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Grayling's Brexit Bulletin - 14 June 2019

17th June 2019


The BREXIT Bulletin: Johnson on top as no-deal creeps nearer


Boris Johnson cemented his position as frontrunner of the Conservative leadership race yesterday (13 June), winning an impressive 114 votes out of the possible 313 in the first ballot.
To put this into perspective, Foreign Secretary Jeremy Hunt came second with 43 votes, Environment Secretary Michael Gove came third with 37, fourth was former Brexit Secretary Dominic Raab with 27, Home Secretary Sajid Javid won 23, Health Secretary Matt Hancock won 20 and International Development Secretary Rory Stewart won 19.
Failing to achieve the required 17 supporting votes, Andrea Leadsom (11 votes), Mark Harper (10 votes) and Esther McVey (9 votes) are no longer in the running.
Seven candidates then became six as self-described ‘candidate focused on the future’, Matt Hancock, withdrew from the race today (14 June), saying that ‘the party clearly is looking for a candidate to deal with the here and now’.
Brexit plans?
Unsurprisingly, the candidates’ plans for Brexit have dominated the competition.
Rory Stewart has been the only candidate to rule out no-deal under his leadership, calling it ‘catastrophic’ and insisting that there is no evidence that EU leaders would reopen negotiations. To varying degrees of commitment, the remaining candidates are hoping to re-open negotiations with Brussels and fight for improvements to Mrs May’s deal. Proposals include a ‘new digitised [Northern Irish] border’ (Javid), a Canada-style free trade agreement (Gove), sending a new negotiating team to Brussels, including representatives from the DUP and ERG (Hunt) and the complete ‘removal’ or ‘overhaul’ of the backstop (Johnson and Raab respectively).
Apart from Gove, who has said he would consider a short extension of a couple weeks to a month, the remaining four hopefuls have promised to leave on 31 October, accepting a no-deal outcome if concessions have not been made.
No deal still possible
The chances of a no-deal outcome further increased on Wednesday (12 June) as MPs rejected a Labour-led attempt to take control of the parliamentary timetable. Opposed by 309 votes to 298, the motion would have given MPs the chance to pass legislation to stop an incoming Prime Minister taking the UK out of the EU without parliamentary approval. Although the Speaker of the Commons, John Bercow, has indicated that he will do everything possible to ensure Parliament is given the chance to rule out no deal, the opportunities to do so are rapidly disappearing.
The coming week of the Conservative leadership race will see two televised debates and up to three further rounds of voting. Johnson’s uncharacteristic silence during his campaign so far (he has answered only six questions from journalists to date) has not gone unnoticed and, despite being the obvious frontrunner, it will be fascinating to see whether he can maintain his momentum.
Whether it is Johnson or anyone other than Rory Stewart who eventually becomes the next Conservative leader, given that the legal default remains no-deal on the 31 October, it now seems perfectly possible for the next Prime Minister to usher in no-deal by simply not acting.

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This week's content:

The view from Brussels


The view from Brussels

EU Brexit contingency measures “fit for purpose”
On 12 June 2019 the Commission published a 5th Communication on Brexit Preparedness. The main thrust of the Communication is that the Commission considers that the ‘no-deal’ contingency measures undertaken prior to the two extensions to Art. 50 “remain fit for purpose”. As such there will be no substantive amendments, and no additional measures are planned before 31 October.
However, some technical adjustments are considered necessary. For the vast majority of contingency measures, the timing of the application and the duration of the effect of each of these acts is automatically adjusted to the new withdrawal date, and there is no need to amend the texts, but in some cases the measures fix a date for the end of their validity. The Commission will consider whether these acts need a technical adjustment to take into account the realities of the new Brexit timeline before they expire.
As in the past the Communication stresses the importance of the EU-27 Member States making contingency plans, and they have been asked to screen the measures that have been adopted to ensure they remain fit for purpose.
Companies are again advised to make use of the additional time until 31 October 2019 to take the action necessary to prepare for the UK’s withdrawal, namely:

  • Put in place the necessary regulatory authorisations; it will not be possible to place products on the market that do not comply;
  • Take administrative steps for cross-border trade;
  • Take the necessary action for relocation;
  • Effect corporate re-organisation where necessary; and
  • Adapt contracts where necessary.

The Grayling View:
Whilst many business sectors will be disappointed that the Commission has stated it will not consider additional measures, with many having made extensive representations for a more comprehensive set of measures, others will be relieved that the Commission has confirmed that technical adjustments will be made in some cases to expiry dates.
Perhaps the main headline is that the Commission now considers that the additional time available because of the extension will in principle be sufficient for operators to adapt, so that even in cases where exemptions or derogations are available, they should not be necessary. Medical device manufacturers for example would have been hoping to make liberal use of exemptions to prevent short term issues around certification for placing on the market.
Something unmentioned in the Commission’s communication is that the contingency measures undertaken by businesses are not necessarily ‘evergreen’, particularly the stockpiling of agri-food products, but also chemicals and even components. Plans made for a ‘no-deal’ on 29 March have been unwound in many cases. Businesses face a choice as to whether to engage in another round of costly contingency planning for an outcome that may never happen. Whilst this is exactly what contingency is for, the parable of the boy that cried wolf is a reminder that, at some stage, portions of the business community may not be ready.



Dates for your diary

Week of 22 July 2019 - New Conservative leader (and Prime Minister) announced 
31 October 2019 - UK to leave the EU at the latest
31 December 2020 - end of transition (according to the Withdrawal Agreement)



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