The ayes have it
Where else to begin this week but the House of Lords, as the Brexit Bill passed its second reading without a vote.
Despite suspicions peers could hold up the Bill, and warnings the upper chamber could face reform if it did so, the Government’s legislation cleared its latest hurdle without a hitch. Although the nervousness of ministers that there might be problems was evident as Prime Minister Theresa May made an unexpected guest appearance in the Lords’ gallery to cast a watchful eye over the debate. Mrs May was later replaced in the gallery by Foreign Secretary Boris Johnson in what can only be described as a unique Westminster bubble tag team.
The Prime Minister won’t be resting on her laurels, however. The Bill now moves to Committee stage in the Lords, and it’s here peers have the best chance to table amendments, impeding its progress and trying to change the scope of the legislation beyond giving the PM carte blanche to trigger Article 50. The Bill will ultimately pass, and at the moment the Government is still on track to keep to its timetable of triggering Article 50 next month. But if some more outspoken peers stick to their guns, get the tin hats ready – the Bill is in for a rockier ride.
Actually, we’re not all doomed
Staying in Westminster, Governor of the Bank of England Mark Carney was up in front of the Treasury Select Committee this week. And, in comments starkly different from those made before the EU referendum, he accepted Brexit could go smoothly.
Mr Carney was heavily criticised – to the point of his position being questioned – in the run up and immediately following the vote last June, when he suggested the UK could face economic turmoil as a consequence of leaving the EU. But giving evidence to MPs on Tuesday, Mr Carney conceded a smoother process – with higher interest rates – could be achieved, if the Government is able to secure “a bold, ambitious trade deal.”
The Governor’s comments will hearten Brexiteers, who’ve long claimed he’s been doom mongering. But the caveat in Mr Carney’s comments needs to be noted. Ministers will need to secure bold trade deals for Brexit to go smoothly, particularly if – as we now expect – Single Market access is off the table. Meanwhile, German economic growth has overtaken the UK as the fastest in the G7. So, a more positive forecast, but not one to get carried away with just yet.
European Commission President Jean-Claude Juncker said this week the UK faces a “very hefty” bill for Brexit. Speaking at the Belgian Federal Parliament, Mr Juncker was in the mood for tough talk, insisting there would be years of “tough negotiation” and leaving the EU wouldn’t come at “a discount or at zero cost.”
The Commission President’s comments were far from universally welcomed, drawing the ire of, amongst others, German Chancellor Angela Merkel. But they do highlight an important thread of the negotiations to come – namely the cost to the UK of Brexit. Sir Ivan Rogers (former UK Permanent Representative to the EU) has warned the Commission could demand 40-60 billion Euros. And while International Trade Secretary Liam Fox has dismissed such suggestions as absurd, any such bill will have an impact on British public finances. That’s before considering when such discussions could take place. Michel Barnier has intimated discussions over an exit bill could take place in parallel with other considerations, a suggestion dismissed by British ministers. An extra layer of complication could be added to an already complex process if both sides have to negotiate over the content and timing of negotiations.
A busy week for Theresa May this week. Fresh from the gallery at the House of Lords, she welcomed Emmanuel Macron – a favourite to win the French presidential election – to Downing Street.
Mr Macron is currently running nearly neck and neck with Francois Fillon, but both men could lose to Marine Le Pen in the first round of the election – although pollsters expect the better placed of Messrs Marcon and Fillon would beat Ms Le Pen in a second round.
But before talks with Theresa May, Mr Macron was happy to put the proverbial cat amongst the pigeons, telling journalists outside Downing Street no less of his plans to entice financial services and the sectors professionals from London to Paris.
Talks with the PM were apparently more convivial. But the comments of a possible future French President will be a stark reminder to Mrs May and Chancellor Philip Hammond that major EU financial centres – chiefly Paris and Frankfurt – are making moves to encourage relocation of financial services powerhouses away from London. British ministers will have to show how their negotiations make London a place to remain for the financial sector, including addressing the passporting issue.
Wish you were here?
Speaking on a visit to Estonia and Latvia this week, Brexit Secretary David Davis insisted the UK will not “suddenly shut the door” on low-skilled EU migrants, and would only restrict freedom of movement when it was in the national interest – at which point immigration controls would be phased in.
Despite Mr Davis’ reassurances, new figures from the Office of National Statistics have shown migration to the UK has fallen to its lowest levels for two years, with a “statistically significant” number of Eastern Europeans choosing to leave Britain. Net migration fell below 300,000 – a fall of 49,000 on the previous year – with overall migration to the UK from the EU at 165,000. For the first time, migration from the EU was exceeded by migration numbers to Britain from other parts of the world. Immigration minister Robert Goodwill described the figures as “encouraging”, while a spokesman for the Institute of Directors warned EU nationals were leaving because of “the climate of uncertainty.”
The Government continues to tread a fine line on immigration, and a big question for Brexit will be how ministers can keep a pledge to reduce net migration while also making sure the doors remain open to essential and high skilled workers.