Brexit weekly: 5 things

There’s power in a Union

Theresa May’s Brexit strategy suffered a blow this week as a cross-party alliance of Labour, Liberal Democrats, crossbenchers and Tory rebels in the House of Lords voted for an amendment to the EU Withdrawal Bill, requiring the Government to keep open the option of staying in the EU Customs Union.

Political drama is set to continue in the Commons next week, where rebels under the leadership of Yvette Cooper and Nicky Morgan have teamed up to table an amendment to force the Government’s hand on the Customs Union. In the words of Labour Leader Jeremy Corbyn: the real fight starts now.

All eyes will be on the likes of Anna Soubry and Dominic Grieve, as the 123-strong majority for the Lords amendment puts pressure on Tory Remainers in the Commons to follow suit and step up their cross-party game. As the Prime Minister’s majority is wafer-thin, whether or not they decide to vote against their government is the key question.

Back to square one

To add insult to injury for Mrs May, the European Union has rejected Britain’s post-Brexit customs proposal for Northern Ireland. Originally put forward in August last year, the “new customs partnership” proposal was supposed to allow Britain to maintain its own system of tariffs, but act as a “collector” of EU customs duties on goods that enter the UK bound for an EU country. A second proposal from the British negotiators, the “highly streamed customs arrangement” was centred around technological solutions to lower customs barriers. European diplomats do not regard either proposal as workable to solve the delicate situation at the Irish border.

This adds a new dimension to next week’s vote in the House of Commons. With the Irish border being one of the most complicated issues to solve, staying in the EU Customs Union is regarded by many as the only way to overcome this obstacle and complete a Brexit deal, whilst also navigating the complex political situation in Ireland.

Shadows of Empire

‘Global Britain’ enthusiasts were quick to point towards the Commonwealth as an opportunity ready to be seized to once again take a role of global leadership following departure from the EU. And what better way to showcase a positive relationship with Britain’s former colonies from all corners of world than during the Commonwealth Summit in London, one might think. Unfortunately for the unlucky PM, things did – again – not turn out quite as planned.

The Windrush scandal – the deportation of citizens from the former Caribbean colonies who were invited to the country as British citizens between 1948 and 1971 – has soured relationships and has thrown Theresa May back into the spotlight for her record as Home Secretary. Changes to immigration law in 2012, which Mrs May oversaw, require people to have documentation to work, rent a property or access benefits, including health care, and have left many of the Windrush generation in a legal limbo. Those who arrived in Britain as children might have done so on their parents passports – and landing cards were allegedly destroyed by the Home Office in 2010.

This is not the first time that Global Britain’s future was hampered by the Government’s approach to immigration. Previous trade talks with emerging economies such as India and China stalled because of the Government’s hesitation to grant easier access to visas, particularly for students. But as reducing immigration numbers was one of the key themes during the referendum, the Government finds itself in a political trap.

Windrush also rings the alarm bells for European citizens, who see a foreshadowing of their own future after Brexit, if their rights will not be safeguarded by the European Court of Justice. This could throw yet another spanner in the works for the Government’s Brexit negotiators, as campaigners will certainly lobby to put ECJ jurisdiction – a no-go for Brexiteers – back on the table.

It’s all about the money

The pound had a rocky ride on the stock markets since Brexit, but recently the currency seemed to be on the road to recovery, hitting a post-referendum high against the dollar on Tuesday as investors hope for an interest rate raise in May to ease inflation pressure.

But not so fast. Mark Carney, the Governor of the Bank of England, has said that whilst a raise of interest is likely this year, any increase will be gradual and linked to the outcome of many of the major decisions that have yet to be taken on Brexit.

The cautious approach of Carney might halt the climb of the pound but as households still feel the pinch, income growth remains weak and the biggest Brexit storms are yet to come, it might be better to play it safe.

At the same time, the National Audit office has published estimations that the UK could pay an extra £3bn more in budget contributions to the EU, as well as an additional £2.9bn to the European Development Fund, news that will certainly upset those who believe that Britain should not be required to pay anything more than a minimum divorce bill – or preferably, nothing at all.

Meanwhile on the continent…

Angela Merkel and Emmanuel Macron met in Berlin on Thursday to discuss reform plans for the European Union. Whilst Macron campaigned enthusiastically on his plans for European reform during the French presidential race, Germany’s Merkel is known for her rather cautious approach to politics.

Macron has been advocating for a Eurozone budget and a finance ministry, as well an EU bailout fund. Germany wants to move on eurozone bank regulation and to make the euro more crisis resistant.

Reform might be on the way, but expect small steps. Mrs Merkel’s caution has only intensified since she suffered a humiliation at the polls at home last September. Although her junior coalition partner, the Social Democrats, is more supportive of Macron, key players in Merkel’s own Christian Democratic Union do not wish to loosen the purse strings in Europe.

The two leaders have agreed to forge out a joint position ready to be presented at the next EU summit in Brussels.