Brexit Update 2nd August 2019

By August 15, 2019 Brexit Updates

Top 3 developments

  • The Liberal Democrats won the Brecon and Radnorshire by-election leaving the Conservative Party with a working majority of just one.
  • The new Chancellor, Sajid Javid, has issued an extra £2bn for a no-deal Brexit.
  • David Frost, the new Europe advisor, has visited Brussels to meet with key officials from the European Commission.

UK Update

Conservatives Say By-(Election) to Brecon and Radnorshire

Following MP Chris Davies’ conviction for expenses fraud, the constituency of Brecon and Radnorshire in Wales held a by-election yesterday. In response to Boris Johnson becoming a Prime Minister, the Remain parties developed a new tactic to win seats and lobby the Government against Brexit. Plaid Cymru, the Green and the Independent Group for Change all agreed not to stand in the by-election. This meant that the Lib Dems were the only Remain party, other than Labour, standing in the by-election, facing the Conservatives and the Brexit Party.

Whilst this by-election may have been a standard run of the mill affair, it sets a precedent for things to come ahead of a General Election, which, if predictions are right, could be soon. Heidi Allen has launched the ‘Unite to Remain’ group to coordinate a wider tie-up of Remain parties with the belief that they can win “somewhere between 100 and 200 seats where we can really make a difference and return more Remain, progressive, moderate MPs” to Parliament. As the Lib Dems triumphed over both the Conservatives and the Brexit Party yesterday, this may set a precedent for remain parties gaining more seats in the event of a general election. With the Lib Dems targeting all Conservative seats for the next general election, it would foreshadow them taking some real strong holds following the continued public frustration with the Brexit negotiations.

Additionally, this may cause a few doubts in No 10 as to whether a snap election is really winnable. The Tory-DUP working majority has now dropped to just one meaning that Johnson will have to rely heavily on his party and the DUP to get any policy through. This also severely increases the chances of Johnson losing a vote of confidence, should one be called.

Putting your money where your mouth is

The new Chancellor Sajid Javid announced on Thursday that an extra £2.1 billion was being made available to prepare for a no-deal Brexit. New PM Boris Johnson made his promise to ‘turbocharge’ no-deal preparations a central part of his leadership campaign, and this announcement by Javid was a message to the EU that he is serious about leaving without a deal, and he is putting his money where his mouth is. A breakdown of this funding includes £434 million to help ensure continuity of vital medicines, £344 million for new border and customs operations, and to improve transport infrastructure around ports and for Operation Brock – the traffic management plan in Kent which closes the motorway and uses Manston airport as a lorry park. £138 million will be spent on a public information campaign about a no-deal exit, and £108 million will be spent to help exporters prepare for Brexit and to take advantage of new opportunities. With this new allocation the total Brexit spend of the Government could be as high as £6.3 billion.

The new PM believes a better withdrawal agreement can be secured if the EU truly believes that the UK are serious about keeping no-deal on the table. Theresa May never really talked tough enough about no-deal to convince the EU that there was any tangible alternative to the deal they were offering. They were therefore comfortable to play hardball and not offer any changes to the backstop because no-deal was not a credible threat. Although Parliament still presents a big roadblock to no-deal, every indication from Johnson, his Number 10 team and his Cabinet suggests that he is deadly serious about getting the UK out of the EU by the 31st October, and pursuing no-deal if necessary. These spending commitments give further weight to this.

Although a no-deal is expected to severely affect the UK’s economy, it would also be detrimental to the EU27. It  could also create discontent towards the EU from the member nations because they would believe that this eventuality was totally avoidable. It could possibly be viewed as an own goal from the EU Commission because if they were a little more flexible then they would not negatively impact the nations’ economies and create a hostile relationship with the bloc’s most important immediate economic, military and diplomatic partner. This is a risky strategy being pursued by Boris undoubtedly, but it might just work. The main question regarding these spending commitments is: will they be enough to make the EU blink?

Storm(ont) in a Teacup

Boris Johnson visited Northern Ireland on Wednesday for discussions with the five political parties at Stormont and to reassure them that he was committed to preserving the union. Arlene Foster, leader of the DUP spoke warmly about how her party will work with the PM to secure a deal with the EU and strengthening the union. This was important for Boris as the DUP are currently giving the Government a working majority in Parliament with the Confidence and Supply Agreement and the support of the 10 DUP MPs. Their support will be crucial in getting any updated withdrawal agreement through Parliament and, considering they have previously indicated support of a time limit to the backstop, there is some flexibility here in getting a deal over the line.

The trip was not entirely rosy for Johnson however, as Sinn Fein warned Boris not to wreck the union, and that a no-deal Brexit was an “astonishing political and economic act of self-harm.” Worryingly the Sinn Fein leader Mary Lou McDonald also cited the Good Friday Agreement when stating that if Northern Ireland was dragged out of the EU, then they should be given the “democratic opportunity” to “decide our future”. This is a fairly blatant threat that a no-deal Brexit could push Sinn Fein into campaigning for a referendum for Northern Ireland to become part of Ireland. This is of course the exact opposite of “strengthening the union” and could be absolutely fatal to Boris’ premiership. Not including the history of the Troubles and the lives lost by British troops in maintaining the union, it would also set a precedent for Scotland to hold another independence vote.

Johnson causes a Sturgeon

On part of his visits this week, Johnson met with both Nicola Sturgeon, First Minister of Scotland, and Ruth Davidson, leader of the Scottish Conservatives, in Edinburgh. Neither meetings spelled good news for the new Prime Minister’s pursuit of a no-deal Brexit.

Sturgeon has always been anti-Brexit, as Scotland voted overwhelmingly to Remain in the 2016 referendum. Following her meeting with Johnson, Sturgeon told broadcasters “in reality, he is pursuing a no-deal Brexit because that is the logic of the hard-line position that he has taken. And I think that is extremely dangerous for Scotland, indeed the whole of the UK”. It is likely that Sturgeon will pursue this ‘project fear’ tactic of the dangers of a no-deal in order to receive more support for a second independence referendum, which she has been campaigning heavily for. Westminster ministers, including David Lidington, have stated their fears that a hard-line approach to a no deal could result in the breakup of the union and Sturgeon is attempting to make their fear a reality through Scottish independence.

Johnson’s meeting with Ruth Davidson appeared to be more positive as she outlined her commitment to helping Johnson create a new deal with the EU. However, Davidson used an article in the Scottish Mail on Sunday to declare “I don’t think the Government should pursue a no-deal Brexit and, if it comes to it, I won’t support it”. Davidson fears a no-deal Brexit would be seized on by the SNP in their drive for independence and has insisted that she would not support such a departure from the EU. As Johnson’s working majority has decreased to just one this week, he is heavily reliant on all the support from his party and this may spell a rocky passage ahead as October 31st approaches.

EU Update

Not the first trip to Ireland that has caused a headache…

Boris faced even more troubles about Ireland this week, but not just from the political parties from Northern Ireland, but also from the Irish Taioseach and US Congress. The PM had a call with Leo Varadkar before his trip to Northern Ireland, and the reports on this call suggest that the relationship is icy between the two leaders. Johnson outlined that the UK is leaving the EU come what may on the 31st October, and that the withdrawal agreement must scrap the backstop. Varadkar was reportedly firm in towing the EU line and outlining that the backstop was necessary and that the withdrawal agreement would not be renegotiated. Varadkar reportedly offered for Johnson to visit Dublin, but noticeably, when Johnson’s team briefed the press on the phone call this bit was left out, as clear an indication as any that Boris has no intention on visiting Dublin anytime soon.

Meanwhile, the Chair of the Ways and Means Committee in the US Congress – the Committee that must approve all US trade deals – said that they would not vote on any UK-US trade deal that leads to a hard border in Ireland. Boris’ strong relationship with President Trump and the prospect of a mega trade deal with the US has been sold as one of the biggest appeals to offset the economic damage of no-deal. This comment will therefore throw cold water over the suggestion that a seamless trade deal can be signed with the US the moment that the UK crashes out the EU without a deal. However, even without this roadblock, there is little hope in a deal being agreed anytime soon.

Trade deals are a meticulous and agonisingly slow process and negotiating with an economic giant like the US will prove very difficult to wrestle favourable terms to the UK. This does not even cover the PR issues the Government would face about chlorinated chicken and the other red flags that are attached to a US trade deal. The chances of a UK-US trade deal being ready by the 31st October are basically zero, so any claim made otherwise should be taken with a pinch of salt, if not a handful…

Frost covers Brussels

David Frost, the new Prime Minister’s new Europe adviser, has told EU counterparts that the UK will leave the bloc on October 31 “whatever the circumstances” in the first meeting between the new Government’s team and the European Commission. Frost went on to confirm Johnson’s strategy to three key officials: Clara Martinez Alberola, the head of the cabinet for the European Commission President; Stephanie Riso, a senior official in Barnier’s negotiations taskforce, who was a key player in drafting the backstop and Ilze Juhansone, the deputy secretary general at the commission.

Frost’s arrival in Brussels marks an abrasive new phase in EU-UK relations as Johnson “turbocharges” Britain’s no-deal planning. Unfortunately, both sides reiterated their position with the UK demanding the backstop be removed from the Withdrawal Agreement or they will pursue a no deal and the EU continued with their position that the Withdrawal Agreement will not be reopened. Barnier reinforced these views during a call with Brexit Secretary, Steve Barclay, who stated that there was no chance of the EU changing its position or offering a “managed no deal” through side-deals to cushion the economic impact. None of the meetings bode well for future negotiations between Brussels and the UK, especially as Johnson has declared he will not meet with them until the backstop is removed from the Withdrawal Agreement.

Upcoming Key Dates

  • 3rd September: House returns from recess
  • 14th-17th September: Liberal Democrat Party Conference
  • 21st-25th September: Labour Party Conference
  • 29th September – 2nd October: Conservative Party Conference
  • 17th October: EU October Summit
  • 31st October: Current Brexit Deadline.

 

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