Brexit weekly: 5 things

The never-ending story

Another week has gone by and yet here we are still discussing how to best survive Brexit.

Theresa May is more or less in the exact same place she was months ago, dealing with this messy situation but with the looming deadline closer than ever. May is still pushing for MPs to agree on an “alternative” deal to present before the EU and she is trying to gain support for her plan under the promise that she will push for clear concessions on the backstop. But her plan still seems to lack enough support among MPs on both sides of the bench who are complaining and pointing out that the new proposal seems suspiciously similar to the one the House of Commons overwhelmingly voted down on 14th January.

Deal or no-deal?

Theresa May is also, for the moment, resistant to the idea of agreeing to rule out a no-deal scenario despite top government ministers Richard Harrington, Philip Hammond and Amber Rudd publicly pressuring her to rule it out.

Meanwhile, opposition leader Jeremy Corbyn is still refusing to openly back anything resembling a second referendum, but he is set to back an amendment to May’s Plan B intended to avoid a no-deal Brexit from happening. The amendment in question, tabled by Labour MP Yvette Cooper, aims to have article 50 delayed by nine months in the event that no agreement is reached by 26th February.

Michel Barnier is unimpressed

All this mayhem in UK politics seems slightly pointless after listening to EU chief negotiator for Brexit, Michel Barnier, declare that the EU will not agree to a time limit to the backstop, which is precisely what many MPs are demanding in order to back an alternative plan.

The UK is wrapped up in a political storm with MPs forced to decide whether they would eventually support a no-deal outcome. But there is a slight problem here: the EU has a say on this as well, and if the UK is not able to present an alternative agreement and officially requests to extend Article 50 – which May still refuses to do – the  EU, according to Barnier, will only agree to the extension if there is a “stable majority” in the UK  that can guarantee that talks and decisions will move forward. A stable majority is hardly what we see in parliament today.

If the EU does not agree to an extension – and this is a complex decision considering that the European elections are four months away – no-deal Brexit will be a reality whether the UK wants it or not. Barnier has clarified however that, regarding the UK/Irish border, although the EU will have to carry out controls for goods coming in the Republic of Ireland, both sides will have to find a way of avoiding a hard border, as the EU acknowledges that this is a sensitive issue.

Keep calm and carry on?

Many UK citizens do not seem to be visibly worried about the possibility of a no-deal Brexit, which should be a good sign I guess, except that 75% of warehouses are at full capacity with companies stockpiling food and medicines. Whilst Sony Europe is the latest in a series of companies that has decided to move its legal base from London to another European capital – in this case Amsterdam.

And speaking of companies jumping ship, even prominent outspoken Brexiters like James Dyson are joining the ranks of businesses relocating headquarters outside the UK. But this is not a contradiction or an act of hypocrisy mind you, because Dyson has decided to relocate to Singapore and not some European capital. Furthermore, he has quickly clarified that timing is purely coincidental and that his decision has nothing to do with Brexit and all to do with the increasing demand for his products in Asian markets.

The IMF joins the conversation

To make matters more pessimistic, the World Economic Forum annual meeting is taking place in Davos this week and one of the first conclusions of the World Economic Outlook presented by the International Monetary Fund (IMF) is that China´s slow growth and a possible no-deal Brexit are the biggest threats to the growth of global economy for 2019. The IMF has already cut its world GDP expansion forecast for 2019, from 3.7 to 3.5 per cent, but warns that China’s economic slump and the UK leaving the EU without an agreement may make matters worse.

As for the impact of a no-deal in the UK, in the latest update to the World Economic Outlook, the UK economic growth was forecast to be 1.5 per cent for 2019, but Gita Gopinath, the IMF’s new chief economist, clarified that there is “substantial uncertainty” around the UK predictions.

The overall message of the Davos summit is that, although global economic growth is not in great shape, we are not facing a recession (yet). Whatever the case, the good news for me, and for 3.7 million Europeans living in the UK, is that Theresa May has agreed to scrap from her plans the £65 fee that Europeans were requested to pay as part of their application to continue living in the UK after Brexit, which means that we will be £65 pounds better prepared to face economic calamity. Lucky us.