Brexit weekly: 5 things

By Chris Rogers November 24, 2017 12:07 pm

Time to be moving along?

Whisper it quietly, but we could be about to see a breakthrough in Brexit talks.

Reports this week have suggested that after months of frustration (never has the sight of David Davis falling off a stage been more symbolic), UK and EU negotiators could hammer out a deal on the ‘divorce bill’ within the next three weeks. According to senior EU negotiators, there’s now a better than even chance of the EU27 agreeing that sufficient progress has been made to move onto talks about future trading relationships.

It all sounds a bit like an old Nintendo game, where the background to the game would suddenly dissolve to announce the start of the next level.

The turning point has been renewed efforts by Theresa May to settle the divorce bill (oh, we’ll get to that). But there are now serious expectations that the Prime Minister could present a formal offer when she meets Donald Tusk and Jean-Claude Juncker for dinner in a fortnight’s time.

If she pulls it off, then it’s potentially a big – and perhaps more importantly, a personal – win for an embattled Prime Minister, one which could give the wolves at the door pause for thought. But, while the UK is anxious to get onto trade discussion, let’s not forget a few things. The EU will have to agree to the UK’s revised offer. Theresa May will have to manage inevitable ructions from her own party ranks. And there are still some massive questions to overcome, with Ireland top of the list (oh, we’ll get to that too).

Misery for Merkel?

Speaking of embattled premiers…

As the start of the week it looked like Germany could be in the market for a new Chancellor, after talks to create a Merkel-led coalition broke down. At the time of writing, that prospect is now less likely, with Martin Schultz of the Social Democratic Party under pressure to go back on a pledge not to enter a coalition with Mrs Merkel, and entering talks with the German President to agree a way forward.

Mrs Merkel had initially suggested she’d be willing to call a snap election (although there’s probably a British PM out there somewhere who could testify to the dangers of that…). The apparent willingness of Mr Schulz to talk again makes that prospect less likely, but in the context of Brexit, German politics is significant for a number of reasons.

First, and despite what we in the UK might think, Brexit is not the centre of the universe for many in the EU. And the coming weeks will underline this point – Mrs Merkel’s priority is sorting out the domestic situation. Second, because even if she remains in post, the authority of the dominant political figure in Europe over the past decade has taken a hit. That could have implications for Brexit talks in the longer-term, with Mrs Merkel having to reflect upon the views and expectations of her coalition partners, given her party is in the minority (does that sound familiar to anyone?).

Ardent Brexiteers insisted Mrs Merkel’s potential fall was an opportunity to play hardball on the divorce bill. Although why they’d want to risk antagonising a still-powerful German Chancellor, why they think any other major German party is inclined to be any ‘softer’ on the exiting Brits, or why they want to risk more difficult discussions with her hypothetical successor is anyone’s guess.

More money, more problems?

It was all about the money next week. Philip Hammond presented the Budget, simultaneously pleasing Brexiteers with the commitment of £3bn for the Brexit transition, and proving he’s unlikely to win Britain’s got Talent with a stand-up comedy routine.

But the other big news was the collective commitment by the Cabinet (yes, including Boris and Gove) to increase the amount the UK’s prepared to offer as a ‘divorce payment,’ prompting the suggestions that we could see trade talks – or at least the willingness by the EU to move to trade talks – before Christmas. Boris apparently had conditions, wanting more clarity on the end relationship the EU is prepared to accept. But it now looks as though Theresa May has sign off on offering £36bn, with speculation in some quarters that the offer could be as much as £40bn.

Good news, right? Perhaps. The prospect of agreeing a higher divorce has, unsurprisingly, attracted the ire of Brexiteers. Robert Halfon, the Education Select Committee Chairman (and former Education Minister rather inexplicably fired by Theresa May) suggested the British public would “go bananas” over a larger payment, also noting there’s plenty of issues at home where the money would do good. The latter is an entirely fair point, and while the PM might have got the Cabinet onside, time will tell if her backbenchers will feel the same way – which could make negotiations all the trickier.

We need to talk about Ireland

In many ways, all the rhetoric (dare we say a degree of histrionics?) about the divorce bill amounts to bit of a storm in a teacup. If you want a really intractable Brexit problem to solve, look across the Irish Sea.

The difficulties of the Irish border situation were thrust back into the spotlight this week with Prime Minister Leo Varadkar threatening to veto a Brexit negotiations timetable that would commence trade talks this year. Meanwhile a leaked Irish government document has warned the UK Government’s “political confusion” and “chaotic” approach to Brexit.

The fundamental issue is of course what the border between the Republic of Ireland and Northern Ireland should look like – a question that DUP leader Arlene Foster was in Downing Street to discuss this week. Will there be a hard border, which could pose issues in terms of moving goods and trade? Or should there be a soft border (whatever that means) – and if so, does that mean Northern Ireland required some sort of special status, potentially including it remaining in the customs union?

Theresa May might be quietly confident of satisfying fellow leaders with British progress on the divorce bill, but any form of consensus on Ireland is way, way off in the distance. And, just to put it into context, British and EU negotiators are trying to find a solution within two years to an issue that, fundamentally, has existed for more than eight centuries. Best of luck.

Culture shock

The EU Commission ruled this week that bids from UK cities (there have been five) to be the European Capital of Culture in 2023 wouldn’t be considered. The award is open to cities outside the EU, but only if their countries are candidates for EU membership, or part of either the European Economic Area or European Free Trade Association. And, as things stand, by 2023 the UK we won’t be part on any of them.

The announcement was made in a letter to the Department for Digital, Culture, Media and Sport, which had previously warned that British bids might hit the skids because of Brexit negotiations. The DCMS said it disagreed with the decision, given that while the UK had decided to leave Europe, but was currently still a part of Europe.

Why’s this matter? In some ways it’s symbolic – a demonstration of things the UK won’t be able to participate in the eventual post-Brexit world. In others, it’s economic – a successful UK bid would have supported tourism campaigns. But it’s a reminder you can’t leave the club and still expect the benefits of membership.

But, at least Theresa May might be able to start talking trade before Christmas. So maybe we can bid again for culture capital in 2025 or something…

 

For more information about the Brexit process and its implications, please visit https://www.whitehouseconsulting.co.uk/project-brexit/

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For media enquiries, please contact Chris Rogers on 020 7793 2536 / 07720 054189, or email Chris.Rogers@whitehouseconsulting.co.uk.

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