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Brexit: state of play of the no deal scenario

That a no deal Brexit will damage the British and European economy was already clear. The Catholic University of Leuven even calculated that a no deal Brexit would cost the European Union 1.54% of GDP and 1.2 million jobs. The effect for the UK: a 4.4% reduction in GDP and 525,000 job losses, this only in the short term. In terms of sectors, a hard Brexit would have especially a severe effect on the European Food and Beverages sector. A hard Brexit would also have a big impact on the European textile industry and in addition, services sectors would be heavily affected.

Due to the severe economic consequences of a no deal, Members of Parliament (MPs) from both the Conservative Party as the Labour Party tabled an amendment on the parliamentary estimates bill that would deny funding to four government departments in the event of a no-deal Brexit without explicit parliamentary approval. The amendment concerned the departments for International Development, Work and Pensions, Education, and Housing, Communities and Local Government. However, the Speaker of the House of Commons, John Bercow, said on 1 July that he had not selected this amendment. Grieve and Beckett have, therefore, re-submitted their amendment on 2 July, but 10 Downing Street has strongly condemned this amendment to shut down the government as very irresponsible.

Not only the MPs are concerned, but also Brexit Secretary, Stephen Barclay, asked last week to accelerate the preparations for a no deal Brexit. Barclay said: “Time is of the essence and we can’t be complacent. I do not want to be in a situation when we get to November and there were things we could have been doing at this time and we didn’t do them.”

Key players in a possible no deal Brexit are of course Boris Johnson and Jeremy Hunt, the remaining contenders in the Conservative Party leadership race. In his bet to become the next leader of the Conservative Party, Foreign Secretary Jeremy Hunt presented his ten-point plan for delivering Brexit in case he wins. Hunt proposes to speed up the no deal preparations, the establishment of a No Deal Cabinet Task Force and the appointment of a new negotiating team. A Government under his leadership would prepare for a No Deal Brexit Budget, and the Treasury would prepare a No Deal Relief Programme including a £6 billion fund for the fishing and farming sectors.

Boris Johnson, on the other hand, has said that he believes there is only a “very, very small possibility” that the UK will have to leave the EU without a deal. However, he also said that when he is elected as new Prime Minister, every member of his Cabinet should have to live with the possibility of leaving the EU without a deal. This is also in line with the fact that Johnson is preparing an emergency budget for such a scenario. More concretely, this budget will consist of a tax cut and a revision of stamp duties to safeguard the economy after a hard Brexit.

What’s next?

Conservative Party members will receive their postal ballots between 6-8 July. The final deadline to return the ballots is Sunday 21 July. Boris Johnson and Jeremy Hunt participate in hustings until 17 July. It is widely believed, however, that a majority of voters will immediately cast their vote when they receive their ballot. The next few days will, therefore, be key for Hunt to get his message across and for Johnson to avoid any gaffes. In the week of 22 July, Britain’s new Conservative Party leader and Prime Minister will be announced.

Brexit: the final campaign?

Boris Johnson and Jeremy Hunt, the two remaining candidates in the race for the leadership of the Conservative Party and the position of Prime Minister of the UK, are campaigning throughout the country to win the votes of 160,000 Conservative Party members. Johnson is more likely to win, not only because he had a big lead over Hunt in the last voting round (170 to 77 votes), but also because a recent poll shows that more than three quarters of the party members believe Johnson would be a good leader.

The strength of Johnson is that he is clear in his mission. He wants to leave the EU on 31 October, with or without a deal. In a no-deal scenario he even proposed this week not to impose tariffs on goods entering the UK. Yet, Johnson stressed that it is not only a decision made by the UK, but also by the EU. Despite criticism of others like the Governor of the Bank of England and the International Trade Secretary that this would not be possible Johnson did not change his strategy. Therefore, his rival, Jeremy Hunt, is blaming Johnson that his no-deal Brexit plans are remaining too vague and unrealistic. Hunt distinguishes himself from Johnson by pursuing a better deal rather than a no-deal Brexit. Hunt stated that a new deal with the EU would be difficult but said that he would keep negotiating if parliament were to veto the no-deal option, even with the option of an extension after 31 October.

One of the main issues, also in this campaign, is still the Irish backstop. To solve this problem three domestic advisory groups have been established. The Technical Alternative Arrangements Advisory Group is the first, the second is comprised of businesses and trade unions and gathered for the first time this week, and the third will be made up of parliamentarians. Boris Johnson’s main goal is to replace the Northern Ireland backstop in May’s Withdrawal Agreement (WA) with “alternative arrangements” to take effect at the end of the transition period. Jeremy Hunt’s main goal, too, is to renegotiate the WA and get rid of the Northern Ireland backstop as it is currently stated. However, as stated before, Hunt would continue negotiations to find a deal beyond 31 October.

The Irish Prime Minister Leo Varadkar reacted this week again that he could not accept alternative arrangements as an alternative for the backstop before he knew how it would work in practice. In addition, he said that it would never be possible to have these alternatives ready before the UK leaves the EU. Therefore, he still supports the backstop as the only solution for the time being.

What’s next?

Conservative Party members will receive their postal ballots between 6-8 July. The final deadline to return the ballots is Sunday 21 July and consequently, the winner will be announced in the week of 22 July. Johnson and Hunt participate in hustings until 17 July.

Brexit: Searching for a new leader

The resignation of Prime Minister Theresa May last week could not save the Conservative Party in the European elections. It was quite clear that the Brexit Party of Nigel Farage is the winning party, gaining 29 seats. The Liberal Democrats took 16 seats, the Labour Party 10, the Green Party 7, the Conservative Party 4, the Scottish National Party 3 and Plaid Cymru 1.

As the election results were devastating for the traditional parties, Labour deputy leader, Tom Watson, indicated that the Brexit stance of Labour costed Labour a lot of votes. In particular, the unclear position of Labour towards a second referendum. In addition, shadow chancellor John McDonnell, one of Labour leader Jeremy Corbyn’s closest political allies, told the BBC another referendum may be the only way to break the Brexit deadlock in Parliament.

But Brexit did not only had a huge effect on the elections in the UK, but actually in the whole European Union, at least that is what President of the European Council Donald Tusk claimed at yesterday’s informal European Council summit. Tusk argued that Brexit acted as a “vaccine” against Euroscepticism and, therefore, helped to limit the profit of anti-EU parties. Tusk also added that he is not optimistic about the future of Brexit, because “we are all aware of the state of things in London.” A no-deal scenario or the UK revoking Article 50 remains likely. Influential Tories, Boris Johnson and Dominic Raab, are for example still willing to leave the EU without a deal.

In the meantime, the European Union is preparing itself for Brexit, with or without a deal. When Theresa May offered her resignation last week, EU leaders already warned that nothing had changed in Brussels. The Dutch Prime Minister, Mark Rutte, is one official who said the EU would never reopen negotiations on the Brexit divorce deal, whoever succeeded May. Furthermore, a spokeswoman for the President of the European Commission, Jean-Claude Juncker, said that “Brussels’s position on the withdrawal agreement has been set out, there is no change to that.” In addition, Sabine Weyand, Deputy Chief Negotiator and right hand of Michel Barnier within the European Commission’s Article 50 Taskforce, has been appointed today as the new Director-General of Directorate-General Trade. This indicates that the European Union is preparing itself for the next step in the Brexit process as Weynand will lead the EU’s negotiations with the UK on its future trade relationship in the post Brexit phase.

What’s next?

It is still unclear if there will be a vote on the Withdrawal Agreement Bill next week as Theresa May announced earlier. For the time being the focus is more on the possible successor of May. Tory MPs have until 10 June to put their name forward, and the party hopes a new leader will be in place by the end of July. In addition, a possible general election seems unlikely. Foreign Secretary, Jeremy Hunt, already said that the Conservative Party would commit “political suicide” if a general election was held.

 

Brexit: the eye of the storm

After weeks of talks between the Conservatives and Labour to find a compromise Brexit deal to pass in the House of Commons, the dialogue collapsed without agreement. However, this came as no surprise as it was already clear that the two main parties are deeply divided over Brexit. In addition, the cross-party cooperation was not supported by backbenchers of either parties.

The failure of the cross-party dialogue, exacerbated by Theresa May’s own unstable position and increasing pressure from her colleagues to leave, incentivized May to announce that she will set a timetable for her departure. Before departing, May will still try to avoid British MEPs actually having to take up their seats in the European Parliament after the elections held today (Thursday, 23 May). She will also push for the new Withdrawal Agreement Bill to be voted on in June. As a compromise in the negotiations with Labour, the new Brexit deal would include a provision that states the UK Parliament has the final say on the backstop. Additionally, the bill would also grant Westminster the power to weigh on the future relationship between the EU and UK.

As May feels pressurized, she even announced a concession on a second Brexit referendum during a keynote speech in London. Concretely, a vote for a second referendum would be possible if her new Withdrawal Agreement Bill passes onto the next stage of the legislative process. In that case, May wants to give anti-Brexit MPs the chance to add the option of a second referendum to the new bill once it has gone through its second reading, a stage where MPs can attach amendments.

It seems that May is able to survive the latest storm, but for how long? After a lot of rumours, it was not the Prime Minister, but leader of the House of Commons Andrea Leadsom who announced she quits the government over Brexit and May’s handling of the process. Her resignation is the 36th by a minister under May and the 21st minister to quit over Brexit. Political pundits believe May’s resignation could be announced in a matter of just a few days.

What’s next?

The Conservatives are expected to perform badly in the European elections. Perhaps a departure of Prime Minister Theresa May after the elections could be a way to end a disastrous chapter in Tory/UK history and open up a new, more hopeful one. More ministerial resignations could still follow too, but not today. Today is voting time.