EU REFERENDUM - MAKE AN INFORMED DECISION
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LAST WEEK IN BREXIT 30/05/2017

30/5/2017

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I'm not always sure if it comes across, but I broadly try to be positive on this blog, but I'm really finding it difficult recently. It seems more so than ever that regardless of whether you think Brexit as a concept is a good idea or not, there is increasing despair across the board about the way it is being handled by our political parties. A YouGov poll from a few weeks ago coined the term re-leavers - those who don't support Brexit but now think that the government has a duty to deliver it. This group made up 23% of those polled. Combined with other Brexit supporters the poll showed there now to be 68% support for Brexit to be delivered across the board, so it looks like a majority of people want this thing to happen, or at least accept that we should make a go of it.

Now then, it's rather safe to assume that re-leavers would prefer a soft Brexit - something which arguably only the Lib Dems are campaigning for. The trouble with that of course is that the LDs look very unlikely to win, would prefer the whole thing to not go ahead anyway, and are also planning to negotiate based upon the idea that they could then hold a second referendum with an option to remain. They absolutely cannot guarantee that this choice is a possibility (more so now that the Irish Court case on the revocability of A50 has been abandoned), but also, like their EU counterparts, would have no clear incentive to negotiate a good deal under these circumstances. So overall their position seems broadly incoherent, and they are perhaps not as natural a home for re-leavers as they may seem, despite looking like the only option for hard remainers.

Labour then? Well this isn't that difficult. Labour's position is essentially this: We would do exactly what the Tories would do only for more noble reasons that make no sense when you think about them for a second and despite the fact that staying in the single market would address everything we purportedly want out of Brexit much more adequately. The main differential is that Labour do not think that no deal is better than a bad deal, although once again this would bring into question how they would negotiate. In terms of Brexit alone, I can't really figure out who they are trying to appeal to.

We all know what the conservatives plan is, detail aside, but the whole no deal is better than a bad deal thing is still their official policy. Whether they or anybody else actually believes it or not, it is in their manifesto. The audience applauded when May repeated this line during her interview with Jeremy Paxman last night, but even Theresa may is saying over and over again about how we need to make a success of the next 5 years or all sorts of bad things will happen, but the no deal line just doesn't sit alongside this. A slightly more coherent message would be something like: 'whilst we think no deal is better than a bad deal, no deal would be a failure'. Pete North as ever does a good of explaining why it is absolutely a bad idea, even if you think we should trade on WTO terms, purely because of the cliff edge it would entail. Many people also only think about trade when considering no deal, but what about everything else? No deal as the government means it is just walking away with nothing. It would mean in April 2019 a total severance of every legal form of cooperation we have, covering everything from our skies and travel policy, to maritime law, to energy, to legal frameworks, to financial transaction frameworks, to crime cooperation, to data sharing -  everything. The cliff edge would be enormous, even if you think we could rebuild. Only some significant mental gymnastics can avoid this. No deal on trade? Okay, maybe we could overcome it, but no deal on anything whatsoever? It would be a disaster.

I think my overall point here is that every party can be shown to be handling this incoherently or ineptly in some way, and that I'm finding it hard to think of any individual's position on Brexit that aligns exactly with any of our main political parties. This is aside from the fact that there are many other things to consider in the election, and many other ways in which the parties are blurring lines. Political homelessness and despair must be at an all-time high right now, and it is difficult to see when things might get any better.

If I could finally ask you to check out our Brexit podcast, where more views than just my own are aired, and importantly leave us a review on iTunes and share with others. We're having a week off before the election but will be back with our immediate reactions days later.

alex.davies@gmchamber.co.uk

@GMCC_Alex
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LAST WEEK IN BREXIT 22/05/107

22/5/2017

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Last week, David Davis' opposite number in Brussels, Michel Barnier, penciled in June 19th as the first day of the formal Brexit negotiations; Davis himself suggested that if the EU gives us a bill of £100bn we will just walk away; the Institute of Chartered Accountants said the bill could actually be as little as £5bn; Theresa May said that Brussels will have a bill of its own to pay; the Centre of Economic and Business Research said that losing access to the single market for services alone would cost us £36bn a year; and Angela Merkel  promised to treat the UK "fairly".

So it looks like what are perhaps the most important negotiations in this country's history will start on the 19th June, just 11 days after the snap General Election. The effects of the GE purdah mean that contact between the two sides is currently low, hence the extra 11 days needed for preparation following the election result. This is also the reason why the news at this point in time is basically just total speculation coming from both sides in isolation. On June 19th this all changes and the official talks begin. On this day, Michel Barnier will hold the opening discussions with whoever the British Brexit negotiator will be following the election. They will have around 15 months to thrash out the issues, with the matters of the divorce bill, the rights of EU citizens and the Irish border expected to be sorted by the end of this year. The talks are to be separated into 4-week rounds focusing on a particular issue, with week one being for preparation, week two for the disclosure of documents by both sides, before two weeks of discussions followed by reporting of progress at the end of each round.

In the meantime, we have estimates for the divorce bill now ranging from £5bn to £100bn+, so it absolutely anyone's guess what the final sum is, even though the matter of transfers between both sides will likely extend for years. David Davis' rhetoric that we will just walk out of the room if the bill is not to our liking is frankly, ridiculous. As Richard North explains, a complete walk-away no-deal option in the early stages of talks would be comparable to the total cessation of formal relations between nations that would only happen otherwise if a war broke out, and is thus incredibly unlikely and totally undesirable. Lines like this from our chief negotiator are looking increasingly stupid and unhelpful, particularly when the other side is making efforts to start approaching this thing seriously and with an open-mind.

On the report from the CEBR, which finds that exiting the single market for services could cost the country up to £36bn per year, it certainly won't sit well for both the Tories and Labour, who have both seemingly ruled out single-market membership completely. Now of course, forecasts like this are only as good as their assumptions and both parties hope to secure a replacement trade deal, but the report looks only at the frankly incomplete services aspect of the single market and does not sit well alongside the idea that "no deal is better than a bad one" - a line which unsurprisingly appears in the Conservative manifesto and is completely unsupportable from anything but a negotiating tactic viewpoint. Let's hope that our team take the negotiations and the matter of this county's future a little more seriously from June 19th, because I doubt there will be many secrets after that.

alex.davies@gmchamber.co.uk

@GMCC_Alex
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LAST WEEK IN BREXIT 08/05/17

8/5/2017

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Last week, the Conservatives won big in the local elections, Theresa May accused the EU of interfering in the General Election, Emannuel Macron became the new President of France with a landslide victory over Marine Le Pen, Jean Claude Juncker said that English is losing its importance in Europe, Donald Tusk continued his role as a (relatively) rational mediator and the Brexit bill snuck up to €100 million, which we will not be paying.

It is more than a month into our two-year negotiation with the EU and we are yet to hear of anything productive. What are getting is lots of rhetoric about the negotiations and how they could or should go, with the usual characters playing their typical parts. Theresa May was widely criticized for her view that EU officials are interfering with the General Election last week, with the European Commission responding by saying that they are ‘too busy’ to be bothering about it at all. President of the European Commission, Jean Claude Juncker, is perhaps the chief anti-Brexit voice from within the Union. Juncker is also the easiest official on the other side to fit into the mould of “the elite”, being Prime Minister and then finance minister of Luxembourg – a rich country of just 600,000, before joining the organisations of the EU. Juncker is the natural equal to our own ‘bloody difficult woman’, and it was the dinner between him and Theresa May a couple of weeks ago that seemingly went so badly. This week, Juncker came out with the line that ‘English is losing importance’ in Europe, a typically barbed statement from a notoriously tricky adversary. Following his dinner at number 10, Juncker said that “I’m leaving Downing Street 10 times more sceptical than I was before.” Despite this, Juncker does not actually have a formal role in the negotiations, but will surely have a hand in developing the Commission’s position. Even Angela Merkel was said to be annoyed at Juncker's recent behavior and attitude. Either way, Juncker already appears to be changing the tone of talks before the official negotiations even begin.

Juncker’s partner in crime is former Prime Minister of Belgium, Guy Verhofstadt, who now acts as lead Brexit negotiator for the European Parliament. Verhofstadt has too been the bane of Eurosceptics since the referendum, often ridiculing the whole idea of Brexit. This week however, he penned an unusually productive feeling piece in the FT, where he says “I believe that a Brexit deal remains more likely than unlikely. There is more that unites the two sides than separates them and, regardless of what is said in the build-up to negotiations, a no-deal scenario would be a disaster for all.” Like Juncker, Verhofstadt will not be directly involved in negotiations, and as the Parliament has no formal involvement either, his influence is generally overstated.

Towards the other end of the scale we have former Prime Minister of Poland and now President of the European Council, Donald Tusk. Tusk is generally serving as a calming and mediating force, as he showed last week when saying that everyone needs to calm down and stop arguing following the reports of the unhappy dinner and the continued jibes from Juncker. Tusk seems genuinely displeased by some of the rows and bad will around the negotiations, and certainly is the keenest for talks to lead to an outcome that works for both sides. Luckily for us, Tusk is the maybe the most important figure at play, being in charge of organising the Council’s negotiating position. Finally, we have former French foreign minister and Chief negotiator for the European Commission, Michel Barnier. Barnier is also largely seen as a pragmatist in contrast to Juncker, and is in charge of the day-to-day negotiating process. He, like Tusk, will play a large part in keeping things running smoothly, and will be another figure that May would like to keep on the good side of.

Emmanuel Macron trumped Marine Le Pen in the French election, and whilst Macron is openly a lover of everything European Union, his premiership should see a much more stable and focussed Union for us to negotiate with than Le Pen would have provided. A key economic advisor of Macron has said that we can expect him to be ‘tough’ on Brexit, but also that the UK and Europe shared a ‘mutual interest’ in maintaining economic prosperity.
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Lastly, the EU has indicated it now expects an upfront bill of around €100 million, which David Davis immediately rejected. Whilst EU lawyers have conceded that such a demand would never be legally enforceable, the issue of the divorce bill wants to be settled early on by both sides, and it this point it looks like we are moving further apart on this issue, rather than coming together.

For more of this, please have listen to the Last Week In Brexit Podcast, where we have the room to really get stuck into the more complex issues.

alex.davies@gmchamber.co.uk

@GMCC_Alex
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