Sign up here to receive the daily news briefing in your inbox every morning with exclusive insight from the BrexitCentral team Michel Barnier forced to apologise over ‘inappropriate’ Brexit punishment clause The European Commission was forced to apologise to diplomats from the remaining 27 EU member countries for the “inappropriate wording” of the Brexit punishment clause, amid fears it could trigger a British walkout from negotiations… EU officials moved swiftly to calm national diplomats who were concerned the clause would jeopardise the prospects of a final Brexit deal at a meeting on Tuesday… The rare mea culpa from Brussels is a sign of how desperate the commission is to maintain the painstakingly constructed united front of the EU 27 in the face of Brexit. It is also a rare mis-step from Mr Barnier, who with his eyes on becoming president of the European Commission, has been keen to project an image of scholarly infallibility… Whitehall sources said the French were particularly angry at the “aggressive political opening salvo” and described the hardline stance as having “fractured” the coalition of 27. – Telegraph (£) EU ‘removes transition punishment clause’ – BBC News EU removes ‘punishment clause’ from draft Brexit transition deal threatening UK if we break EU rules – The Sun Brexit win for Britain as Brussels cancels controversial plan to put punishment clause in the transition deal after a backlash from 12 EU countries – Mail EU backs down in Brexit transition row by softening ‘punishment powers’ – The Times (£) Brexit boost as EU backs down over threats to punish Britain – Express Theresa May to hold talks with Angela Merkel in Berlin today Theresa May is due to hold talks with German Chancellor Angela Merkel as she seeks to make progress on negotiating Brexit. The PM will travel to Berlin for the meeting at the Chancellery. It comes a day ahead of a speech on Saturday in which she is expected to set out the “security partnership” she wants to maintain with the EU. The UK is under pressure to reveal more detail about the final relationship it wants with the EU.… The German chancellor has been engaged in her own domestic negotiations in recent months, with a coalition deal finally agreed last week after her party suffered heavy losses in September’s election. – BBC News Theresa May being urged to offer ‘concrete’ plans for what Britain wants from Brexit as she flies for showdown with Angela Merkel – The Sun May seeks ‘deep and special’ EU security co-operation – FT (£) Angela Merkel’s Germany is a ‘free rider’ and a ‘threat to the West’ storms Polish PM Mateusz Morawiecki as leaks reveal the country hasn’t got enough tanks to send to NATO – The Sun Remainers plotting to secure a second Brexit vote — with the help of a summer rock concert and a mobile app The spring and summer will see a major uptick in campaigning by various pro-European groups, according to several figures involved, who are now better coordinated thanks to a 60-person email group, better financing and a shared strategy. Remainers have set their sights on a key parliamentary vote in the fall that will see MPs accept or reject Prime Minister Theresa May’s Brexit deal with the EU. While not everyone wants to reverse the referendum outright, campaigners hope to knock Brexit off course by defeating the government in that key vote and then either force a general election or secure a second referendum on the deal… A parliamentary vote in December, which saw Conservative rebels vote with Labour to defeat the government on an amendment to the EU (Withdrawal) Bill, which guaranteed a “meaningful” vote in parliament, was a “eureka” moment, according to James McGrory, executive director of Open Britain. – Politico Theresa May ‘asks’ Irish Prime Minister Leo Varadkar for help on avoiding hard Irish border Leo Varadkar, the Irish Prime Minister, said the two leaders were now working together following a face-to-face meeting in Belfast at the start of the week. The idea of some sort of “customs union partnership” comes after London rejected Dublin’s plea for the UK to remain in the EU single market and customs union, to avoid the need for a hard border. Mr Varadkar is coming under growing pressure in Dublin to show last December’s UK-EU agreement – that there will be no return to border posts and checks – will be adhered to. In the Irish parliament, he insisted there would be little difference between the current customs union and any new partnership that was reached… Mr Barnier has said “full alignment” is being drafted for the legally binding withdrawal agreement that the UK must sign in order to move to talks about the transition or future relationship. – Independent Italian president declares EU ‘will NOT step back’ on Irish border position – Express Westminster involvement in Northern Ireland governance ‘inevitable’, says former NI Secretary Theresa Villiers – Sky News Theresa May should stop ‘pussyfooting around’ and impose direct rule on Northern Ireland, Lord Trimble says – Telegraph Sinn Féin claims papers prove power-sharing deal was struck – Guardian Stormont talks collapse as Foster joins calls for direct rule – Henry Hill for ConservativeHome Could direct rule solve Northern Ireland’s political crisis? – Siobhan Fenton for the Spectator Northern Ireland needs the short, sharp shock of direct rule – Owen Polley for Reaction The collapse of power-sharing in Northern Ireland shows the Good Friday Agreement has outlived its use – Ruth Dudley Edwards for the Telegraph (£) The lost language of power-sharing – Guardian editorial > Northern Ireland on BrexitCentral: Michael Burrage: Regulatory divergence does not require a hard border between Northern Ireland and the Republic Hugh Bennett: It’s time to stop doom-mongering over the Irish border – the solutions are already out there Alexander Redpath: Why Brexit won’t derail the Northern Ireland peace process Lee Reynolds: Remainers are insulting Northern Ireland to caricature it as forever standing on the precipice of violence UK to set out post-Brexit vision for financial services The UK is ready to set out its vision of how it wants financial services to operate after Brexit and favours an ambitious “mutual recognition” of regulations to preserve the City of London’s access to the EU. Three senior figures briefed on Brexit discussions in the cabinet said that the government will back the proposal, which is also favoured by Mark Carney, the Bank of England governor… Under Britain’s proposal, the UK and the EU would recognise each other’s regulatory and supervisory regimes and would have aligned rules at the point of Brexit, with a mechanism that would monitor any divergence… The idea is likely to be welcomed by Britain’s financial services firms and is favoured by cabinet ministers because it would allow the UK to set its own rules to meet commonly agreed objectives such as consumer protection and financial stability… But the EU27 will take a tough line on financial services, knowing that protecting the City is one of Britain’s principal negotiating objectives. Any deal is likely to come very late in negotiations. – FT (£) London continues to attract more foreign tech talent than other European cities London remains the most attractive location in Europe for tech talent seeking to move for work, new figures reveal. The capital attracted more foreign workers than other tech hubs across the continent, including Paris, Berlin and Amsterdam last year, according to data from London & Partners and LinkedIn. Both those within the EU and non-EU workers in the technology industry were drawn to the capital over other cities. And separate data from Stack Overflow showed London also remains home to more software developers – over 250,000 – than any other location in Europe. – City A.M. Institute of Directors proposes ‘hybrid’ customs union arrangement A major business group has put forward a bespoke Brexit solution which it believes will protect manufacturers from customs chaos but also allow the UK to strike independent trade deals. The Institute of Directors, a trade body with a membership of 30,000 business leaders, has proposed a customs arrangement that would allow for easy trade in industrial products and some processed foods. The proposal is largely modelled on the EU’s customs relationship with Turkey, with some key differences… The IoD’s Allie Renison, author of the paper, said: “A new but narrowed customs union would facilitate the continued flow of goods across UK borders.” – Telegraph Report: Customising Brexit – A hybrid option for a UK-EU trade framework – Institute of Directors Soft Brexit plot revealed: Businesses demand ‘partial customs union’ with EU after split – Express Institute of Directors calls for Turkish-style customs union after Brexit – The Times (£) Ed Balls study suggests majority of British firms opposed to customs union exit – Independent Brexiteers slam findings of Ed Balls business survey – Express Narrowed customs union could pave way to whole new world – Stephen Martin and Allie Renison for The Times (£) > Simon Boyd on BrexitCentral today: Time to respect the will of the people: an open letter to Carolyn Fairbairn of the CBI Testing of ‘breakthrough’ Home Office Brexit app for EU citizens delayed amidst ongoing negotiations Home Office plans to roll out a phone app to register EU citizens in the UK have been dealt a blow after Theresa May clashed with Brussels over people arriving during the transition period for Brexit… Those who have been shown screenshots of the system say it involves a simple 10- to 20-minute process involving an applicant scanning in their passport and national insurance number to an online or phone app… Those who have been in the UK for five years or more and answer “seven or eight” basic questions on nationality and work status will be automatically emailed a “permanent settled status” registration number. Those who have been in the UK for fewer than five years will be issued a temporary special status number. The app is a complete break with the previous 85-page permanent residency application process, which involved a mountain of documents chronicling every exit and entry from the UK and tax records going back years… Ian Robinson, an immigration expert and partner at the law firm Fragomen, said the app was a “breakthrough” compared with the nightmare bureaucracy of the permanent residency process. But he warned that the system may not be able to cope if millions apply to register on day one. – Guardian Ruth Lea: It is time the UK proposed a post-Brexit trade relationship My preference is for a straightforward trade deal broadly based on the continuation of tariff-free trade for goods, and a special arrangement for financial services. These are mutually beneficial. Indeed, tariff-free trade arguably helps EU exporters to the UK more than the reverse, given the EU’s enormous goods surplus with the UK — £95bn in 2017. On financial services, Bank of England governor Mark Carney has been commendably robust in his assessment that the City of London, as Europe’s banker, provides considerable benefits for our EU partners. Note, by the way, that the EU included a provision for financial services in the moribund Transatlantic Trade and Investment Partnership. Assuming a clean break along these lines and no hidden “regulatory alignments”, the benefits of the UK’s new freedoms are obvious. Providing governments are prepared to adopt outward-looking policies that enhance competitiveness, then Britain’s future will be very bright. – Ruth Lea for the FT (£) James Forsyth: What the Brexit Inner Cabinet might end up proposing One option being talked about would see the UK remaining compliant with European rules and regulations on all goods other than agriculture. (To put it in technical language, the UK would remain fully aligned with the EU acquis on tariff chapters 25 to 99.) On services, the UK would reserve the right to regulate in its own way. This would lead to divergence from EU rules in fairly short order. In crude terms, this approach could be described as Norway for goods and TTIP — the abandoned US-EU trade deal — for services. The UK would, effectively, be trying to stay in the single market for goods while leaving it, to the extent that it exists, for services. It isn’t certain that the Brexit inner cabinet will agree to this position. – James Forsyth for the Spectator Christian May: Business leaders are more relaxed about Brexit than you think It can be useful to look at the raw views of business leaders, before they get filtered and processed through the policy shops of the business lobby groups. To this end, I’ve been looking at some fascinating polling of 2,500 board-level business leaders from across the UK, France, Germany and Spain… Looking first at the UK, 53 per cent of business leaders said the UK leaving the EU would be best for the EU economy overall, 53 per cent said it would be best for the interests of their company and 63 per cent said they favour Brexit on a personal level… A majority of business leaders in Germany also felt Brexit to be best for the EU economy, as did French business chiefs, who also backed Britain’s exit from the bloc by 71 per cent to 29 per cent.… Overall, attitudes among senior business figures towards potential Brexit outcomes are strikingly optimistic, especially in the UK. The report author, FTI’s John Maloney, rightly ponders why the collective views of individual businesses are seemingly so at odds with the public interventions made by their representative bodies on their behalf. Perhaps, being at the coal face, they have more confidence and faith than their own lobby groups, who tend to play a more political game. – Christian May for City A.M. Alan Oxley: Soft Brexit would tie the UK to an unwieldy, decaying bureaucracy Why would the world’s fifth-biggest trader and second largest economy in the EU accept an arrangement to leave responsibility for setting its tariffs to the other members of the community after it left the EU? Yet this is being proposed to key quarters in Whitehall… The EU penchant for over regulation is starting to undermine the competitive advantage low common tariffs were supposed to provide to EU businesses… The EU has wrecked the international system for setting common health and safety standards, particularly for traded food items… Trade policy regulation, the EU’s core function, is stalling… The calibre of leadership of the Brussels institutions is notoriously poor… The EU’s record of nation building and leadership has become the victim of compromise and convenience by the leading economies. This was demonstrated in the creation of the eurozone… The case for withdrawal from the EU is now even stronger than it was when the Brexit referendum was held. – Former Australian Ambassador and GATT Chairman Alan Oxley for the Telegraph (£) The EU is on the verge of political chaos, and Britain could be the loser – Liam Halligan for the Telegraph (£) Asa Bennett: Remainers howl Boris Johnson down because they can’t cope with his Brexit triumph Mr Johnson tried to reach out across the divide, but Remain campaigners want to make a point. Their minds were already closed to him, which may be inevitable given how great a humiliation he dealt them in 2016 by winning the referendum. During that campaign, Mr Johnson was indisputably the most popular politician in the fray. None of his Remainer opponents could match his public appeal, which is why they were determined to dent it. They threw everything they could at him. They piously accused him of lies and scaremongering during the TV debates. Amber Rudd even pushed a dodgy date-rape metaphor in their desperation to demean him. The Remain campaign thought that, come referendum day their tactics would work, but it turned out that Mr Johnson’s side actually came out on top. They hadn’t just lost, but – after months of Project Fear and ad hominem – lost dishonourably. – Asa Bennett for the Telegraph (£) Boris is right: most Leavers and Remainers really want the same thing – Mark Brolin for the Telegraph (£) Boris clears the path for Cabinet agreement on a Brexit deal – Mark Fox for Reaction John Longworth: Let’s burn EU red tape and embrace era of prosperity The Cameron government’s attempt of “one in one out” and then “one in two out”was noble but had little impact because the big regulator, the EU, was off limits and that is half of the statute book at least. By 2010, before I became director-general, the BCC estimated that the cumulative cost to British business and the economy of EU regulation was in excess of £80 billion… So why suddenly is there a deafening silence from the business groups who should be clamouring for deregulation? Well it turns out that the big multinational corporations that the CBI represents actually like regulation, at least the stuff they already have. They don’t want change — it enables their well resourced regulatory departments to “game” the system and keep out competition and, of course, maintains the importance and value of those departments who are the ones generally asked the question about the desirability of regulation. All the business groups favour the EU: it is bureaucracy speaking to bureaucracy… The clamour from real businesses for deregulation remains as strong as ever. It should be noted that all of the business groups combined represent only one quarter of UK business, even if you believe their membership claims. – John Longworth for The Times (£) Brexit in brief 50 times Theresa May set out her Brexit red lines on laws, money, borders and trade – Guido Fawkes Patriotic stars who are supporting our Brexit – Express editorial Ukip is collapsing, but Henry Bolton might just be the man to save it – Nigel Farage for the Telegraph (£) Eurozone members must be serious about risk-sharing – Marcello Minenna for the FT (£) Labour gets 16,000 emails in five days urging it to consult on Brexit – Guardian Romania anti-corruption chief hits out at critics as rule of law concerns grow – FT (£)