Brexit Update 30th June 2017

By July 14, 2017 Brexit Updates

Top 3 developments

DUP-Tory deal signed

May now has a parliamentary majority – and all it cost her was a £1 billion strategic alliance with the DUP. Many predict that the DUP will want tax cuts of £460 million to keep the Tories in power post-Brexit.

The Queen’s Speech Vote

With DUP backing May won a vote of confidence by a slender margin in the Commons. MPs voted to endorse the Queen’s Speech – and by extension, May’s fragile government – by 323 to 309.

Heads roll at Labour HQ

Corbyn has sacked three Labour frontbenchers who defied the party whip in voting for Chukka Umunna’s Queen’s speech amendment.

UK Update

Pressure – pushing down on May, pressing down on EU!

Despite what the Queen pun may indicate, the EU is actually facing very little effective pressure from the UK Government. This is mainly because the two main parties have spent a great deal of time squabbling – among themselves, and with one another.

PMQs saw Corbyn take May to task over the Grenfell tower, attributing it – in part – to cuts to public services, and local authorities, saying that “the tragedy of Grenfell Tower has exposed the disastrous effects of austerity, this disregard for working-class communities, the terrible consequences of deregulation and cutting corners”. This view is clearly shared by some of the public: a report published by NatCen found that popular support for higher taxes and increased public spending is at its highest in a decade.

On the same morning, Cabinet ministers hinted that the 1% pay cap on public sector workers would be lifted; by lunch-time the PM’s political spokesperson declared “we have heard the message of the election”; by 4 pm “the policy hasn’t changed”; at 7:20 Tory and DUP MPs voted down Labour’s Queen’s Speech amendment to lift the pay cap by 14 votes, meaning another high profile Government U-turn.

Queen’s speech passed by a slim Mayjority; Corbyn wields the kosh

MPs voted to endorse the Queen’s Speech by 323 to 309. Cross-party rebellion was quashed when the government announced a major concession – to allow Northern Irish women to have free access to abortions in the UK. This was in response to Labour MP Stella Creasy’s tabled amendment to allow Northern Irish women this right, which attracted support among Conservative MPs. This – to some extent – quashes fears about any ideological influence the socially conservative DUPs may exert over the government.

However, Chukka Umunna’s amendment – demanding a commitment to fully remaining in the single market and customs union post-Brexit – did not enjoy the same success. 49 Labour MPs defied the party whip and voted in its favour. 3 prominent Labour frontbenchers who did so were demoted. Labour deputy leader Tom Watson said that he was “very disappointed” with Umunna for his decision to “break away” from the party line. Corbyn has a long history of voting against the party line, and these high-profile sackings may prove inflammatory. He has one fan, at least: “Corbyn showing his true Brexit colours. He’s almost a proper chap” tweeted ex-MEP and Brexit architect, Nigel Farage.

Bojo blusters on Brexit; is still no closer to number 10

Labour aren’t the only party suffering internal divisions over Brexit. The Tories are still no closer to forming anything approaching a party consensus on Brexit. Hammond made jokes at Boris Johnson’s expense during a speech at the annual gathering of The Economic Council of the CDU. He went on to stress the importance of a warm trading agreement between the EU and UK, calling for the trade of services to be liberalised globally. German Finance Minister Wolfgang Schäuble, who spoke immediately before Hammond, did not stick around to hear him speak. Hammond has been a staunch advocate of a soft, business-friendly Brexit. He’s not the only one – a recent Times report showed that just 65 Conservative MPs are prepared to leave the EU without a deal.

On the other side of the spectrum, Eurosceptic Tory MPs continue to push for a hard Brexit. Buoyed by his own ambition, Boris Johnson insists that a deal offering the UK easy and tariff-free access to the EU could be easily wrapped up within two years. He and other Eurosceptics continue to insist that the UK will thrive outside of the single market and customs unit. This is in open opposition to the Chancellor of the Exchequer, pragmatist (and potential leader), Phillip Hammond. Weakened May, who once blustered that “no deal is better than a bad deal” now watches from the side line as her ministers vocally try and shape Brexit on their own terms, for their own motives.

May no-mates

In spite of all the internal jostling in the Tory ranks as to who should replace May, the broadly-held party line is that May must stay. Many supposed that the wooden leader would be propped up and wheeled out throughout Brexit negotiations, so as to be made into a scapegoat post-Brexit. However, Nicky Morgan broke with party consensus, saying on Newsnight that May’s time in Number 10 should end with the submission of the UK’s final Brexit plans to the EU. When pressed, she that would “probably” mean October 2018 – the target date for a deal.

European Update

In the immortal words of Destiny’s Child: Bills, bills, bills

The European Commission has said that Britain’s withdrawal from the EU could leave the remaining 27 countries with a €20bn a year hole in their budget. Gunther Oettinger – European Commissioner for the budget – said that “we will have a gap of €10bn-€11bn a year”. He later clarified in a blog that the financing new initiatives – such as defence and security – may mean that “the total gap could therefore be up to twice as much”.

In a reflection paper on the future of the EU’s finances, the European commission wrote that new sources of revenue “should be conceived not only to finance part of the EU budget, but also to accompany its core policies”. One option raised was the application of common energy or environmental taxes “to ensure a level playing field between companies and contribute to the global fight against climate change.” A percentage of corporation or financial tax being used to “strengthen the fight against tax fraud and tax evasion” and reinforce the single market was another such idea.

If EU wanna be my lover, EU gotta get with my friends

Political turbulence in Britain has seen the EU look more united than ever. Margrethe Vestager, the EU’s commissioner for competition, handed Google a record-breaking €2.4 billion fine in one of the most complex and high-profile cases in EU antitrust history. This decision demonstrably shows the power and authority of the bloc: a rare political victory over one of the most powerful companies in the world. Last week the European Council’s president, Donald Tusk, spoke of “a surge of pro-European sentiment in recent weeks”; the success of centrists such as Macron indicates that Europe is broadly united and free of the populism and uncertainty that currently dogs Britain.

Barnier, borders, and Brexit

May’s offer for EU citizen’s rights haven’t been enthusiastically received. All EU citizens who move to the UK before Britain’s formal withdrawal will be given “blanket permission” to stay in the UK for up to two years post-Brexit – giving them time to apply for official residency rights. Barnier responded with a tweet that said that “more ambition, clarity, and guarantees needed than in today’s UK position”.

If a tweet seems a desultory response, it is probably because EU officials are hard at work on other matters: navigating how to create a “seamless border” between the North and South of Ireland, for one. “We’re trying to protect the single market and [prevent the Irish border becoming] a back door to import and export goods from third countries without any checks,” one of the officials said. May has said that Britain wants to “avoid a return to a hard border”.

What May has to say may prove to not be of much importance. According to EU treaties, May’s triggering of withdrawal talks means the European Council has to meet in two formats: as a group of 28 – until the UK officially leaves – and as a group of 27, as the remaining EU nations thrash out their collective negotiating position. After a working dinner last Thursday, May was required to leave the room as she became the subject of discussion. Given the UK’s exiting status, there is little May can contribute to long or short-term plans, and she voluntarily left summits early in December, February, and March, skipping April’s celebration of the anniversary of the Treaty of Rome entirely. There is little to suggest she was missed: “Leaders don’t want to walk over a dead body,” one EU diplomat said.

Timeline

  • 1st July – 3rd September – parliamentary recess
  • July 17th – second round of talks
  • 24th – 27th September – Labour Party Conference
  • 1st – 4th October – Conservative Party Conference
  • October 19th – EU Summit