Brexit News for Wednesday 10 January

Brexit News for Wednesday 10 January
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Philip Hammond and David Davis unite in Brexit charm offensive to German public…

The German public are being hit by a Brexit charm offensive from two top Cabinet ministers seeking to push back against the EU’s red lines. Chancellor Philip Hammond and Brexit Secretary David Davis – who sit at opposite ends of the divorce spectrum – have united to pen a column in the Frankfurter Allgemeine newspaper. Writing as they travel to Berlin and Munich, the pair hope to win over Germans as the UK gears up for phase two talks with Brussels. They say the UK wants the most ambitious economic partnership with the EU “in the world”, but that will require a “bespoke solution”. – Sky News

  • Hammond and Davis: Post-Brexit trade barriers ‘make no sense’ – Politico
  • Davis and Hammond make plea to Germany in pursuit of Brexit deal – Guardian
  • Hammond and Davis insist German and UK views not incompatible – Bloomberg
  • Hammond bypasses Barnier with direct appeal to European leaders – The Times (£)
  • Hammond and Davis fly out for charm offensive with German business – City A.M.
  • Hammond and Davis want to fight for a transition period – Frankfurter Allgemeine Zeitung (De)
  • With creativity and inventiveness, into a bright future – Philip Hammond and David Davis for the Frankfurter Allgemeine Zeitung (De) (€)

…with UK warning EU it risks new global banking crisis if it blocks Brexit deal on financial services…

The European Union risks opening the door to another global financial crisis if it refuses to give London’s bankers a good trade deal, two senior U.K. ministers said, as the finance industry emerged as a key battleground for Brexit talks. In a joint article for a German newspaper, Chancellor of the Exchequer Philip Hammond and Brexit Secretary David Davis said they want close cooperation between EU and U.K. regulators after the country leaves, as part of an expansive trade deal covering both goods and financial services. This will enable both sides to continue their work ensuring “such a catastrophe” as the 2008 crash “doesn’t happen again,” the ministers wrote in a guest column for the Frankfurter Allgemeine Zeitung. “We must re-double our collective effort to ensure that we do not put that hard-earned financial stability at risk, by getting a deal that supports collaboration within the European banking sector, rather than forcing it to fragment.” – Bloomberg

  • Philip Hammond and David Davis warn of a global crash if financial services are excluded from final Brexit trade deal – The Sun
  • EU may allow UK banks limited post-Brexit access, Barnier says – Bloomberg

> Mark Hoban for BrexitCentral: Post-Brexit free trade deals should cover services as well as goods

…as German hostility risks derailing UK plans for bespoke Brexit trade deal

Britain’s plan for a bespoke Brexit trade deal is at risk of being derailed by German opposition even before negotiations on the EU-UK future relationship begin later this year, the Telegraph can reveal. Angela Merkel, the German chancellor, is strongly opposed to a British plan for so-called “managed divergence” from the EU after Brexit, with senior EU officials and experts warning that the German leader considers the idea another ruse for Britain to “have its cake and eat it”… Mr Hammond and Mr Davis will argue that the UK is not trying to cherry-pick, but that “it makes no sense” to put in place unnecessary barriers to trade in goods and services “that would only damage businesses and economic growth on both sides of the Channel”… The British overtures came as EU sources said that Berlin remains implacably opposed to what UK officials have dubbed the “three baskets” approach to Brexit, in which the UK would identify where it wants to stay close to Europe, where it will diverge and a regulated middle ground. – Telegraph (£)

No “No Deal” minister is appointed in reshuffle…

The Prime Minister is understood to have promised Brexiteers several months ago that a minister in charge of preparing for leaving the European Union without a trade deal would be given the right to attend Cabinet. The plans, which were disclosed in Monday’s Daily Telegraph, were in place as late as Sunday and then were dropped on Monday as Mrs May’s plans to reshuffle her Cabinet unravelled… Steve Baker MP, the Exiting the EU minister, was widely expected to be given the right to attend Cabinet… A Brexit source said appointing Mr Baker would have allowed Mr Davis to be “good cop” and Mr Baker to be “bad cop” over the Brexit talks. The source said:  “It was commonly expected among Brexiteers that DExEU would be split in this way otherwise our negotiating stance is not credible.” – Telegraph (£)

…but prominent Eurosceptic Suella Fernandes is appointed to Brexit department

The Brexit Department has been beefed up with the appointment of a leading Eurosceptic who says leaving the EU without a deal would be ‘great’ for Britain. Fareham MP Suella Fernandes, a former barrister, is chairman of the influential European Research Group of pro-Brexit backbench Tories. Her promotion to a junior ministerial post marks a meteoric rise for the 37-year-old, who was elected to Parliament in 2015. A daughter of immigrants from Kenya and Mauritius, she has previously declared her determination to make Britain a ‘fully sovereign trading nation’ once again after Brexit… Miss Fernandes says that in 15 years, Brexit ‘will be seen as the best thing that has happened to our country’. – Daily Mail

  • Theresa May gives Brexit backer Suella Fernandes Government job – Bloomberg

EU document reveals where Brexit will hurt most in Europe

The impact of Brexit will vary considerably across the European Union, with some regions bracing for severe costs and others less exposed. That’s the message from data collected by the EU’s Committee of the Regions on the predicted local economic and cultural fallout of the U.K.’s departure from the bloc. The document, made up of questionnaire responses submitted by local officials and obtained by Politico, reveals a detailed and diverse patchwork… The findings is sure to bolster the view among Brexiteers that there may be divisions on the EU side that can be exploited to Britain’s advantage in Phase 2 of the negotiations, which are due to start within weeks. – Politico

  • Host of European countries worried their economies will be clobbered by the fallout from Brexit, dynamite report reveals – The Sun

Labour will commit to staying in customs union ‘by spring’…

Labour is likely to announce by the spring that it wants to stay indefinitely in a modified version of the European customs union. Senior Labour figures, including MPs for Brexit-supporting areas, said the move was intended to mark a significant break from the government’s policy. The policy has not been agreed and still faces obstacles, but a range of senior figures have confirmed to The Times that the move is likely. “Things are fluid” a source said, but added that they hoped the party would modify its position by March or April. If Labour managed to keep Britain inside the customs union, it would continue to be prevented from negotiating its own trade deals after Brexit. The Labour plan would be to ask the EU to give Britain a seat at negotiations when it strikes future trade agreements. – The Times (£)

…as minister reveals back door in Customs Bill to allow Britain to rejoin EU Customs Union without new legislation

MPs will be able to vote for Britain to rejoin the EU customs union after Brexit without further legislation, a minister has revealed. The surprise admission delighted pro-EU MPs, but will alarm Brexiteers who will view it as a back door to remaining within the trading rules, despite EU withdrawal. Ken Clarke, the former Conservative Cabinet minister and leading anti-Brexit rebel, said he was “considerably reassured” by what the Government was proposing… Mel Stride, a Treasury minister, revealed the small print of the Taxation (Cross-Border Trade) Bill, which is needed for the Government to levy customs duties on goods traded with the EU after Brexit… “Clause 31 makes provision for the Government to enter into – or this country to enter into – a customs union with another territory,” Mr Stride said. “That territory could be the existing customs union of the European Union after we have left the European Union; it could be another territory apart from that.” MPs would simply have to approve a statutory instrument – a regulation, not fresh legislation – in order for that to happen, the minister added. – Independent

Theresa May tries to sidestep more trouble over Brexit Bill with new proposals

Ministers have proposed further changes to Theresa May’s critical piece of Brexit legislation in a bid to ward off further defeats at the hands of Tory rebels. Among the proposals are those they say will limit their scope to use so-called “Henry VIII” powers that would allow them to change laws without full parliamentary scrutiny after the UK leaves… Brexit Minister Steve Baker insisted on Tuesday that the new changes being proposed, consisting of a series of amendments to the EU (withdrawal) Bill, were not a climbdown… [Dominic] Grieve had an appointment at Downing Street on Tuesday to discuss the changes with senior members of the Government. – Independent

  • PM likely to survive final Commons Brexit vote, says John Curtice – Guardian

Scots oppose Nicola Sturgeon plan for Scotland to stay in single market and separate immigration rules

Nicola Sturgeon’s demands for Scotland to stay in the single market and a more liberal immigration regime than England are opposed by most Scots, according to a major Brexit survey showing waning support for independence. Professor Sir John Curtice, the UK’s most eminent psephologist, found nearly two-third of Scots (63 per cent) think the entire UK should have the same immigration regime after it leaves the EU next year… Although 62 per cent of Scots voted Remain in the EU referendum, he concluded that Ms Sturgeon had made “little headway” over the past year and there was no “major rift” with the English about what they want from Brexit. Instead, Scottish and British views have converged and are extremely similar on a wide variety of issues, including ending freedom of movement, with the English becoming markedly more pessimistic about the outcome of the talks with Brussels. – Telegraph (£)

  • Nicola Sturgeon: ‘No Brexit preferable to no deal’ – BBC News

Brexiteers to give Michel Barnier hamper of English wine and cheddar in show of UK’s strengths

A delegation of Brexit supporters will present the EU’s chief negotiator with a hamper of English sparkling wine, cheddar cheese and Shakespeare plays at a meeting in Brussels today, as they warn him against under-estimating Britain’s global influence. The group, led by MEP Steven Woolfe, hopes to foster a more positive tone in the negotiations –  but will also use the meeting with Michel Barnier to warn of “huge support” among voters for a “no deal” scenario where Britain reverts to WTO rules. Mr Woolfe will be joined this morning by former CBI head Lord Digby Jones, Labour Leave chairman John Mills, and former British Chamber of Commerce chief John Longworth as they discuss Brexit with Mr Barnier. – Telegraph (£)

  • Michel Barnier: We’re united on Brexit because of Trump – Politico

Brexit-hit pound helps UK boat and yacht industry notch highest revenue since financial crisis

Britain’s boat and yacht industry saw revenues hit their highest level since the financial crisis as the Brexit-hit pound buoyed sales for UK firms. Figures released by lobby group British Marine showed revenues rising 3.4 per cent in 2017 to £3.12bn, a total not seen since the global market crash of 2007-08. It helped the sector support more than 33,000 jobs in the UK’s manufacturing and service industry, while British Marine said firms “directly contributed” more than £1.3bn to the UK economy between March 2016 and April 2017. British Marine’s chief executive Howard Pridding said sterling’s collapse – sparked primarily by Brexit jitters – was partly to thank for the performance, as it made UK products cheaper for international buyers. “These impressive figures demonstrate how the industry has successfully cashed in on the pound’s devaluation since the Brexit referendum in 2016,” he said. – Independent

Vaping chiefs hope Brexit will puff new life into industry

Brexit may provide a boost for the electronic cigarette industry as it could allow ministers to slash red tape which dictates the size and strength of nicotine refill containers. The use of e-cigarettes, widely known as vaping, has proven popular among those who wish to kick the habit as they contain nicotine but no tar or smoke. The devices heat up liquid nicotine, known as e-liquid, until it becomes vapour which is then inhaled by the user. Though e-liquid contains no tobacco, the product is subject to strict EU regulations on smoking under its Tobacco Products Directive (TPD). But Christian Mulcahy, the head of the UK Vaping Industry Association, says leaving the EU could open the door to scrapping such rules, which he claims deter some smokers from switching to e-cigarettes. – Telegraph (£)

Juncker accuses Poland of being racist for turning away refugees

The head of the European Commission has accused Poland and other countries in eastern Europe of racism, telling the Polish prime minister that his country must accept refugees under European Union migrant quotas… Poland and Hungary face fines and legal action for refusing to accept Syrian and other refugees from Italy and Greece. Last month the commission opened disciplinary procedures against Poland over judicial reforms that Brussels said endangered democracy. Mr Juncker insisted that he was not “at war” with Poland but he has taken an uncompromising line… Mr Juncker told the German broadcaster ARD that Poland and Hungary were guilty of racism for refusing to accept Muslim refugees… His language will add to tensions between east and west as Poland, one of the EU’s largest countries, is singled out with Hungary over its opposition to immigration and the imposition of western European judicial standards. – The Times (£)

Matthew Goodwin: Whether the Tories meet triumph or disaster depends on immigration reform

Today, the Conservative Party’s following is far more pro-Brexit, more working-class than that which handed David Cameron a surprise majority back in 2015. Making sense of this change is crucial to making sense of where the party should head next… They stand at a crossroads: down one path lies a Cameron-reboot aimed at tempting millennials, middle-class liberals and Remainers in London and the university towns with offers of a soft Brexit, tuition-fee reform or a new housing policy. The other path requires responding to their much larger army of fervently pro-Brexit working-class voters who are looking for a “real” Brexit and who, it should not be forgotten, have already shown their willingness to abandon the Tories when their concerns are not met. Ukip may no longer be a danger to the Tories in elections but apathy easily could be. Sandwiched between these two routes is a middle way… This means promoting a new generation of Conservatives to start a new conversation with these voters about how Brexit can be used to create a fairer society and far stronger public services. – Professor Matthew Goodwin for the Telegraph (£)

William Davison: Ireland may be the UK’s best Brexit ally – not a stumbling block

Although he may have played hardball in recent months, Mr Varadkar looks like Theresa May’s key EU ally. “I think in the months and years ahead, Britain will have no closer friend than Ireland when it comes to future negotiations,” he said after the interim deal had been agreed… Since the vote to leave the EU, there has been a tendency to portray the UK stance as underdeveloped and unrealistic. Its proposal in August that high-tech remedies could be implemented to avoid a hard customs border on Ireland was widely derided in the media as “magical thinking”, after comments by an anonymous EU official. But the Irish government’s broad backing in precisely this area is reinforced by their Revenue’s insistence that modernised EU procedures mean there is no need for new customs posts on the border. This suggests that the pessimistic consensus of experts and media on the issue has been misleading. – William Davison for CapX

Liam Fox: Labour’s approach to trade policy is as incoherent as it is irrational

Trade creates prosperity; it has acted as the greatest force for combatting global poverty in recent decades. With a billion people taken out of poverty in the past generation, we have a moral duty to ensure that the full benefits of free trade are made available to those who follow us, especially in the developing world. Those on the anti-trade left would ensure that a more protectionist world denies the poorest that opportunity. They will use every red herring to cover up what is an essentially anti-capitalist agenda, as we saw with the European Left’s opposition to a trade agreement as benign as that with Trudeau’s Canada… Here, in Britain, Labour’s approach to trade policy is as incoherent as it is irrational. On the Canadian deal, CETA, Labour split three ways and now their trade policy – as with much of their policy across the board – has been taken over the hard left. In appeasing their new allies their new hardcore anti-trade approach threatens to harm the very people Labour claim to represent. The consequences of anti-trade policies are rising prices, less quality and choice and the threat of lost jobs. We need to take a different course. The EU referendum result gives us a golden opportunity to take advantage of global trading opportunities as barriers of geography are diminishing. – Liam Fox for The Times (£)

> WATCH: Liam Fox introduces the Trade Bill in the House of Commons

> Theo Clarke for BrexitCentral: Brexit Britain will be at its best when it leads – in aid, trade and diplomacy

Telegraph: British MPs should defend British interests, not those of the European Union

Until we leave, we remain a full member of the Union and pay our dues so are entitled to equal treatment. It is one thing for the EU to prepare for all possible outcomes, quite another to disadvantage a member in doing so. But what is unconscionable is for Opposition MPs to egg them on. A referendum was held and the country voted to leave. More than that, the House of Commons agreed by an overwhelming majority to trigger Article 50 and begin the process of withdrawal. The terms of Brexit are still to be determined and the Government has yet to set out where it thinks we might end up. But in the meantime it behoves all parliamentarians to defend the interests of this country, not those of the EU. – Telegraph editorial (£)

  • Brussels warns UK companies of shut-out in event of no-deal Brexit – FT (£)
  • Yet more bullying tactics from Brussels thugs but they won’t defeat us – Express editorial

Brexit comment in brief

  • Theresa May’s reshuffle may have given the Brexit rebels their new leader: Justine Greening – Asa Bennett for the Telegraph (£)
  • Theresa May can’t reshuffle her way out of it: her premiership will only ever be about Brexit – Philip Johnston for the Telegraph (£)
  • Britain should stay in the single market and customs union as a bare minimum – Alison McGovern and Heidi Alexander for The Times (£)
  • Italy could soon have a much more Eurosceptic government – Enea Desideri for CapX

Brexit news in brief

  • Ukip chief Henry Bolton faces pressure from party to quit over model lover Jo Marney – The Times (£)
  • German regulator makes flexible pitch to lure banks after Brexit – FT (£)