationship with the EU. On the matter of regulatory alignment, divergence was deemed to have ‘won the day’ with the UK set to gradually move away from EU regulations in certain sectors, in a form of ‘managed divergence’ after a period of full alignment to limit disruption. Adopting a three baskets approach, which was previously touted and rejected by the European Commission, the UK will seek to remain aligned in some areas, abide partially in others and move completely away on the rest.

The Chancellor, Philip Hammond, was said to have been shocked by the level of divergence agreed. Theresa May will now need to take the proposals to the full cabinet, who are expected to sign it off before a speech next Friday. Parliament, however, remains a significant potential obstacle to the PM’s Brexit proposals. Only by keeping MPs onside and assuring concessions to stave off a rebel amendment demanding a customs union can the Government pursue its flexible three baskets policy.

ERG and Commission flex muscles before Chequers

The highly influential European Research Group, headed by chief Brexiteer Jacob Rees Mogg, published a two-page letter to the Prime Minister this week setting out its vision for a post-Brexit relationship with the EU. The letter, which was also signed by some MPs who are not members of the group, stated that the UK should gain full regulatory autonomy after Brexit, as well as the freedom to adopt a global trade strategy, complete with the ability to negotiate new trade agreements ‘immediately’. Whilst the European Research Group sought to point out that only May could deliver Brexit, it has not stopped others from perceiving it as a ransom note.

The European Commission, sensing a hardening of the UK’s three basket approach, published a presentation on its website stating that UK regulatory views were ‘not compatible with the principles in the European Council guidelines’. This is unlikely to gain favour with UK negotiators, who see Council guidelines as one aspect of a two-party dialogue. The Commission is also worried that attempts from the UK to form a relationship with the EU based on mutual recognition risks undermining the original guideline to not allow cherry-picking.

With March quickly approaching, May is under pressure to set out the Government’s position prior to the commencement of further negotiations. It is widely expected for talks to begin in stalemate, with hard positions on both sides, and little is known of what may happen if no agreement is reached by the October deadline. It is not in either party’s interest for the negotiations to collapse, but with such strong views on all sides, something will have to give.

Corbyn to set out Labour’s Brexit position

Jeremy Corbyn is expected to set out Labour’s new position on Brexit negotiations and the future relationship with the EU on Monday. The speech is likely to include a commitment to remain in some form of customs union with the EU, placing a clear division line between the Conservative and Labour positions. Such a stance increases the chances of Labour supporting a tory rebel amendment compelling the Government to ‘secure tariff-free’ access to the EU, including the potential to participate in a customs union with the EU’. May will be under pressure to convince tory rebels to drop the amendment.

Fishing and workers priority for Gove

The DEFRA Secretary has ruled out the possibility of the UK’s fishing waters being used as a negotiating chip in exchange for the UK gaining access to the EU’s financial service sector after Brexit. The comments follow wide support from the fishing industry to leave the Common Fisheries Policy which regulates catch quotas. The European Commission is under pressure from EU states that are reliant on fishing in UK waters, such as Spain and the Netherlands, and, as such, is likely to seek access to ensure minimum disruption to the sector.

Following his appearance at the National Farmers Union conference this week, Gove addressed concerns about the lack of seasonal workers on farms. He stated his support for a scheme for seasonal workers from across the world to come and work in the UK to meet demand. The UK’s migration advisory committee is currently reviewing Brexit immigration policy, with the issue of seasonal workers to form one aspect of immigration policy. An immigration bill is set to enter Parliament in the coming year. It will set out an independent immigration policy for EU and non-EU citizens, with discussions over EU citizen access likely to form part of discussions over the future relationship in March.

Agreement close as UK and Scottish administrations meet

Despite a recent breakdown in talks, Westminster and the Scottish Parliament are said to be close to reaching an agreement on what the 111 EU powers that will return to the UK after Brexit will entail. The Scottish Government is seeking the ‘vast majority of powers to automatically flow from the EU to the devolved administrations’, whilst the UK Government is seeking supervision of such powers. Any divergence in the regulations on environmental standards, food, etc. risks creating barriers in the UK’s internal market. The UK government is reluctant to hand over powers to the devolved administration, only to have to enter negotiations when UK-wide common frameworks are sought. Progress will need to be made, to ensure closer support of the UK Government’s Brexit objectives by the devolved administrations.

Best for Britain campaign beefs up operations

The group which acts as Secretariat for the APPG on EU relations and is recipient of over £400k funds from George Soros, is ‘beefing up operations’ over the next six months to ensure a no Brexit option is considered in the final months before Brexit. New staff are being recruited, with plans to increase content calling for the UK to remain in the bloc across social media and more traditional platforms. With polling pointing to a similar outcome if a second referendum was held, the chance of the group succeeding in goal this is limited. However, if May fails to secure a good deal and satisfy the majority of Parliament in a final vote, this would be likely to threaten the stability of the government.

Airbus CEO confirms company will stay in UK

In a letter given to Business Secretary Greg Clark, Airbus CEO, Tom Enders, promised the Government Airbus would leave its British operations in place ‘long into the future’. This comes as a boost for May as she seeks to convince stakeholders that job losses will not rise due to her Brexit plans.

Transition migrants set to retain equal rights

EU migrants who arrive during the transition period are likely to retain the same rights as those who arrive before the UK leaves the EU according to media reports. Theresa May previously set out that those arriving after the UK leaves the bloc would not be able hold the same status; this change of position was likely adopted to speed up negotiations. It is also believed that the Home Office has fought back against a two-track EU immigration policy, citing strain on staff and time constraints as two reasons why the plans cannot be executed. Commitments to this effect, if true, are likely to form part of May’s speech next Friday in what is billed as the final speech on the Road to Brexit, and of similar scope to May’s Lancaster House and Florence speeches.

European Update

EU27 meet to discuss budget shortfall

EU27 members are meeting to discuss the shortfall in funds caused by Brexit, and its implications on the EU budget. The Commission has warned that a failure of states to increase their contributions will result in programmes being cut, including future EU defence plans. The most controversial cuts would fall on the Common Agricultural Policy, with regional and structural funds also affected. The negotiations on how to allocate funds and changes in member contributions are likely to be heated, and to run parallel to UK exit negotiations, with many states looking to the UK as a possible source of future financing if the EU weakens its red lines on single market access and financial services inclusion. The protracted negotiations will go on throughout the year, with the European Commission seeking concessions from member states as it aims to fulfil the EU’s long term financial priorities.

Juncker’s Chief of Staff to become head of EU Civil Service

The College of Commissioners, who act as the executive branch of the EU in terms of their policy portfolios, appointed Martin Selmayr as head of the EU civil service this week. Selmayr, who acts as the EU’s number two after Barnier in Brexit negotiations opposite Olly Robins from the UK and is Chief of Staff to Juncker, will take on the post of Secretary-General, overseeing the work of the entire civil service. Having acted as one of the key architects of Juncker’s top-down reorganisation of the Commission, he remains a formidable figure in Brussels, and is to be charged with implementing Juncker’s legacy over the next twenty months and beyond. Juncker has already ruled out rerunning for Commission president next year, allowing Selmayr to act as his legacy posting.

Michel Barnier has been tipped to take Juncker’s place, having previously ruled out remaining as chief Brexit negotiator beyond the March 29th exit date, whilst also retaining a good relationship with member states and the European parliament.

Timeline

  • 23rd February – Informal meeting of EU27 Heads of State/Government
  • 22nd – 23rd March – European Council Summit

 

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