Brexit Update 7th September 2018

By September 21, 2018 Brexit Updates

Top 3 developments  

    • Alternative to Chequers tabled by ERG
    • Agricultural workers pilot scheme launched
    • Manfred Weber endorsed by Merkel for Commission President

UK Update

Your deal, my deal, their deal, no deal

The Institute of Economic Affairs’ Shanker Singham has worked with the Conservative European Research Group to develop an alternative proposal for future UK-EU relations after the group and others criticised the Prime Minister’s Chequers proposal. The alternative plan, which will total around 140 pages, will be set out from this weekend in three instalments and is said to be based on a Canada-style free trade agreement, with a proposed solution for the Irish border issue. The publication represents a direct challenge and threat to May’s premiership, given support for the final UK-EU deal from her own party remains critical to passing the final agreement in Parliament. Dominic Raab has insisted MPs will be more supportive of the final agreement when faced with a binary choice of whether to support the deal or opt for a no-deal scenario. Barnier meanwhile is said to have said the Chequers proposal is ‘dead in the water’, which makes the Government’s position harder still, on all fronts.

It remains unclear whether the ERG, Labour or others within Parliament could influence the outcome of a no-deal scenario if the Government fails to pass the withdrawal agreement, which is likely to have only tentative support from across the house. Many will say the deal is better than a bad deal, many will say the deal is better than a no-deal, and many will say the deal is a bad deal, and no-deal is the worst deal – whatever the stance taken, very few are likely to be entirely happy with whatever the outcome is, meaning this is likely to remain an area of contention for the coming months and years.

Ire over Ireland border

The Telegraph has reported that Dominic Raab used an early meeting with Michel Barnier to tell him that the EU will be forced to order the Irish government to reinstate the border in Northern Ireland in a ‘no deal’ scenario, leaving the EU’s Chief Negotiator “absolutely furious”. The Brexit Secretary and the Government have reportedly become impatient with the EU’s objection to try and find a long-term solution to the border issue in the context of a future relationship without first agreeing on a backstop. Progress on the backstop is said to be “close to zero”, whilst Raab said that good progress is being made in other parts of negotiations. Best for Britain, the group campaigning for the UK to remain in the EU, further commissioned a Delta poll in Ireland which found that 52% of voters would vote for a united Ireland if a border was imposed.

The only solution put forward by the EU to date on an Irish backstop rests on customs checks being made down the Irish Sea, this has been ruled out however by the UK who deem it ‘unacceptable’. Raab further questioned the EU’s willingness for EU customs tariffs to be collected by the UK Government in Northern Ireland as part of the EU’s backstop proposal, but reluctance to engage with the UK-wide dual-tariff customs partnership proposal set out in the Chequers white paper. With just over a month to go, however, the EU is likely to continue to press on the backstop, whilst the UK presses on the future relationship, with both waiting for the other to blink. But just as two cars move towards each other in a game of chicken, the failure of either to swerve leaves a worse fate for both, showing the risk of the current impasse.

Visa scheme for agricultural workers launched

The Government’s scheme for agricultural workers has been launched, addressing the need for continued seasonal workers beyond Brexit. Whilst farmers’ associations applauded the ‘step in the right direction’, they said more needed to be done to allow farmers the flexibility to keep seasonal workers longer in periods of growth in the sector. The 2,500 workers a year cap was also criticised, with the Chair of British Summer Fruits saying 10,000 was a more appropriate cap given the current shortages on UK farms.

Under the scheme, non-EU migrant workers will be able to work in the UK for 6 months on farms before having to leave the country. The pilot will allow the government to make any changes to the policy and is likely to feature in part within the UK’s future immigration policy set to be tabled this year. Speaking at the launch of the new scheme, Sajid Javid, the Home Secretary, said he was committed to “having an immigration system that reduces migration to sustainable levels, supports all industry and ensures we welcome those who benefit Britain”.

Business Investment Down

Businesses have invested £22bn less in the last two and a half years, in part due to Brexit according to figures from the Office of National Statistics and Vendigital, a large business consulting group. Managing Partner of Vendigital, Roy Williams, has that manufacturers are reluctant to invest reserves for fear that orders from EU27 states may decline after Brexit. He further added that “policymakers increasing focus on planning for a ‘no-deal’ could make things worse”. With a little over 6 months to go until we official leave the EU, many of the issues facing business depend on the outcome of negotiations, and the subsequent votes in Parliament, meaning uncertainty is likely to remain at this critical stage. The Government’s no-deal technical papers offer some guidance to business on how to prepare in any scenario, with more set to follow in the coming weeks.

Operation Yellowhammer

HM Treasury suffered a leak when a government official had his clear folder snapped by eagle-eyed photographer Steve Back. The document showed what has been dubbed ‘Operation Yellowhammer’. Led by the Cabinet Office’s civil contingencies unit, the plan sets out how departments should prioritise spending in the case of a no-deal scenario. In the first instance, they are expected to draw upon internal budgets and reallocations of funding, with bids to the Treasury for Brexit contingencies in 2019/2020 made thereafter. The plan also appears to set out what communication networks would be established to deal with any additional requests for funding departmental spending.

Not for a lack of energy

EDF, Unilever and the UK’s energy industry body, Energy UK, have urged the UK Government and European Commission not to impose cross-border tariffs or barriers on energy trading after Brexit. The group warned that imposing costs on the use of interconnectors, which allow for the transfer of energy across borders, would ultimately have a negative effect on consumers and would set back the battle against global warming. With the UK outside of the single market, energy companies remain concerned over existing energy contracts that operate across borders, with infrastructure also often operating between countries, such as between Northern Ireland and the Republic of Ireland.

EU Update

Slammed over Selmayr

The European Ombudsman ruled on Tuesday that the European Commission had “stretched and possibly even overstretched the limits of the law” in fast-tracking the appointment of Martin Selmayr to the post of Secretary-General of the European Commission – the most senior position in the EU’s civil service.

The five-month investigation, culminating in a report, found that there had been four acts of ‘maladministration’ by the entirety of the 28-member commission. However, unable to impose consequences, the Ombudsman instead urged the Commission to “develop a specific appointment procedure for its Secretary-General, separate from other senior appointments”. The investigation was swooped upon by the UK who criticised the Commission for selectively breaking rules for internal appointments but not for negotiations, where the UK is seeking it to change its position.

I dub thee…

Manfred Weber, leader of the largest European Parliament political grouping, the European People’s Party (EPP), has been given the blessing of German premier Angela Merkel to run for the European Commission presidency after announcing his candidacy. If selected, Weber would take over from incumbent Jean-Claude Juncker at the end of his five-year term in October 2019.

Under current rules, the European Council, made up of the 28 heads of state or government, must nominate a candidate for the Commission presidency. The European Parliament then votes on the nominee, who once elected forms a ‘college of commissioners’ similar to a cabinet drawn from all 28 EU states who work across policy areas. Since the Lisbon Treaty 2009 however, the European Parliament has sought to put forward its own nominee for the job to be approved by the Council. This nominee is drawn from the largest European Parliament Group, which is currently the EPP, making Weber the likely nominee unless the EU Council refuses him. Michel Barnier has also been suggested as a potential nominee, however protracted Brexit negotiations appear to have scuppered his chances at present.

Upcoming Key Dates

    • August-September: 70+ technical papers released on No-Deal preparations
    • 20th September: Meeting between EU Member States in Austria
    • 18th October: EU Council Summit, including sign off of the EU Withdrawal Agreement
    • 29th March 2019: UK planned exit from the European Union
    • 30th March 2019: UK planned transition period.
    • 31st December 2020: UK planned exit from the transition agreement.