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The big picture
Buckle up: a “hard” Brexit is looking more and more inevitable. Here’s a round-up of what happened last week that points in the direction of Britain exiting the single market as well as the European Union.
First off, remember that the minister in charge of delivering Brexit, David Davis, has told MPs (though No 10 told him off for it) it was “very improbable” that the UK would be able to remain a member of the single market “if a requirement of membership is giving up control of our borders”.
Davis also conceded last week that if trade talks with the EU were not successful it was possible that the UK could leave without a deal, which would mean trading on World Trade Organisation tariffs.
He did not think it was “very likely”, he told a Commons foreign affairs committee hearing, but still:
If you’re after a factual statement of what the outcome could be, I guess it’s what is commonly known in the world at large as WTO rules. That’s, I guess, the conclusion of what the situation would be if we were outside the union with no deal.
Next comes the news that a group of leading Conservative Eurosceptics, including three former ministers, have formed Leave Means Leave, a new pressure group calling for Britain to end free movement and quit the single market whatever the trade deal on offer (see below).
Meanwhile, European leaders are lining up to repeat that there can be no compromise. The European parliament’s chief Brexit negotiator, Guy Verhofstadt, said last week that “if the UK wants access to the single market, it must also accept the free movement of citizens”.
The European commission president, Jean-Claude Juncker, reiterated during his State of the EUnion address on Wednesday that there can be no “à la carte” cherry-picking when it comes to the single market, adding two days later at the EU-27’s meeting in Bratislava on Friday that that he did not see “any possibility for compromise” on the issue.
And just to remind us that (unlike the article 50 exit deal) Britain’s future trade agreement with the EU must be ratified by all 27 member states, the prime minister of Slovakia, Robert Fico, warned on Saturday that the Czech Republic, Hungary, Poland and Slovakia – the Visegrad group – were prepared to veto any pact that restricted their citizens’ rights to live and work in Britain.
The president of the Bundesbank, Jens Weidmann, underlined what a hard Brexit would mean for the City in a Guardian interview, saying that exiting the single market would threaten London’s status as a financial hub by denying UK-licensed banks their “passporting” rights to operate across the bloc:
Passporting rights are tied to the single market and would automatically cease to apply if Great Britain is no longer at least part of the European Economic Area … of course, several businesses will reconsider the location of their headquarters.
Finally, although the Financial Times (paywall) reported that the chancellor, Philip Hammond, was fighting a rearguard action against the “clean break” favoured by the cabinet’s Brexiteers by highlighting the dangers to the economy of abandoning the best possible access to the single market, Bloomberg reckoned he was close to giving up hope of being able to hold the line.
All of this adds up to the all but inescapable conclusion that we are heading towards a deal in which control over immigration is likely to take priority over favourable single market access, which in turn implies a hard Brexit.
In more cheering news, however, all will be OK because, as the Sunday Telegraph reported, a campaign has been launched by MPs, former ministers and a senior former aide to the Queen to recommission the royal yacht Britannia and use it to secure post-Brexit international trade deals.
Foreign secretary Boris Johnson was reported to see the vessel, decommissioned in 1997, as “a great symbol of global Britain”. So we’re laughing. (Although maybe not him: No 10 subsequently said the idea was “not on the agenda”.)
The view from Europe
Last week was not much about Brexit and a lot about not markedly successful attempts to unite and rally the EU in the wake of Brexit, with commission president Juncker, EU council president Donald Tusk and assorted national leaders all having their say in Brussels and at that informal meeting in Bratislava.
Juncker unveiled a raft of concrete measures aimed at bolstering Europeans’ sense of security in the face of the terror threat, globalisation, the migration crisis, high youth unemployment and economic stagnation, including the establishment of an EU defence headquarters to work towards a common military force.
He also urged more solidarity and cooperation among EU nations, which he said were more divided than he had ever seen them:
We have to stop this war according to which all success is national, and all failure is European. There is fragmentation out there that is leaving scope for galloping populism. The people of Europe don’t want this petty envy between the various institutions. They want results.
In Bratislava, EU leaders met without Britain to try to chart a way out of what German chancellor Angela Merkel described as “a critical situation”. There was determination to show a united front, for a while at least, and discussions were described as polite and with no recriminations.
But Italy’s prime minister, Matteo Renzi, refused to appear at a press conference with his French and German counterparts, declaring that he “was not satisfied with the conclusions on growth and immigration”, and Hungary’s leader, Viktor Orbán, slammed the EU’s migration policy as “self-destructive and naive”.
Oh, and Brussels’ Brexit negotiating team was strengthened with the addition of a top German trade expert, Sabine Weyand, as deputy chief negotiator, alongside the head of the commission’s Brexit taskforce, French veteran Michel Barnier. That looks like quite a strong team.
Meanwhile, back in Westminster:
Getting on for three months after the referendum and the debate in Westminster has yet to progress much beyond endless repetitions of – yes – “Brexit means Brexit”, while a cacophony of off-stage voices yell their various interpretations of what this actually amounts to.
For the Conservatives, the latest contribution is Leave Means Leave, a series of backbench hard-Brexiters, including some recently ousted former ministers such as Dominic Raab and Owen Paterson.
They are pushing for the UK to adopt a no-compromise approach to negotiations and swiftly leave the EU without any single market-type arrangement in place, instead relying on WTO rules while separate international deals are forged:
Britain must leave the world’s least successful economic zone – the single market.
Labour have arguably been doing the more cogent thinking on Brexit over the last week. Jeremy Corbyn used a setpiece speech on his economic thinking to argue that the referendum result marked a rejection by voters of a status quo that had failed them, while saying he would prefer the UK to remain in some sort of single market.
Separately, a group of backbench Labour MPs wrote essays for a Fabian Society report on the post-Brexit world, with several of them saying that the party must acknowledge voters’ opinions on mass migration by rejecting the free movement of EU nationals into the UK as a “red line” of any post-EU settlement.
You should also know that:
- Business confidence has hit a four-year low amid rising concerns over economic uncertainty and a slowdown in demand following the Brexit vote.
- European embassies in Britain have logged dozens of incidents of suspected hate crime and abuse against their citizens since the referendum.
- Brexit minister Davis was snubbed by UK retail bosses after he tried to call a meeting to discuss the question, with one source saying it was “a tick-box exercise” with “no substance to the agenda”.
- Member states are already competing to have British-based EU agencies and research centres relocated to their countries, former comission president Romano Prodi told the Observer.
- Scotland’s first minister, Nicola Sturgeon, said she finds it “gobsmacking” that May’s government is still unable to answer basic questions about its Brexit strategy almost three months on from the referendum.
- Legal experts told a House of Lords panel that the chances of EU citizens settled in Britain retaining all their rights to live, work and retire in the UK after Brexit are zero.
Read these:
In a timely paper for the Centre for European Reform, Simon Tilford argues a hard Brexit is now on the cards, saying the lack of an instant post-referendum economic armageddon makes it all the more more likely:
Recent data suggests that the Brexit vote will not cause a recession. This, coupled with the fact that British voters rejected two important principles of the EU, makes a single market exit all but certain.
Joris Luyendijk suggests with customary brio in the Guardian that Europe will do just fine without Britain, which really isn’t as important as it likes to think it is, and that such was indeed the key message of Juncker’s State of the EUnion address:
Where Brexiteers continue to indulge in narcissistic fantasies about getting the best of all worlds from the EU while making Britain a world power again, Juncker … pointed out that Europeans today make up 8% of the world population. In 2050 that will be down to 5%. “By then you would not see a single EU country among the top world economies,” he said. “But the EU together? We would still be topping the charts.” With or without Britain.
Unpicking the “historic misunderstanding” at the heart of Winston Churchill’s famous speech 70 years ago this week on the need for a “United States of Europe”, Quentin Peel in the Financial Times (paywall) points to the irony of the Brexit vote:
The truth is that the process of negotiating Brexit, and reorganising the UK-EU relationship for the future, is likely to dominate everything else for years to come … that is the irony of the Brexit decision. At least for the foreseeable future, it will mean a lot more EU, rather than less, on the UK government agenda.
And back in the Guardian, Martin Kettle argues that the Brexit vote represented a revolt against liberalism and we have entered a new political era:
We have a new political agenda that no political party can afford to ignore. Whether we consider ourselves liberal or not, we increasingly inhabit post-liberal times.
Tweet of the week
Two for the price of one. This one for a laugh:
The royal yacht would represent a nation at once keenly aware of its past while investing wisely in the futurehttps://t.co/HI2FyYDgfm
— The Telegraph (@Telegraph) September 17, 2016
And this one for a weep (Australia accounts for 1.6% of UK exports; the EU for 44%):
47% of Leave voters think a trade deal with Australia is the highest priority - just 23% EU https://t.co/dhjOJLYWEj pic.twitter.com/djF6PEbs5f
— YouGov (@YouGov) September 19, 2016
