Executive Briefing: Brexit bulletin

The draft withdrawal agreement under which the UK will leave the EU on 29 March 2019 is now the subject of high political drama in London.

The minister responsible has resigned, as have a number of other senior and junior ministers. Other senior figures are hesitating. Conservative rebels have begun procedural moves to oust the Prime Minister. Politicians and pundits from all sides have rushed to condemn the draft agreement and its accompanying outline political declaration on future relations as humiliating, placing the UK in the worst of all possible worlds, one in which it is tied to EU rules without any say in their evolving content. Theresa May is steadfast, explaining that her way is the only/best one available to deliver the gradual Brexit, with close economic ties to the EU but no free movement of people, that she believes the British people want.

How did it come to this?

All agreed throughout that the border between Ireland, part of the EU, and Northern Ireland, part of the UK, should remain open and free of physical infrastructure. The British Government set out as red lines early in the negotiations that the UK should leave the EU’s customs union and single market for goods. Unless something else was agreed or a technological solution turned up, it was therefore inevitable that the Irish land border, like the UK’s other borders with the EU, would be where various checks and controls had to be carried out under EU and Irish law (on the Irish side) and British law (on the Northern Irish side).

Since the definitive relationship between the EU and the UK has yet to be determined and there is no technology agreed by all to obviate the need for the physical infrastructure on the Irish land border otherwise needed to cope with differences of customs rules and regulation of goods, a “backstop” comprising temporary alignment was considered necessary to bridge the gap between Brexit and the arrival of either the definitive relationship or the technology. The timing of that arrival is unknown, so the length of the bridge, the duration of the backstop, is equally unknowable.

Given Northern Ireland’s status as part of the UK – notwithstanding existing regulatory differences between Northern Ireland and Great Britain – temporary alignment between Irish (EU) and Northern Irish rules on customs and goods was ruled out by the UK as undermining its territorial integrity. Consequently, the temporary alignment has to be between the whole of the UK and the EU. This is seen and described by the Prime Minister’s many opponents as humiliating. Strong words are used such as vassalage, slavery and betrayal. She says it’s temporary and necessary for the gradual withdrawal the country needs.

Several questions now arise:

·       Will the House Commons approve the text?

·       Will Theresa May survive as Prime Minister?

·       If not, will there be a Conservative party leadership election?

·       Will there be a general election? 

·       Could another Prime Minister negotiate a better deal with the EU?

·       If negotiations need more time, can the 29 March deadline be extended?  

·       If so, for how long?

Business

For business, uncertainty is far from over. Customs and goods alignment might be achieved for a provisional period, but services will have to take their chances in later negotiations. The political declaration on the future relationship, on which work continues behind the scenes, will contain important principles and guidance. The fundamental tenets of a security relationship will also be set out in that declaration, to be followed by detailed work on one comprehensive treaty or a series of individual agreements.

The political declaration could be the key to a solution. If the House of Commons looks poised to reject the Prime Minister’s deal, she can pause and go to Brussels (and almost certainly Berlin and Paris) to negotiate a further concession. The withdrawal agreement itself might be hard to reopen, but the political declaration can be written in various ways to reassure the UK about the future political relationship, ways which could produce a Commons majority by splitting the Labour Party and isolating the more extreme elements within the Conservative Party. Other options are numerous. I realise that this could look foolish before the day is out, but I still think May will succeed in squeezing her deal through.

Jonathan

Key Dates:

25 November: European Brexit Summit

30 Nov-1 Dec: G20 Summit, Buenos Aires

13-14 Dec: European Council Meeting

20 Dec: UK House of Commons recess

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