Brexit Update 9th August 2019

By August 23, 2019 Brexit Updates

Top 3 developments

  • Michael Gove, the Chancellor of the Duchy of Lancaster, outlined his disappointed as Brussels refused to remove the Irish backstop from the Withdrawal Agreement.
  • Remain parties attempt to unite to prevent a no-deal Brexit.
  • Calls for Scottish Independence increase as the Scottish public fear a no deal Brexit.

UK Update

I have a Cumming plan 

One of the most important Brexit stories that came out this week was also one that flew under the radar and received relatively little media attention. The Information Commissioners Office on Monday raised concerns about the privacy policy notice on the Conservative Party’s online call to action. The call asked voters to tell the Party what the most important issue is to them and their family out of a pre-selected 18 options, to say who they voted for at the last General Election and then who they would vote for in the next election. By selecting these answers, you choose to submit your personal data. It is when you click through the privacy policy when you find some chilling facts.

The privacy notice highlights that submitting your data allows the Party to collect information about you on a range of issues, including: ‘opinions on topical issues’, ‘family connections’, ‘political opinions’, ‘voting intentions’, ‘racial or ethnic origin’ and ‘religious views’. This level of transparency is due to the post-Cambridge Analytica world where people are more aware of how easily they hand over data and the power it harnesses, but nonetheless this admission caused some alarm about how much information can be legally harvested from data. There is no doubt that this call to action has Dominic Cummings’ finger-marks all over it.

Cummings is a political operative who understands better than almost anybody how powerful a tool this data can be. As Campaign Director of Vote Leave, he devoted £2.7 million out of the £7 million budget (nearly 40%!) to the digital marketing firm AggregateIQ – who were revealed to have some shady connections to Cambridge Analytica. Cummings can also be credited for gaining the contact details of tens of thousands of voters by offering a £50 million prize to whoever could correctly predict the results of all 51 games of the Euro 2016 Football competition – with odds of 8 billion to one. This call to action is a clear signal that Cummings is nailing down the three main issues that the Party will lead on in any future General Election, and this is perhaps the clearest indication yet that the Conservative Party is preparing for an imminent General Election.

Unhappy as Larry 

Larry Summers this week said that it was “delusional” to think that the UK could strike a quick, advantageous trade deal with the US, and that the UK has no leverage in trade talks. Summers is a US economist who served as Clinton’s Treasury Secretary and Obama’s Chair of the National Economic Council. Speaking on the Today Programme, Summers outlined that the UK has less to offer the US than Europe as a whole, which gives the US even less reason to make any concessions. The US are famously inflexible in trade talks, and the reason that the EU and the US have never secured a trade deal is because both sides are economic superpowers who see no reason to compromise an inch in trade negotiations. Although President Trump has expressed goodwill towards the UK, this is a man who has promised to put ‘America First’, and there is little incentive for him to offer the UK a trade deal which is advantageous to the UK in any way.

Secondly, Summers correctly notes that the UK has no leverage in these talks. Trade negotiations are supposed to be conducted from a position of strength, but the UK will be negotiating from a position in which it has nothing else. For seasoned negotiators, they will smell blood and will strike the hardest possible bargain for the UK to accept. Unsurprisingly, Summers’ comments provoked anger amongst Brexiteers, and Iain Duncan Smith publicly denounced Summers’ comments by highlighting that 45 Republican Senators have signed a letter to Boris Johnson pledging to back a trade deal with the UK once we have left the EU.

Unite to Remain

Remain parties are attempting to put all measures in place to prevent a no-deal Brexit, even including possibly joining together to form a unity party. Under the Fixed Term Parliament Act, should Boris lose a vote of confidence, if it was called, there would be a 14-day period in which an alternative government must win a fresh confidence vote, or else a general election must be called. Labour and other Remain parties have suggested that they would be able to win a confidence vote and therefore impose a ‘caretaker PM’ to request an extension of Article 50 before calling a general election. It is likely that such a request would be approved by Brussels, as they have already suggested that they will extend Article 50 for the purpose of a general election or second referendum.

However, it is unlikely that Jeremy Corbyn’s Labour would secure a confidence vote within Parliament, especially through McDonnell’s support of involving the Queen in this confidence vote. McDonnell has stated that should Johnson refuse to resign; he would send Corbyn to Buckingham Palace to tell the Queen that Labour is ‘taking over’. Many are hesitant to involve the Queen in such a complex political gridlock, especially as it would require her to intervene politically – something which she has avoided doing during her reign.

Alternatively, the Remain parties have stated that they would band together to lead a parliamentary majority after a confidence vote. Whilst it is likely that they would be able to gain a parliamentary majority, it is unlikely that they would be able to select one politician from the various parties to be a ‘caretaker PM’. Dominic Cummings, Johnson’s special adviser, has suggested that this attempt to block a no-deal would be futile and that Boris Johnson could select an election date that was after October 31st, causing the UK to leave the EU without a deal.

Following these comments, Jeremy Corbyn has written to the Cabinet Secretary, Sir Mark Sedwill, asking him to spell out the rules regarding a general election. In his letter, Corbyn tells Sedwill that the Prime Minister is plotting an “unprecedented, unconstitutional and anti-democratic abuse of power” and has asked for clarification. Currently there appears to be no constitutional issue with Johnson refusing to resign after a confidence vote and selecting a date for after the Brexit deadline. However, it would be considered to be a severe abuse of power and a disregard for Parliament’s wishes. Nevertheless, this is completely hypothetical as a vote of no confidence has yet to be called and Johnson may win this vote, as May did earlier this year.

Sturgeon of Support for Independence

With Boris Johnson continuing his ‘do or die’ pledge for a no-deal Brexit, the fear of a ‘Disunited Kingdom’ has grown, as a new poll suggests that a majority of the Scottish public now support Scottish Independence, which was initially rejected by the public during the 2015 referendum. The latest YouGov poll found that 47% back another referendum on independence within the next two years, in line with Nicola Sturgeon’s demand for a new vote by 2020, with 45% disagreeing.

Commenting on the poll, Sturgeon stating that “the case for independence grows stronger by the day. A broken Westminster system means Scotland is being dragged towards a no-deal Brexit, regardless of the heavy price we’ll pay for the lost jobs and lower living standards. The project is being led by Boris Johnson – a prime minister Scotland didn’t elect and who has no mandate to take Scotland out of Europe with all the damage that will entail”. This significant rejection of the current Conservative Government can only spell trouble for Johnson as it is a clear rejection of his current Brexit strategy. Johnson only has a working majority of one and therefore will need all the support that he can muster from within Parliament and with the SNP avidly campaign against not only a no-deal but remaining within the United Kingdom, it is unclear how productive the first months of his premiership could be.

The calls for Scottish Independence have not only spelt issues for the Conservative Party but also the Labour Party as John McDonnell has caused a split in the party after stating that he will support a second independence referendum despite the leader of Scottish Labour stating that there was no need for this. McDonnell has received significant backlash from his party surrounding the notion of supporting the break-up of the union and has helped Conservative campaigners as they suggest that he is in Sturgeon’s pocket.

Turn on the taps 

The former Chief Economist of the International Monetary Fund Olivier Blanchard said this week that Boris Johnson should turn on the spending taps of public finances to boost the economy after Brexit. This is a surprising statement to come from someone so closely linked to the IMF, as they have been historic advocates of slashed Government spending to reduce deficits and of economic prudence. But Blanchard commented that ultra-low bond yields have given Governments the opportunity to widen deficits with little lasting damage to the economy. The UK’s current budget deficit has been halved in the past year to £24.7bn, its lowest level in 17 years.

This will be music to the ears of Number 10, as Boris’ campaign pledges of putting 20,000 more police officers on the street, rolling out nationwide full fibre coverage and fixing social care all have a hefty price tag attached to them. In the Autumn Budget in 2018 Philip Hammond said that the age of austerity is coming to an end. Assuming Brexit is signed, sealed and delivered, Boris may well be the PM that brings austerity to an end and may well have the available finances to deliver on his campaign promises. However, the elephant in the room and the big ‘but’ is the assumption that he will have secured a Brexit deal. Everything rests upon this, and it is safe to say that those calling for the end of austerity should not get excited until this happens.

EU Update

For Gove nor money  

Newly appointed Chancellor of the Duchy of Lancaster Michael Gove accused the EU this week of blocking the chances of securing a Brexit deal by refusing to scrap the Irish backstop. Although he has a fancy title, Gove has essentially been tasked by Boris to coordinate the Government’s no-deal planning and chairs the Government’s Brexit ‘war cabinet’, which involves the highly technical and occasionally ugly process of making sure that the Government is ready for no-deal, at all costs.

His comments were in response to Irish Taioseach Leo Varadkar, who outlined that the backstop would not be removed from any future withdrawal agreement. Gove argued that because Theresa May’s deal had been rejected three times by Parliament, this was a clear mandate to seek new changes to the agreement, and that the only alternative to a revised agreement is no-deal. His view was corroborated by new EU Sherpa David Frost, who caused alarm with diplomats in Brussels by telling them that the UK had no alternative to no-deal and “no intention to negotiate.” The Government’s message discipline has been strong thus far, and the overarching message is clearly that this Government is willing to pursue no-deal if the EU does not bring anything new to the negotiating table.

At present, it seems both sides are digging in and are unwilling to compromise. But how will this stalemate end? Considering the entire negotiation boils down to a single issue, it could be argued that it is rash for the EU to be so inflexible and to lead its members into unnecessary economic downturn. But equally you could argue that the only thing that stopped the UK smoothly exiting the EU on the 31st March was 34 Conservative MPs who also refused to compromise. A plausible scenario could be that the UK continues to play hardball and the EU eventually offers something like a 5 year time limit on the backstop, something that is unappetising but just about palatable to the DUP and some Conservative MPs – and even some Labour MPs if they truly believed the alternative is no-deal. But this entire strategy rests on whether Johnson could actually get a no-deal through Parliament without it being blocked. At the moment the Parliamentary arithmetic dictates that he cannot, so the stalemate and the uncertainty is set to continue for the foreseeable future.

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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