The big hoo-ha from last week was over our exiting of Euratom, the European agency which regulates the nuclear industry.  We first learned of this decision when it was included in the Article 50 withdrawal letter, but the subject flew somewhat under the radar. Until now. Of course it turns out that this could be a pretty big deal, but more terrifyingly, that no assessment of the implications of the move were carried out beforehand. The Euratom treaty enables the free movement of nuclear materials and workers, and oversees the rules of doing so. It also funds and co-ordinates nuclear research projects and institutions throughout Europe. Whilst a separate legal entity to the EU, the two are inextricably connected, with no country being a full member of Euratom from outside the EU. The decision to leave Euratom was made without assessment as it is subject to the jurisdiction of the European Court of Justice (ECJ) which is now a red-line for the government, because we need to “take back control”. Leaving Euratom, among other things, will put our world-leading nuclear industry and its workers at risk, will disrupt British scientists’ work in the field, and may restrict the use of radioactive materials in the health service, such as those used to treat cancer. There are ways around this, such as associate membership, but it is not at all clear how easy or practical this would be or what of the benefits could be retained. Even arch architect of Vote Leave Dominic Cummings ranted on Twitter about how stupid a move this would be. It is just another entry in the ever-extending list of things that nobody who is handsomely paid to do so gave any serious thought to – customs, skies, fisheries, medicine, nuclear – what will it be next week?

We also had the launch of the bill formerly known as the Great Repeal Bill – now entitled the “European Union (withdrawal) bill”. I’m rubbish at legal stuff but the general impression seems to be either that we don’t really know any more about what this means, or that we should all be terrified of the coming power-grab and potential constitutional crisis, or both.

The Tory cabinet seems to be ganging up on Phillip Hammond in anonymous briefings, and is squabbling over Brexit policy, according to leaks within the party. Figures like Chris Grayling have immediately come out and denied that this is happening, but if it is, it is not good news for the Tory party and is probably bad news for the country. The rest of the party remains intent on repeating the same things over and over again, not changing course one iota in light of emerging information, the absolute antithesis of pragmatism. Hammond, whilst not a great deal more impressive, is much more realistic and appears to be actually taking new information on board and adjusting his approach accordingly. His rhetoric is perhaps at odds with the party line, but as we have seen the party line is unhelpfully rigid and ambiguous. Hammond represents compromise within the party – something which there will need to be a lot of, on both sides of the negotiations, if an amicable deal is ever to be reached. Any attempts to silence differing viewpoints within the party makes one wonder how differing viewpoints may be approached during negotiations. Alas, Hammond did eventually reiterate that there would be no single market membership during the transition period, once again throwing absolutely our best option under the bus.

Labour continue to confuse everybody. They have refused to rule out SM membership during the transition, but still want to retain all benefits of the SM and the CU despite leaving them, which is impossible, but boy are they sticking to it. Rebecca Long-Bailey even said this week that Labour want to “have our cake and eat it” when it comes to Brexit whilst recognising that this would be difficult without major concessions – a “have your cake and eat it” of a position, and completely meaningless. The bigger issue with the current political landscape is that with Labour having done fairly well at the election and the Tories looking shaky, party politics is becoming more important than doing Brexit in a sensible way. Hammond will now be hounded for disloyalty rather than listened to when he makes fair points about how badly his colleagues are doing.

As we officially enter the second round of negotiations, it unfortunately feels as if the only appropriate course of action for our politicians at this point is to accept that they may have screwed this up somewhat on first attempt, and reset both their approaches and their expectations. Davis in particular is still confidently pedalling vague nonsense, as we saw at his questioning by the Lords Committee last week. Everything he says massively oversimplifies the task at hand, and his general message that through compromise we will get through this and everything will be fine is completely at odds with his parties’ complete inability to even entertain the idea that they should adjust their strategy. Brexit will only work with if both sides are willing to give ground, yet the Tories are showing zero capacity to re-evaluate and adjust the course they so obviously set us upon before they were ready. They seem to see any wobbling on the current approach as a weakness, rather than a strength in effective, pragmatic management and a clear sign to the other side that we want to work with them. I cannot see any future outcome in which the Tories look good, given their current strategy. If we crash out without a deal, their reputation will be shot, and they will likely be out of power for a long time. If Brexit doesn’t happen, their reputation will be shot, and they will likely be out of power for a long time. If we get a good deal, it will look absolutely nothing like what they are suggesting we might get, will cross their red lines, their reputation will be shot, and they will struggle to get into power for a long time. The only way out of this is for them to hold their hands up and rethink, or call an election in the hope that they lose. The trouble is, none of the other parties are offering up anything better.

To end on a slightly more positive note, everything is starting to point in one direction: Norway. Barnier is mentioning the EEA more and more often, seemingly growing frustrated at our sides’ unwillingness to confront the best possible option despite him repeatedly putting it on the table. Iceland’s foreign minister has basically invited us into EFTA, and apparently there is willingness from all EFTA representatives to allow Britain into the bloc. Bill Cash, who leads the European Scrutinee Committee has said EFTA membership is an ‘interesting proposition’, and apparently there is increasing support for the idea within government, even going as far as the PM, and with DExEU not ruling it out. The way out is right there in front of us guys!

alex.davies@gmchamber.co.uk

@GMCC_Alex

Theresa May is tomorrow, on her one-year anniversary as PM, set to make a speech to reinvigorate her premiership. In this speech she will call upon opposition parties to “contribute, not just criticise”, and to “come forward with your views and ideas about how to tackle these challenges as a country”. This message is in stark contrast to what we were seeing 6 months ago, when any opposing a hard Brexit were called out as saboteurs. That May is willing for Brexit to become a cross-party issue some will see as very welcome, but it is a clear sign of weakness and a path she has obviously been forced into rather than chosen. Nevertheless, it is yet another sign that our Brexit destiny is softening, with the threat of “no deal” feeling for the first time ever less likely than the whole thing being called off. Perhaps.

Of course, the issue is far from settled. Rebel MPs including Chuka Umunna and Anna Soubry have formed a cross-party group to oppose hard Brexit, and there are rumours that Eurosceptics Steven Woolfe, founder of Labour Leave John Mills and co-founder of Leave.EU, Arron Banks are teaming up in the hope of launching a new movement to stop Brexit being watered down.  It seems that we may be returning to the world of Brexit campaigns. The trouble with this strategy in my eyes, is that a new Hard-Brexit campaign would have nothing new to say, and would be operating in an environment that is obviously turning against them. It wouldn’t be a reboot of the leave campaign rather than a re-hash – surely something nobody wishes to endure at this point.

The move by May will hopefully force Labour’s hand by exposing the contradictions of their Brexit strategy, which is currently permitted by their opposition status to not have to make any sense. If however, Labour take up the offer to collaborate, they will certainly need to firm things up. Labour are currently managing to wear two hats – they essentially back a hard Brexit, but also have their six rules under which Brexit must not go ahead, none of which would be satisfied by a hard Brexit. With May looking in essence to trade amendments for votes in parliament, Labour could find themselves in a fairly powerful position should they choose to take it, even if it is one in which their incompatible Brexit statements (or super-smart totally-on-purpose next-level politicking) have to be addressed. Labour’s position thus far has been given a pass, but if they are to take a step closer to the negotiating table this cannot go on.

Guy Verhofstadt has given us his two cents on the proposal for EU citizen’s rights, calling it a “damp squib” and “far short of what citizens are entitled to”. His comments form a joint letter to newspapers signed by leaders of political groups accounting for two-thirds of the European Parliament, in which they explain that they can veto any deal if they do not approve. Of course, vetoing the deal as far as we currently understand would leave us with “no deal” in which the rights of all citizens concerned would be blown to smithereens. This is like our MPs suggesting they might vote against the final deal if they don’t like it, which again would guarantee the worst outcome possible. Am I missing something here? Are both sides implicitly saying that if they don’t like the deal, we revert to the status quo? Unless there is a secret agreement that if Brexit doesn’t satisfy everyone then we won’t Brexit, these arguments make no sense whatsoever, right? Maybe I am losing it, I don’t know anymore.

alex.davies@gmchamber.co.uk

​@GMCC_Alex

Last week, Jeremy Corbyn sacked three of his frontbenchers because they voted for an amendment on staying in the single market. I could dwell on the irony of JC sacking MPs for rebelling – something which he has been proud of doing for his whole career, but instead I’m going to try and break down the madness that is happening regarding the single market question. Elsewhere, Labour MP Caroline Flint, speaking at a Progress event, said that “Those who aim to keep us in the single market, know full well that this is EU membership in all but name”. Speaking on Question Time, Liam Fox said: “Let’s face it, the people who say ‘we want to stay in the single market, we want to stay in the customs union, but really, we still respect the will of the British people’ – it’s not true. They’ve tried to frustrate the will of the British people”. I am astounded and disappointed that this kind of unthinking is still going on in the minds of our politicians more than a year on from the referendum. A senior trade diplomat at the WTO this week was quoted to have said “There are people in the UK who know what they are doing, but they are not the ones making the decisions."

Now, I am not suggesting that the opinion that we should leave the single market and the customs union is invalid, just that I am getting quite annoyed at the shaming of people who perhaps might have a nuanced view of these issues. To suggest that anything but coming out of the SM and the CU as soon as possible is an attempt to frustrate the will of the British people or is some attempt to stop Brexit, is a shutting down of much-needed debate, just as an amendment that would enshrine a guarantee of continued membership is equally ridiculous whilst the matter is obviously not settled. The current rhetoric around this question from our politicians at the moment does nothing if make them look incapable of holding a complex, non-binary thought, and forces me once again to go over some of the same things I’ve been arguing since I first entered Brexit land.

So here we go again: Brexit is a process, not an event. It is a catalyst, not a cure. Whatever you may want to get out of it, there will need to be steps along the way. After each step, we must take time to ensure that we are prepared for the next one. Ideally, if businesses are going to need to make an adjustment to a new arrangement, there should be as few adjustments as possible, and they should have more than enough time to prepare for them. None of these steps or adjustments will give us what we want in and of themselves, they will only move us closer to a position where getting what we want is more of a possibility.

As things stand, we are over three months into our two-year negotiating period, and basically nothing has been achieved. There are in my mind only two possibilities wherein we can make this work: One, that we extend our membership of the EU until at least 2022, but likely longer, by which time we may have enough sorted out as to have the adjustment be manageable; or two, we negotiate an extended transition period until 2022, but likely longer, wherein we are technically out of the EU but little adjustment has needed to take place. Our primary objective at this point should be to remove ourselves from the current time constraint, and get ourselves into a position where we can take our time, and figure out how to get the most out of this whole process.

There are many prongs to the things we seek to gain from, and protect during the process, and different people want different things; there are going to be trade-offs, and effective management of these trade-offs through a pragmatic approach is vital. Rushing this and closing off possible routes is the best way of guaranteeing that we “win” in one area but “lose” in all others; that we take one step forward but many more steps back. Behind the scenes at least, It seems as if civil servants are starting to come to terms with these trade-offs, and are considering realistic first steps to manage them effectively. But when MPs on both sides shame people doing any serious thinking about how best to go about this, it feels like we’ve made no progress at all in the past twelve months.

What about freedom of movement? Well, SM membership is not at all at odds with controlling immigration, if we can be smart about it. First of all, FoM is Freedom of Movement of Labour, not everybody. Many countries within the EU have ID card systems or something similar that allow them to monitor who is coming in and out and what they are doing much more comprehensively than we do. Non-EU immigrants to the UK already have ID cards, we have a system in place that could be rolled out more widely, all within the rules of the SM. Other countries too, have stricter border controls than we do, all within the rules. In this respect I suggest that perhaps some the dissatisfaction with the way things are currently done here are more reflective of domestic policy rather than the EU's. Then there is also the possibility of something like the emergency brake outlined in article 112 of the EEA agreement which is rumored to be on the table for the transition period. I could also talk about how the most recent annual survey of EU citizens conducted by Project 28 found that 76% of EU citizens believe the organisation handled the migrant crisis poorly, or that 79% believe that the EU “should protect its outer European borders more effectively”. This is a massive disconnect between the people of the EU and its leaders, at least showing that the conversation around FoM is bound to change dramatically over the next few years as Brexit progresses. On this issue, we are not necessarily up against an immovable object. There are options.

On the customs union, Theresa May was actually spot on when she said it isn’t a binary choice. The CU isn’t really what people think it is, and the various aspects attributed to it are not interdependent. There are ways we can make sure that customs cooperation remains as it is today whilst we are released from the Common Commercial Policy that prevents us from doing our own trade deals. In fact, we could enter our own customs union with the EU kind of like Turkey, or strike up individual bilateral deals like Switzerland. There are options.

Ultimately I suspect that we will leave both the single market and the customs union, but like Brexit as a whole, these are only means, not ends. The first step we take – be it EEA, EFTA or something similar, might not be the final destination that people are after, but until we have determined the best way to manage the trade-offs on the way to that destination, we would be stupid to start taking options off the table. 

alex.davies@gmchamber.co.uk

@GMCC_Alex

I’ve mercifully been away on holiday for a while, and a fair amount of stuff has happened in the past couple of weeks. First of all, the Brexit negotiations officially begun, and immediately, there were reports that Britain was dealt an early blow, but I’m not so sure. On day one, David Davis agreed to the EU’s proposed negotiating sequence instead of his own, which he had previously claimed would be “the row of the summer”. He agreed that there would be no talks on a trade deal until sufficient progress had been made on the divorce settlement, whereas he purportedly wanted these talks to occur in parallel. This was reported as both a compromise and a capitulation, and in truth, it is a bit of both. The Commission had initially asked that the divorce deal be settled completely before trade talks could begin, whereas the new agreement is that there is substantial progress before parallel talks open up. Regardless of whether this is seen as a sign of weakness or whatever, I think it is a good outcome. It shows first of all that the EU has the upper hand on many of these issues, but also that there is perhaps not as much willingness to walk out of talks as the government wants us to believe, which is good. Whether you like Brexit and the government’s approach to it or not, there should not be a desire for talks to fail or an appetite for us to be humiliated. Compromise is good, especially on day one.

We also had the Queen’s speech last week – a bizarre event new to myself where the government’s legislative agenda for the next two years is set out in a highly ceremonial fashion. 8 of the 27 bills announced were in order to allow Brexit to happen, with the most interesting update being that the Repeal Bill will no longer do so greatly. More widely, the speech was an indication of just how much Brexit is going to consume administrative capacity over the coming years, with lots of good and bad things making no appearances at all. Things that could be dropped without a fuss, were – fox hunting, social care funding changes, but there was also no Local Finance bill, putting business rates devolution firmly into the ‘anybody’s guess’ pile. Whilst a government that doesn’t legislate much is not necessarily a bad thing, we should hope that dropping all the things businesses are asking for doesn’t become a habit.

There have been a bunch of other interesting murmurs and announcements, which all again point to there being compromise – something the government have up until now been denying the existence of. David Davis has said that he is willing to do a deal on the influence of the European Court of Justice; there has been the announcement of the new “settled status” that will allow Britain’s 3 million EU nationals to remain here (Great analysis tweet thread here); there is the assurance that Brits will continue to get free or subsidised healthcare when abroad, and apparently, the Tory cabinet is now arguing over how long the transition period should last, rather than if there should be one at all. There was also this interesting tweet from Alain de Botton, suggesting that ministers are willing to accept the EEA route as a transition, and that an offer may be made to us following the German elections. I have no idea if that will actually happen, or if such a route would be seen as acceptable from the EU’s side, but with Donald Tusk and the author of Article 50 both still suggesting we can stop this train altogether I think anything might just be possible.
​
Just on the ECJ point, the big issue comes down to the ongoing dispute settlement system between us and the EU, and as this tweet thread from lawyer Steve Peers attests, the only logical solution is the EFTA court, which adds weight to the EEA argument. Are the planets beginning to align? Or am I being much too optimistic in my post-holiday comedown? Check in next week to find out.

alex.davies@gmchamber.co.uk

@GMCC_Alex

I wasn't going to do a blog this week, as the GE is taking up all the headlines and is stalling anything meaningful happening Brexit-wise. Last week though, the exposure of what "no deal" would actually look like seemed to reach a new high. The big one was this piece in the FT, which revealed that there are at least 759 treaties which need to be renegotiated, but also that we would need to replicate agreements with at least 168 countries even to stand still in terms of trade relationships. Of course, under a true "no deal" where we just walk away, we would fall out of all those treaties, putting us in an enormous legal void, and we would also lose our trading arrangements with those 168 countries. Stephen Bush wrote another great piece for the New Statesmen explaining all the ways in which a bad deal would almost certainly be better than no deal. I think these articles hit home with the same message that I've been pushing for a while, that no deal doesn't just mean trading on WTO terms, it means a total severance of cooperation in every form that we currently take part in. Whilst it is great to see the mainstream sources finally doing some good work on this stuff, they are behind the curve. Richard North in particular has been spelling this exact story out for years now, and last week was still on top form. 

There was lots of good "no deal" action on Twitter, too. There was this thread from Ciaran McGonagle on how the "no deal" threat doesn't square up with May's ambition for a "global Britain":

​Pete North was on fine form too with these two threads, on the viability (or lack thereof) of the Conservative's negotiating strategy and the need to port over EU external trade deals in order to maintain regulatory harmonisation:

​Finally, Ian Dunt wrote a great thread on why the argument that we must go into negotiations whilst prepared to walk away doesn't boost our hand, a position I increasingly agree with. His analogy is that asking a friend for a sandwich or you'll jump off a cliff doesn't give you leverage, it just makes you look like an unreasonable lunatic.

​Dan Hannan tries to make the opposite argument here:

​I understand the argument here, but I think it's too simplistic. Instead, imagine going to a car dealer in a nice car and trying to negotiate for a similarly nice car whilst saying "if you don't give me the new nice car I'm going to trade mine in for the worst one you have".

alex.davies@gmchamber.co.uk

​@GMCC_Alex

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

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

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.
​
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

It’s been two weeks since the last update on this blog (although the podcast has been filling the gaps), and a week since the surprise announcement of a general election on June 8th. This will inevitably be a Brexit –focused election, but the possible ramifications on the Brexit process are not yet clear. Theresa May’s reasoning for the announcement was that there is division in Whitehall over Brexit, but the election will also mean that there is no other GE before 2022 – the year in which the A50 negotiations and any transition arrangement are expected to be over. This will in effect give whoever is elected full control over the massively important first stages of the Brexit process. From the Conservatives point of view, they are hoping (and expected) to secure a larger majority than they have currently, allowing them to claim a larger mandate for their Brexit plan. There is already some disagreement about what this means as to the strategy. Initially, some commentators were suggesting that a larger tory majority could lead to a softer Brexit, as this would weaken the voice of the strongest euro-sceptics in the party who currently have May’s ear. This might lead May – who campaigned for remain, to take a more moderate and pragmatic approach to Brexit. The trouble is, I do not expect us to learn much about any individual party’s Brexit strategy in the upcoming manifestos, I expect us to just see broad objectives and direction, without much about the process of getting to the final destination. In the case of the Conservatives, the manifesto is unlikely to deviate from or give much more detail than the “Plan for Britain” speech, the accommodating white paper and the 12 key areas already highlighted by the party.

This point extends to the other parties too. The Liberal Democrats were fast out the blocks on a “stop hard Brexit” campaign line, and Labour are likely to say something similar. But considering this is undoubtedly going to be a Brexit-focussed election, and that Brexit will see potentially 5 years of negotiation between ourselves and 27 other countries, it is difficult to see what promises can be made. We have already told the other side what our overall objectives are and they have broadly agreed with them, so what wiggle room is there to change tack? The Lib Dems in particular look poised to run on a pro-free movement, pro-single market platform, which immediately brings the idea of EEA/EFTA membership to mind. This route is something which is being mentioned increasingly by representatives from Europe, too, particularly as transitional arrangement but potentially as a basis for a longer-term relationship. Campaigning explicitly on this strategy would be a clever and bold move by the Lib Dems, and whilst they are not expected to see enormous gains, this would certainly pique the interest of voters on both sides of the Brexit debate. The problem would persist however, of only being able to point to objectives, as the parties will be wary of making promises in their manifestos that may come back to haunt them.

All of this is kind of irrelevant though, given just how much this is the Conservatives’ election to lose, and in reality, the election itself is unlikely to either give us more detail about our future or to affect the Brexit process much, if at all. As more comes out from the parties and the final manifestos are released we’ll get analysis done of the Brexit side of things up here on this site. In the meantime, there’s some much wider debate around the election and other related issues like the French elections happening in our podcast (Episodes 9 onwards for election coverage). If this blog is failing to quench your thirst please have a listen, subscribe and leave us a review on iTunes if you can.

alex.davies@gmchamber.co.uk

@GMCC_Alex

So there we have it. The letter notifying the triggering of Article 50 was delivered to EU Council president Donald Tusk on Wednesday, and the Brexit process is officially underway. The letter itself can be read in full here. Following Tusk’s immediate announcement, which had particularly sombre tone, the attention turned to the suggestion that Theresa may was threatening the EU with the prospect of withdrawing or reducing security cooperation. This was a sign of how every single aspect of this process can potentially be whipped into an unnecessary frenzy, and wasn’t the only case of this from last week. The fact is, that under a ‘no deal’ scenario, there would be no legal precedent as to our ongoing security cooperation with the EU, in terms of delivering security itself but also the sharing of data to help fight crime and terrorism (of which we are an integral player). It wasn’t a threat, the idea of which is extremely silly given our history within the EU and NATO and the Five Eyes intelligence alliance and everything else. Instead, Theresa May was simply saying look, if we can’t come to an agreement then security cooperation is going to be one of many things that will suddenly become very unclear in a legal sense. I actually see this as the government admitting that ‘no deal’ is certainly something they want to avoid, a much more productive stance than ‘no deal is better than a bad deal’. Of course this was blown up into a news story over here, but the immediate response from the other side was that it was a perfectly sensible thing to point out and not a threat at all.

Then, on Thursday we had the first government white paper on the Great Repeal Bill. The paper laid out the broad objectives and strategy for bringing EU law over onto our statute books, including the repeal of the 1972 European Communities Act. The consensus from law experts on twitter was that it was a bit thin on detail, and whilst the white paper confirmed that the interpretation of EU laws post-Brexit will be that of the Court of Justice of the European Union going forward, it raised questions around what happens as said EU laws or regulations change beyond then – do the changes apply to us too? I am a legal novice and thus struggled with this a fair deal, but twitter came to the rescue, and I would recommend following the thread below started by Professor of Public Law at Cambridge, Mark Elliott:

Soon after the A50 letter was delivered we received the first response from the European Council outlining their early negotiating strategy. This actually followed a much bigger document which leaked before last Wednesday.  The documents were reasonable overall, but included a few interesting points. The response first set out some things we all know but are worth reiterating, such as the fact that the EU27 will now go away and agree on a joint negotiating stance without us in the room, before coming back to negotiate as a whole, rather than as member states. It also mentioned that the UK will not be a member of the single market come the end of all this, and that this was always going to be the case in the eyes of the Council. There were positive messages around the divorce, and the position was made clear that the EU does not want this to be messy. The intention it seems is to disentangle things like our settlement bill and the rights of citizens first before moving onto trade matters, but also that a trade deal can be signed whilst we are still members – something which many has suggested couldn’t happen. Perhaps the most interesting point however, was that the EU are more than happy to offer us a transitional arrangement, but any such arrangement will be time-limited to 3 years, meaning we would have to move on by the end of March, 2022. I find this to be an interesting development because one of the key arguments against going down something like the Norway route – using EEA membership to maintain single market membership for the time being – was that we would get stuck there. If any interim stage is time-limited however, this argument fails. I certainly called for EEA membership to be a part of our exit strategy, because it would essentially take trade matters completely off the table for the Article 50 negotiation period, and would allow us to take our time with the FTA after we have officially left the Union. It would ensure the most-stress free Brexit possible. The time limit strengthens this case, because it could no longer be argued that we would then be in a state of quasi-membership for an extended amount of time. I for one hope this conversation is reignited.

Then, right at the end, there was a short clause about Gibraltar, simply stating that Spain would be required to consent to any future UK-EU deals covering the British Overseas Territory and its 30,000 people. The inclusion of this paragraph is pretty odd however, as it states something that would be a given anyway - EU FTAs require unanimity giving any member state a veto. So why is it there? I’m guessing it’s because Spain asked for it to be there. There’s been reports that mentioning Gibraltar in the Article 50 negotiation letter was repeatedly fired around within government but was rejected, and it could be argued that including it at the end of their immediate response was a bit of a naughty negotiating tool by the EU, who could be seen to have turned the people of Gibraltar into a bargaining chip. Alas, it seems there are many old-timey politicians who are literally bursting to mention the Falklands at every opportunity, and so all of a sudden we’re all talking about going to war with Spain or something, and there are articles in serious newspapers about how our navy could destroy Spain’s; then a Spanish MEP accused Britain of ‘losing its cool’; then the chief minister of Gibraltar accused the EU of ‘behaving like a cuckolded husband’ who were being ‘bullied’ by Spain; then we had Boris and EU diplomats on TV talking about the future of Gibraltar; then we had people pointing out the irony that 4 days after notifying the EU we wanted to leave we’re all talking about a potential war, one of the things that the EU was created to stop. All of this happened and became a very serious international affairs matter essentially because the EU allowed Spain to troll a forgotten politician into saying something silly and despite the fact we all laughed at him. Bring on the next two (or five, or ten) years.

alex.davies@gmchamber.co.uk

@GMCC_Alex