Brexit weekly: 5 things

Oh Boris…

Despite attempts to keep Boris Johnson away from Brexit negotiations – primarily by making him Foreign Secretary and sending him to every other continent except Europe – he waded into the debate this week by repeating the most contentious claim of the EU referendum campaign: that the UK will be able to spend £350 million a week on the NHS after Brexit. In response Sir David Norgrove, Chair of the UK Statistics Authority wrote a curt letter to the Foreign Secretary saying “I am surprised and disappointed that you have chosen to repeat the figure… It is a clear misuse of official statistics.”

Writing in the Daily Telegraph, Boris set out his vision for Brexit, adding that the UK should not continue making payments to the EU and will not have to pay access to the single market. He also suggested that the Government could use Brexit as an opportunity to impose a tax on foreign property buyers and cut VAT.

The move reignited tensions within Cabinet over the direction Brexit should take. Flying back from her trans-Atlantic visit and questioned about Boris, an exasperated Theresa May could only say “Boris is Boris”, though who knows what she might have said if a journalist hadn’t been there.  Instead it was the Home Secretary Amber Rudd who delivered the more stinging criticism that Boris was a “backseat” driver on Brexit.

Following the criticism and calls for Boris to resign, First Secretary of State – and de facto Deputy Prime Minister – Damien Green made it clear that Boris will not be sacked. In defence of the decision, Green made the case that shutting down debate around Brexit was not healthy. In reality the fiasco has further highlighted Theresa May’s struggle to unite her cabinet around one clear vision for Brexit. The Prime Minister well knows her position is tenuous after a disastrous General Election. May’s ability to remain leader depends on securing support from both the pro- and anti-Brexit wings of her party. Firing Boris, one of the leading lights for the pro-Brexit camp would be a sure way to plunge her own position into contention.

And that’s before realising Boris’ leadership ambitions are seemingly alive and well…

A future security partnership with Europe

The Government has revealed details of its proposed “Future Partnership Paper” which proposes a security treaty between the UK and the EU after Brexit. The 22-page paper sets out a number of ambitious plans, all of which would need to be underpinned by a new legal agreement. Yvette Cooper who chairs the influential Home Affairs Select Committee criticised the paper saying it had failed to answer the “crucial question” of what would replace the European Court of Justice when it came to security arrangements. Despite leaving the court, the paper argues it would still be possible for the UK to secure an agreement with Europol – the EU intelligence agency – that provides the same benefits as now.

Other areas listed in the document that the Government wishes to continue and contribute to include Schengen Information System II which provides real-time alerts of suspects and vehicles; a European Investigation Order, which allows members states to conduct inquiries in other countries, and the Prum agreement, which allows member states to share DNA, fingerprint and vehicle registration data.

The government paper said that it was “vital” for public safety throughout Europe that Britain and the EU maintain and enhance close collaboration after the UK leaves the bloc in March 2019 and that it wants the “closest possible” security relationship with the EU after Brexit. The issue of security in Brexit negotiations is a high stakes one neither the UK nor EU can afford to be disadvantaged on.

Currently, only member states are part of the European wide security bodies like Europol. Part of the paper’s rationale for complete access are the UK’s “leading capabilities in security, the delivery of justice and the fight against crime and terrorism.”

However, Europe’s crime fighting agencies are funded from the EU’s central budget and one question for the UK will be whether it is prepared to continue paying the running costs of Europol and other organisations after Brexit. Theresa May has said the UK is willing to make “an appropriate contribution” to specific European programmes it wishes to remain a part of, but the question is what is an “appropriate contribution” when it comes to security and who decides what that appropriate figure amounts to?

Hurry up and secure our jobs

One of the City of London’s most senior officials has told the Government that speed is key in Brexit negotiations to prevent an exodus of jobs from the UK’s financial sector. Catherine McGuiness, chair of the Policy and Resources Committee at the City of London Corporation, said that posturing over the so-called Brexit divorce bill was delaying negotiations over the much-needed transition deal that would prevent the financial sector facing a “cliff-edge” in March 2019.

The EU has been clear that negotiations surrounding trade deals and a transition will not be discussed by EU negotiators until the so-called divorce settlement has been finalised. The UK, on the other hand, has been clear it’s priority is to arrange the future trading relationship between the EU and the UK following Brexit.

The City of London Corporation has been recording official announcements from City firms about their contingency plans and currently puts 9,770 roles at risk.  The Bank of England had demanded details of contingency plans from financial institutions by 14th July and firms have begun to reveal how they intend to cope. For example, Amsterdam has been picked for expansion by Royal Bank of Scotland.

Without a transition deal, McGuiness says there will be an “unravelling” in the City with jobs and institutions moving abroad. McGuiness also made the point that it was not Europe who would be the overall beneficiaries of this exodus, but the financial centres of New York and Singapore. EU Members States will gather in October to assess the progress made in negotiations so far and decide whether the agenda can move on to examining trade deals with the UK. Chief EU negotiator Michel Barnier has said already, that “to make progress we are waiting for clear commitments from the UK” regarding payments.

Theresa’s city break in Florence

So it should please Ms McGuiness that in a key speech in Florence today the Prime Minister is expected to make what has been described as an “open and generous” offer, potentially worth €20 billion over the next two years that could plug the current black hole in the EU budget which runs to 2020. The UK Government hope is that this will help move negotiations onto what a future relationship with the EU looks like.

Allegedly in a special two-and-a-half hour cabinet meeting on Thursday, Chancellor Philip Hammond (who has close connections with the City) intervened to urge more haste in negotiations. According to extracts of her speech released overnight, Theresa May will announce the British Government wants a time-limited transition period once the UK leaves the bloc. This is generally thought to be a transition period lasting no longer than two years.

The Prime Minister is also expected to urge her counterparts in Brussels to show “creativity”. This is likely to refer to the EU’s insistence that a settlement is arranged before negotiations on any future trading relationship can begin.

Speaking to Italian MPs in Rome on Thursday, Michel Barnier underlined the point that it will not be possible for the UK to have the same trade benefits as a Norwegian model but the limited obligations of a free trade arrangement along the lines of what Canada has agreed with Brussels.

The fourth round of Brexit negotiations begin on Monday next week and British negotiators will hope that the speech from the Prime Minister will help start the week on a good footing. However, the €20 billion is only expected to mitigate the funding gap in the EU budget and EU negotiators are expected to ask for far more for a final divorce settlement. It’s a step in the right direction, but unclear how big that step actually is.

Leaving so soon?

Oliver Robbins, the top official at the Department for Exiting the European Union is leaving the department and moving to a co-ordinating role at Downing Street after just a year in the job. The move comes amid reports of tensions between the official and Secretary of State for Brexit David Davis.

In his new position, he will continue to act as EU Sherpa and lead the official-side UK team in negotiations, but from Downing Street rather than the Department for Exiting the European Union. Government insiders have claimed that this will leave Mr Davis frozen out of decision making.  Some reports suggest the change is part of the new strategy of Theresa May to increase her influence in Brexit negotiations. Naturally, opposition parties have cited the move by Robbins as further evidence of disarray in Government surrounding Brexit.


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