10 April 2018

Less than a year for an increasingly unlikely Brexit - 140th Brussels for Breakfast – CPD Notes

The countdown to Brexit day is on, but with less than a year to go, British withdrawal from the EU is not secured: voters are asking for a say over the final deal. The economic and political implications of a post-Brexit deal with Brussels may make them reconsider EU membership under a new light.

Graham Bishop/Paula Martín Camargo

Highlights from the “Brussels for Breakfast” meeting

Now only 353 days until we go over the “cliff” – so the 150^th B4B may mark the end of the UK’s EU membership! A lengthy Brexit discussion was inevitable and we focussed on the shape of the deal on the future of EU-UK trade relations, rather than the Withdrawal Agreement or Transition Deal. The seven pages of Guidelines were agreed by the EU27 Heads of Government as part of the Article 50 Council meeting but seem to have had little coverage in the UK – despite their huge significance.

The European Council has now agreed the dates for the next European Parliament elections in May 2019 so the final plenary session of the Parliament will be early April 2019. Any legislative proposals not agreed at that stage are at risk of having to re-start – especially if the new Commissioner on financial services decides to follow precedent and initiate a lengthy review. So the practical deadline for any new legislative proposals is close - May 2018.

Karel Lanoo at CEPS has published a report on the dangers of forcibly moving euro derivatives clearing out of London and splitting regulation away from the single oversight of the Bank of England. He is probably right that the existing proposals would fragment control and raise risks. But could another answer be to centralise it under say ESMA? [...]

Key items of the rest of the month

The 29^th March 2018 marked the start of the countdown for Brexit day. If everything proceeds as planned, the UK will leave the European Union in a year and a 21-month transition period will be triggered. But the official terms of this period and of the future EU-UK relationship are yet unknown – Graham Bishop argued that, when clearer arrangements emerge from negotiations this summer, the same voters that took the decision to leave might well decide that the economic and political implications Brexit entails aren’t as beneficial to them as they first thought, and that they’d like to have a say over them.

Moreover, polling by BritainThinks revealed that there is widespread support among Leavers and Remainers for a vote on the final deal. Bishop concluded that this makes all the more likely that, in the end, Brexit won’t happen at all.

The crystallisation among public opinion and MPs of the idea that Parliament can’t just let May’s cabinet pass the final Brexit deal and passively await the departure day without scrutiny seems to have made Labour’s Sir Keir Starmer declare that his party is still hopeful of being able to vote down, in alliance with other Parliamentary parties and a handful of Conservative rebels, to any bill on the terms for Brexit that the Prime Minister May will put to the House of Commons in the autumn.

MEPs and officials in Brussels are perplexed at the bickering in London over the Brexit terms that keeps producing ‘red lines’ but not a coherent, unified idea of what kind of future relationship the UK wants.   All this “wishful Brexiting”, as Jérôme Gazzano and Andi Mustafaj at the Fondation Robert Schuman have named the impossible Brexit the UK is suggesting, is forcing the EU to take the initiative of the effective definition of the transition period, and by this, the UK is losing the very initiative of it. [...]

Full article available for consultancy clients here