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Grayling's Brexit Bulletin - 29 June 2018

29th June 2018


The BREXIT Bulletin: EU Summit shows signs of irritation
 

This week's Summit has been focused on immigration.

Oh, and Brexit. A bit. But mostly on immigration. The Italians aren't happy, Merkel is in a spot of bother etc...

But yes, Brexit. Remember? The EU is meant to be losing its third largest Member State in 9 months.

Yet all we got today was a page of statements, wishes, implorations, by the EU. 4 paragraphs of thinly disguised irritation, impatience, and anger.

In a week when employers and employees got together to administer a sharp slap on the wrist to EU negotiators for a lack of progress (see below), it can be no surprise when the European Council "expresses its concern that no substantial progress has yet been achieved" on Northern Ireland.

If only that were the only stumbling block. 

The completion of the political declaration on the future relationship "requires further clarity as well as realistic and workable proposals from the UK".

EU leaders also take note that "other important aspects still need to be agreed, including the territorial application of the Withdrawal Agreement, notably as regards Gibraltar".

Ah yes, Gibraltar, remember that? Brexit has a habit of surprising you. The deeper you dig, the more problems you find. Some problems come and go in public discourse but, like the actual rock of Gibraltar, they never really go away.

And that was it. Which is remarkable when you recall that, a few months ago, this was meant to be the Summit where Northern Ireland was, to all intents and purposes, solved. The deadline by which a hard border would be avoided and the UK could still leave the Single Market and the Customs Union. 

So the circus moves on - Barnier has demanded (he is beginning to sound scarier, if not scared himself) that negotiators reconvene on Monday. October is the still the deadline for the entire Withdrawal Agreement to be finalised, but now there is talk of this slipping. 

If there is nothing by Christmas, we will have a problem, a leading decision-maker told the Brexit Bulletin this week. But we are already too late for Airbus. By December, most businesses' contingency plans will surely already be in motion.



If you have any suggestions about the Brexit Bulletin or want to find out more about a specific aspect of Brexit, please do let us know. Please visit the Grayling Brussels website, follow us on Twitter @TheEULobby, and don't forget to check out our Brexit Papers

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This week's content:

The highlights from the UKThe highlights from Brussels

Our next Brexit Club meeting 

On 11 July the Grayling Brexit Unit is delighted to host a lunch briefing with British Telecom's EU Affairs Director Adrian Whitchurch in our offices, Avenue des Arts 46, Brussels. 

The lunch will provide an opportunity to explore the future for EU-27 ICT policy-making and regulation, the implications for digital innovation, as well as innovation and the deployment of 5G. 

Following Adrian's intervention, participants will be invited to participate in an open discussion and ask questions. The event will be held under the Chatham House Rule.

If you would like to attend, please email Alexander.Rowlatt@grayling.com 

The highlights from the UK

Government on brink of agreement?
This was a historic week. The Withdrawal Act received Royal Assent, confirming in law that the UK will leave the EU. However, with the next crunch Cabinet meeting on the UK’s objectives for Brexit due next Friday, the week has been dominated by a breakdown in Cabinet collective responsibility and warnings from businesses and Brexiteers about the government’s direction of travel.
 
It started with Health Secretary, Jeremy Hunt, and Foreign Secretary, Boris Johnson, accusing business of complaining about Brexit too much. They were swiftly rebuked by a number of their colleagues as the government and the Conservative Party sought to protect their position as the “party of business”. However, throughout the week businesses such as Airbus, Honda, and BMW have raised concerns about the Brexit process, primarily focusing on disruption to their supply chains. The Bank of England similarly made an intervention calling for pace and urgency in the negotiations and noted that “material risks” remain.
 
On the other side of the debate, Nick Timothy used his column in The Telegraph to argue that the UK was heading for the worst possible Brexit, accusing the Treasury of not doing enough to prepare for no-deal. Business Secretary, Greg Clark, was also singled out for his calls for “labour mobility” – something Timothy described as free movement by another name. Former Conservative leader, Iain Duncan Smith, similarly attacked the CBI for its Brexit position, stating that “the essential point to remember when big business intervenes politically is that over decades they have, with amazing consistency, been wrong.”
 
The Grayling View
Getting Cabinet to agree on its negotiating objectives has been pushed into the long-grass time and time again. However, this time it does look like the Cabinet really will make a decision. Interestingly, Theresa May has invited the whole Cabinet to her country house, "Chequers", rather than just the Brexit Cabinet Sub-Committee. This possibly nudges the number of votes in favour of a soft Brexit and has therefore sparked speculation that her intention is to get agreement on pursuing a softer Brexit policy. This speculation has been given credence by the fact that May has been slowly conceding certain “red lines” such as the suggestion that there will now be some form of European Court oversight in any future arrangements.
 
The stakes are high for May, and working out how many (if any) red lines to blur will be a precarious balancing act. Conceding ground on European Court jurisdiction is probably sensible as the majority of polling indicates that this isn’t a red line for the electorate. Importantly, it should also increase the likelihood of securing a comprehensive trade deal with the EU. However, whether she can get away with a continuation of free movement, a customs union, or some form of single market access (even if these are given different labels for PR purposes) remains uncertain. To many Brexiteers the continuation of these policies will be viewed as a betrayal and if the electorate share that view, they might conclude that Brexit isn’t being delivered. This risk is not confined to May and the Conservatives’ future electability – it may also cause another huge rupture to public trust in politicians. 

 

The highlights from Brussels 

Progress is needed, now
Ahead of the June Council this week, with Brexit on the agenda, our inboxes were full of statements from businesses across the board, outlining their demands for the future relationship between the EU and the UK, as well as calling for quick progress to be made in the negotiations. From sugar producers to trade unions, calls for faster progress were unanimous, with each sector presenting its specific demands to be met.

FoodDrinkEurope call for frictionless trade between the EU-27 and the UK after Brexit, advocating for regulatory alignment on food standards and a suitable EU-UK customs union, as well as participation of the UK Food Standards Agency (FSA) in the European Food Safety Agency (EFSA). Whilst EU beet sugar manufacturers and growers represented by CEFS and CIBE acknowledged that Single Market and Custom Union membership is not politically possible, they call on the EU to solve a number of current challenges including triangular trade in sugar, rules of origin and UK market access. For SpiritsEUROPE, the trade association representing spirits producers in Europe, the protection of GIs is essential. Ceemet, the European employers’ organisation representing the metal, engineering and technology industries, presented the threat posed by the potential disruption to value chains as a result of Brexit, affecting companies’ investment decisions on both sides of the channel.
 
The Grayling View 
In addition to the strong calls for progress to be made, the recurring themes were made abundantly clear; an extension of the transition period, UK membership of the Single Market and Customs Union and regulatory alignment between the EU and the UK. Many of these options remain politically unacceptable to Theresa May and her government, and the EU holds firm in its position that there can be no cherry picking of EU legislation, meaning we are yet to see a significant amount of progress. What has spurred on this recent flurry of movement? Perhaps Businesses are reaching their tipping point, desperately needing progress to be made, and perhaps anticipating disappointment when this week's Summit concludes.  

 

Dates for your diary

28-29 June 2018 - EU Summit, and informal deadline for agreement on Irish border
1 July 2018 - Austrian Presidency of the Council
18-19 October 2018 - EU Summit and deadline for negotiations on Withdrawal Agreement 
1 January 2019 - Romanian Presidency of the Council
29 March 2019 - UK expected to leave EU
31 December 2020 - Expected end of transition

 

Grayling Brexit Unit

Our Grayling Brexit Unit brings together the very best consultants from across the Grayling network and includes those who have direct experience of working alongside the leading political figures charged with negotiating Brexit in London and Brussels.

The Grayling Brexit Unit is here to support, guide and inform the success of your business and identify how the political dynamics will change as a result of Brexit in both London and Brussels. We are your Brexit experts.

Please contact Robert Francis Tel +32 2739 47 34 (robert.francis@grayling.com) in our Brussels team or Jonathan Curtis (Jonathan.Curtis@grayling.com) in London for more information, and check out our brochure.


Grayling Team

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