Brexit Update 3rd August 2017

By August 17, 2017 Brexit Updates

Top 3 developments

  1. Cabinet ministers row over the UK’s post-Brexit immigration policy
  2. Tensions continue to rise over the Irish border
  3. Bank of England warns of economic uncertainty over Brexit

UK Update

Cabinet quarrels continue

Downing Street has sought to end uncertainty over the UK’s post-Brexit immigration policy by refuting suggestions that freedom of movement will continue after the UK leaves the EU. The move comes after Philip Hammond said full immigration controls could take ‘some time’ to implement, and that there is a broad consensus in Cabinet in favour of a transition period lasting up to three years, during which time ‘many arrangements [would] stay very similar’. On Monday the Prime Minister’s spokesman clarified that ‘it would be wrong to suggest it [free movement]… will continue as it is now’, insisting that ‘free movement will end in March 2019’. The statement is an attempt by the Prime Minister to reassert control over her Cabinet ministers, who have set out their own rival views on what the UK’s post-Brexit immigration policy will look like. The Home Secretary has indicated that there will be a relatively flexible immigration policy which allows EU migrants to continue to come to the UK provided they register. Meanwhile, International Trade Secretary Liam Fox has warned that the continuation of unregulated EU immigration would ‘not keep faith’ with the result of last year’s referendum.

Carney warns of economic carnage

The Governor of the Bank of England, Mark Carney, has warned that uncertainty over Brexit is already impacting on the UK’s economy. The Bank voted to hold interest rates at 0.25%, and downgraded the UK’s growth forecast from 1.9% to 1.7%. The revision caused Sterling to drop to a nine-month low against the Euro. Commenting on the downgraded forecast, Carney said that investment had been weaker than would otherwise have been expected, and that ‘the speed limit of the economy, if you will, has slowed’.

Irish border disorder

The Irish Taoiseach, Leo Varadkar, has said he wants to ‘keep the door open’ for the UK to stay in the EU. When asked whether there’s any possibility of the UK changing its mind on Brexit, Varadkar said ‘I still hope that it won’t happen’. He went on to claim that it is part of his ‘remit’ to keep the door open ‘not just to the EU, but also to the single market and to the customs union’. He suggested that remaining in the single market or customs union would be ‘the best outcome for Ireland and Northern Ireland and Britain’. DUP leader Arlene Foster has attacked Varadkar’s comments as ‘unhelpful’. The row comes as tensions continue to rise between the Dublin Government and the DUP over the issue of the border. Speaking last week, the Irish Taoiseach said the Irish Government will not implement an economic border between the UK and the Republic after the UK leaves the Union. He claimed, ‘it is the British and the Brexiteers who are leaving, so if anyone should be angry it’s us quite frankly’.

Cross party plotting for EEA vote

A cross-party group of MPs announced their intention to force a vote on whether the UK should remain in the European Economic Area post-Brexit. The announcement comes as concern grows amongst MPs that the upcoming EU Withdrawal Bill will not allow the UK to remain in the EEA for even a few years during a transitional period. Labour MPs Stephen Kinnock, Chuka Umunna and Heidi Alexander want to work with their Tory colleagues to pass an amendment to the Bill when it comes before the House of Commons in September. Making the case for cross-party unity, Kinnock said: ‘The EEA is a well-established and well understood arrangement that allows us to leave the EU by walking calmly over a bridge rather than leaping recklessly off a cliff edge’. Single market and customs union access is likely to be the biggest challenge for Theresa May; particularly since she has a slim majority.

Starmer’s a Stayer!

The Tories have accused the Labour Party of trying to halt Brexit after the Shadow Brexit Secretary revealed plans to pressure the government to keep the UK in the single market during a transitional period. Speaking to the Guardian, Kier Starmer said he would table amendments to the EU Withdrawal Bill to the effect of ensuring it was ‘possible to achieve transitional arrangements on the same basic terms – including the single market and the customs union’. Starmer said the amendment could pass with cross-party support. Conservative MP Charlie Elphicke hit out at Starmer’s plan, saying ‘it would be wrong for the Labour party to seek to undermine the referendum decision or seek to kick it into the long grass’.

Davis fears peers

The House of Lords EU Committee has criticised the Brexit Secretary for declining to give evidence over the summer break. Davis refused to appear before the Committee to answer questions on the second round of Brexit negotiations when asked by crossbench peer Lord Jay on 19th July. Davis claimed that he was unable to attend because of Parliament’s summer recess – an excuse Lord Jay called ‘inadequate’. The Brexit Secretary said instead that he would give an oral statement to the House of Commons when it returns from recess in September. His row with the Lords is the latest in what is likely to be a series of confrontations between Ministers and Parliament over accountability during the Brexit negotiations.

IDS hits out at anti-Brexit Trade Envoys

Iain Duncan-Smith has called for trade envoys who oppose the Government’s Brexit position to be sacked. The UK’s 21 trade envoys were originally appointed in 2012, and are charged with building on the UK’s existing relation with emerging markets in order to maximise bilateral trade. However, the former Tory leader has said it is unacceptable that so many of the 21 appointees oppose Theresa May’s line on Brexit. Speaking to the website Brexit Central, Duncan Smith said, ‘it is quite absurd that at the moment the UK leaves the EU and starts to make new free trade deals, we should have as our trade representatives people who are viscerally opposed to Brexit’. A Government spokesman dismissed Duncan Smith’s concerns, saying ‘the voluntary roles are appointed by the Prime Minister and all envoys bring a wealth of experience to help support British businesses in growing and succeeding internationally’.

BoJo and Cable’s war of words

A row erupted last week after Liberal Democrat leader Vince Cable referenced rumours that the Foreign Secretary may be about to resign. Seizing on comments made by International Trade Secretary Liam Fox in which he alleged that ‘there is no cabinet consensus for moderation’, Cable said, ‘Dr Fox’s comments, directly contradicting the chancellor over a transitional agreement on Brexit, show all the signs of a cabinet in a state of civil war’. In response Johnson accused Cable of ‘peddling lies’. A spokesman for Johnson went on to say, ‘Boris and Philip Hammond are working closely to take the UK out of the EU and are not going to be diverted from that important task’. The war of words speaks to the ripe tensions in cabinet as Johnson, Hammond, Fox and May struggle to display unity.

Non, je ne regrette rien

A new poll released this week by YouGov shows that UK voters believe economic damage is a price worth paying to get their way on Brexit. According to the poll, three out of five Brexiteers and one in three Remainers would be happy if the British economy sustains “significant damage” in order to be proven right on Brexit. Only 20 percent of Leave voters said damaging the economy was too high a price for Brexit. The poll comes as the latest figures from Eurostat show that the Eurozone economy has grown twice as fast as the UK in recent months. GDP in the 19 countries that use the euro expanded 0.6% in the second quarter of 2017, compared to the UK’s 0.3%.

European Update

Neg-slow-tiations

Brexit Secretary David Davis has dismissed reports that Brussels may delay trade negotiations because of a lack of progress during divorce talks. The rumours follow a report in the Telegraph in which chief EU negotiator Michel Barnier is said to have told a private meeting of ambassadors that the next phase of negotiations will be delayed by two months because of disagreements over the UK’s divorce settlement. Barnier has consistently maintained that ‘satisfactory’ progress must be made on the exit payment, citizens’ rights and the northern Irish border before the next stage of talks can begin. A spokesman for the Department for Exiting the EU said, ‘negotiations to leave the EU are under way and we have already made good progress on a number of issues… Government officials are working at pace and we are confident we will have made sufficient progress by October to advance the talks to the next phase’.

EBA, EMA, BYE

The application window for governments wishing to host two EU agencies currently based in the UK closed on Monday night. The European Commission will now begin assessing applications from the 23 countries offering to host the European Medicines Agency and the European Banking Authority, based on criteria about office space, job opportunities for spouses, good ‘European-oriented’ schooling and transport links. Currently the two agencies employ just over 1,000 people and are based in Canary Wharf. Months of fierce lobbying is expected until the Commission reaches its decision in November. Germany is the favourite to win the EBA – widely seen to be one of the greatest spoils from Brexit. The Republic of Ireland has bid for both agencies, and has offered £70m over one decade to facilitate the relocation. The results of the Commission’s initial assessment are expected on 30th September.

Timeline

  • 4th September – Parliamentary recess ends
  • 28th August – Third round of Brexit negotiation talks
  • 18th September – Expected start of fourth round of Brexit negotiation talks
  • 24th – 27th September – Labour Party Conference
  • 1st – 4th October – Conservative Party Conference
  • 9th October – Expected start of fifth round of Brexit negotiation talks
  • 19th October – EU Summit