Brexit Bulletin: Already Looking to June
Prime Minister Theresa May is back in Brussels today, for the first time this year, and ready to hail her transition agreement and trigger the start of talks about the post-Brexit future. The real test, though, isn’t going to be at this week’s European Union summit, but rather at the next one, in three months.
By the time of the EU leaders’ gathering in June, the bloc wants to have agreed on solutions to the Irish border problem, have ironed out remaining differences in the Brexit withdrawal treaty text, and nailed down what sort of relationship the two sides are going to have after 2020. Intriguingly, the EU has also promised to rip up its plans if, at the June summit, the prime minister returns to Brussels having removed any of the U.K.’s “red lines” that would allow a closer partnership than currently seems the case, and which many in the EU still dream about.
There’s a lot to do. The mood over the next two days – Thursday’s meeting includes May, while Friday’s sees the 27 remaining leaders get together without her – should be positive. EU officials say the U.K. “moved” more in the past six weeks than at any time since the Brexit negotiations started. It allowed a provisional deal on the 21-month transition period, which the leaders will endorse, and enabled significant parts of the withdrawal treaty to be signed off. So far, so good. But the nagging issue of how to keep the Irish border as invisible as it is now looms large. A rapid-fire series of talks on the subject has been scheduled throughout April.
June’s summit will be the “crunch,” one senior EU official involved in the negotiations told Bloomberg this week. If the issue of Ireland isn’t resolved by then, the meeting “will be rocky.” Soon after, the European Commission wants to release the first draft of the bloc’s “political declaration” on the framework for the future relationship – not a full trade deal, but paving the way for proper negotiations once the U.K. has departed.
How detailed that will be depends on the progress made in talks over the next three months, how far May can go in fleshing out, beyond speeches, exactly what Britain wants to achieve, and – somewhat beyond the U.K.’s control – whether the other 27 countries can remain broadly united on sectors like financial services and aviation.
Over dinner tonight in Brussels, May will address German Chancellor Angela Merkel, French President Emmanuel Macron and her 25 other counterparts. She’ll welcome Monday’s agreement on transition and say she’s ready to get going on the next part of the negotiations. But the respite won’t last long. When they meet without her tomorrow, the EU-27 leaders will release a statement that, according to the draft, will call for “intensified efforts” and reiterate “that nothing is agreed until everything is agreed.”
See you in June.
No Help | The head of the U.K. Supreme Court said judges won’t assist British lawmakers with the wording of a legal document they need to pass before Brexit can happen next year. “We do not see it as our job to tell government what we would like to see specifically in wording in a piece of legislation,” the president of the Supreme Court told a parliamentary committee on Wednesday. It would be “inappropriate for the separation of powers.”
Sacre Bleu! | The U.K. is changing the color of passports after Brexit, from the EU’s favored burgundy, to Britain’s more traditional blue. But news emerged overnight that a Franco-Dutch firm is poised to win the contract to make them, enraging Brexiters, according to newspapers including the Daily Telegraph and the Times. The Home Office said no final decision has been made yet, according to the reports.
On Patrol | Brexit raises the prospect of armed police patrolling the Irish border, former U.K. Defense Secretary and Deputy Prime Minister Michael Heseltine said. Speaking to reporters in Dublin, Brexit opponent Heseltine said he could envisage a soft border involving technology being reintroduced after the U.K. exits the EU. “Borders need to be policed,” he said. Meanwhile, Irish Prime Minister Leo Varadkar told parliament in Dublin that it makes sense to talk about the final status of the U.K.-EU relationship right away.
More Info | Deutsche Bank’s co-head of investment banking said more clarity is needed on the deal reached on a post-Brexit transition period. Marcus Schenck said he hoped the agreement would give banks time to implement their own contingency arrangements, but that it was too early to make that call. “What we know is, a bit more than 12 months from now, we need to be ready,” Schenck said during a panel discussion at Bloomberg’s London headquarters.
Trade Hint | Brexit-backing Trade Secretary Liam Fox indicated that the U.K. could leave the EU without having a clear idea of the future relationship. While the EU has repeatedly said that detailed trade talks won’t take place until after the U.K. has left, the British government’s public position is that the trade deal will be largely completed before Brexit day in March next year. “We need to get early sight of what the future economic partnership looks like,” Fox said in a Bloomberg Television interview. “If we can get that before we actually leave the EU, hopefully by the autumn of this year, that would be a big help to everybody.”
Insurance Reassurance | Lloyd’s of London Chief Executive Officer Inga Beale said insurance contracts across the EU will remain at risk unless there’s an agreement on how they should be treated in post-Brexit Europe. “Regulators across Europe can actually come to an agreement themselves and find a possibility to allow all the insurers and banks on both sides to continue to service those old contracts,” Beale said in a Bloomberg TV interview. “That’s what we’re really pushing for, that contract continuity.”
Dismantling DexEU | Plans are afoot to disband the U.K.’s Brexit ministry, the Department for Exiting the EU (DexEU) once Britain has withdrawn from the bloc in a year’s time, according to the Financial Times. Discussions are under way about whether other departments, including the Foreign Office and Department for International Trade, could take over parts of its work.
On the Markets | The raft of positive news that buoyed the pound this week is persuading even some bears to switch sides. Deutsche Bank AG and MUFG have abandoned their short-term bearish views on sterling, which has rebounded above $1.40 after the much-awaited Brexit transition deal was announced Monday and the latest jobs data showed faster wage growth.
Nigel Farage, Britain’s leading Brexit backer, joined a boat-load of fishermen on the River Thames in London yesterday, throwing a box of haddock into the water in protest at what they see as the government’s broken promises on regaining control of U.K. fisheries after Brexit.
At one point the protest descended into farce when another prominent supporter of Britain’s withdrawal from the EU, Conservative lawmaker Jacob Rees-Mogg, was prohibited from boarding the trawler because of licensing problems.
Farage and Co. have history when it comes to protesting on the Thames in front of the Houses of Parliament. Days before the U.K.’s referendum on EU membership in 2016, Farage led a flotilla of about 35 boats decked out in “Vote Leave” banners. European Parliament Brexit coordinator Guy Verhoftstadt responded yesterday in a deadpan tweet: “Instead of throwing dead fish in the Thames, Nigel Farage should have done his job as a member of the fisheries committee in the European Parliament.”
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