Leaked document suggests EU wants ability to punish UK: Brexit News for Wednesday 7 February

Leaked document suggests EU wants ability to punish UK: Brexit News for Wednesday 7 February
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EU seeks ability to punish UK by restricting market access for non-compliance with Brexit transition terms…

The EU wants powers to punish UK non-compliance during the Brexit transition by summarily cutting off the country’s access to parts of the single market, according to a treaty draft. The five-page text, circulated to EU member states by the European Commission and seen by the Financial Times, sets out how the EU plans to make Britain abide by union law until December 2020 while excluding it from decision-making. Highlighting fears in Brussels over Britain wilfully breaking rules during the transition period or refusing to implement new laws, the draft treaty text calls for additional enforcement powers so that the EU can respond promptly to infringements. – FT (£)

The use of focused sanctions to “suspend certain benefits… of the internal market”, would give the EU the freedom to punish the UK without prematurely terminating the transition period and risking damage to its economic interests. Sanctions the EU could feasibly impose include tariffs on goods, the enforcement of customs checks or the suspension of the single air aviation agreement, which gives UK carriers the right to fly between Britain and the continent. The document does not stipulate what acts by the UK would lead to sanctions, but the EU has made it clear it is concerned that the British government could infringe the rights of its nationals living in the UK after Brexit. – Guardian

  • EU says UK could face higher Brexit Bill – Bloomberg

…which demonstrates why we want to be out of the EU, says Jacob Rees-Mogg…

Jacob Rees-Mogg, the Tory MP for North East Somerset and chairman of the European Research Group of backbenchers, said: “Thank heavens we are leaving an organisation that takes such an aggressive stance when you don’t do what you are told.” He said that the legal text, in particular the demand for Britain to be bound by “sincere co-operation” during transition, contradicted a promise made to MPs by David Davis, the Brexit secretary. He added: “There are all sorts of problems with this. It will make negotiations of future trade deals very difficult. The government will find it very difficult to agree to this.” – The Times (£)

…but DExEU plays down the draft document as an opening gambit in a negotiation

A spokesman for the Department for Exiting the European Union said: “This is a draft document produced by the EU that simply reflects their stated directives. The Secretary of State set out the UK’s position in his speech in Teesside last month. Together these provide a solid foundation for the negotiations on the implementation period which have begun this week with the aim of reaching agreement by March European Council.” – Sky News

Brexit ‘War Cabinet’ meets today – but don’t expect positions to be finalised this week

Despite increasing pressure to articulate the U.K.’s position, Theresa May’s top Brexit team will not agree its preferred future trade and customs relationship with the European Union this week, according to a senior U.K. official familiar with negotiations. Ministers on May’s Cabinet sub-committee on Brexit are set to meet on Wednesday and Thursday to start thrashing out a united position on the final “end state” they want to negotiate with the EU. While this week’s meetings have been portrayed in the press as a make or break moment, those on the inside insist this is not being viewed as “decision week” internally. – Politico

  • Amber Rudd says the UK may have to wait weeks for ‘clarity’ – Daily Mail
  • UK will detail post-Brexit immigration proposal ‘as and when we’re ready’ – Reuters
  • British Chambers of Commerce demands clarity on Brexit ahead of war committee – City A.M.

Ireland digs in over Brexit border question in renewed threat to talks

Ireland is pushing for a settled “legal text” over the border question as early as next month in a move that threatens once again to derail the Brexit negotiations, The Daily Telegraph has learned. Simon Coveney, Ireland’s minister for foreign affairs and trade, is understood to have made Dublin’s uncompromising position clear to British counterparts, putting further pressure on Theresa May to make hard decisions on the future relationship between Ireland and the United Kingdom. It comes as leaked European Commission documents show that Brussels intends to punish Britain if it refuses to submit to EU law during the Brexit transition period by stripping British businesses of their access to the single market. – Telegraph (£)

Public Accounts Committee criticises Whitehall over Brexit priorities

The parliamentary report said decision-making needs to be streamlined and other commitments cut back so attention can be focused on European Union withdrawal. The Commons Public Accounts Committee (PAC) deputy chairman Sir Geoffrey Clifton-Brown, blasted the government for failing to reprioritise its work ahead of Brexit day in March 2019. Pro-Brexit Tory MP Sir Geoffrey said: “Brexit is a byzantinely complicated task with the potential to become a damaging and unmanageable muddle.” According to Sir Geoffrey, departments lack the “technical, project and senior leadership for Brexit alongside all other planned activity”. – Express

PM insists the Tories are ‘focused’ on ‘clear act’ of Brexit

Theresa May has sidestepped questions about rising Tory tensions on Brexit and calls for her to “sling out” arch Leavers by insisting her party is focused on “one very clear act” of leaving the European Union. The Prime Minister refused to directly engage with a question on whether she would like vocal Brexiteers such as Boris Johnson and Jacob Rees-Mogg to be more circumspect, after pro-EU Tory MP Anna Soubry claimed the Government was “in hock to 35 hard ideological Leavers” like the pair. – Belfast Telegraph

Boris Johnson plans big speech for Valentine’s Day setting out ‘liberal Brexit’ vision…

Boris Johnson is planning a big Brexit speech for Valentine’s Day despite fears it will fuel another frenzy about his leadership ambitions, MailOnline can reveal. The Foreign Secretary will set out his vision for ‘liberal Brexit’ in the address as he seeks to put his stamp on the country’s departure from the EU. But the intervention will inevitably be interpreted as a bid to push his own credentials to take over from Theresa May. News of the speech comes on the eve of two crucial meetings of the Brexit war Cabinet, where ministers will try hammer out an agreement on what future relationship the UK should have with the EU. – Daily Mail

…as Remainers launch hunt for new leader to stop Boris Johnson and Jacob Rees‑Mogg

Senior Conservatives have launched a search for a “Stop BoMogg” candidate to prevent Boris Johnson or Jacob Rees-Mogg becoming prime minister in a sudden leadership contest. One cabinet minister privately warned that there was a “whiff of death” about Theresa May’s premiership. Two Remain-supporting former ministers, Justine Greening and Anna Soubry, yesterday suggested they could not stay in a party led by Mr Rees-Mogg, who has emerged as a frontrunner to replace Mrs May. There is growing unease among the parliamentary party mainstream that the party could be “captured” by hard-right supporters of an extreme version of Brexit. – Times (£)

Nick Clegg admits “soft Brexit” hopes are dead but urges MPs to reject final deal – as he reveals “sneering” Brussels’ view of patriotism

Nick Clegg has admitted defeat over his campaign for a soft Brexit, while revealing Brussels’ “sneering disregard” for the reasons behind the referendum result. The former Liberal Democrat leader and arch Remainer told a European think tank last night that he had accepted there was little chance of staying in the Single Market or customs union, after Theresa May’s spokesman definitively ruled it out yesterday. “This week is the week that the illusion of a so-called soft Brexit has died,” he told the Lisbon Council last night, according to multiple reports. However, Clegg added that he was working “day in, day out” to convince MPs to reject the final deal if they are unhappy with it – potentially paving the way for a much-feared no deal. – City A.M.

New Zealand’s Prime Minister says the country is ‘here, ready and willing’ to do a post-Brexit trade deal with the UK

The Prime Minister of New Zealand today said she is ‘here, ready and willing’ to do a post Brexit trade deal with the UK. Jacinda Ardern said she has spoken to Theresa May’s Government ‘many times’ about striking a deal after Britain quits the EU. And she is ready to thrash out the details and sign on the dotted line once Britain is free to do so. Her comments are a boost to Mrs May who yesterday confirmed Britain will be quitting the EU customs union so we can strike free trade deals globally.  Ms Ardern told the BBC’s Radio 4 Today Programme: ‘Well we of course multitask, so there is a lot on our plate but it is a significant priority. – Daily Mail

We must leave EU Customs Union, says Welsh Tory leader

Staying in the EU single market and customs union would “betray every principle” of the Leave campaign, Welsh Tory leader Andrew RT Davies has said. He said the campaign’s “rallying cry” was to take back control “of our money, of our trade, and of our borders”. Mr Davies said both sides of the campaign should now negotiate with Brussels with a “united front”. Welsh ministers and Plaid Cymru have long-called for continued participation in the single market and customs union. Mr Davies, who campaigned for Brexit, made his comments in an article on the Conservative Home website. He wrote: “From a UK perspective, to retain membership of the single market and the customs union is to remain a rule-taker, divested of any influence.” – BBC News

Risk of a no deal Brexit isn’t rising, says Bank of England’s newest policymaker

The Bank of England’s newest policy maker said today that the risk of a “no deal” Brexit was not rising. Elisabeth Stheeman, now an external member of the Bank’s Financial Policy Committee (FPC), appeared in front of the Treasury select committee today, and said that leaving the EU without a deal would damage both the UK and its European partners. Asked about the likelihood of a no deal Brexit, Stheeman said: “I would hope it’s not more likely. I would hope there’s a way to find some common ground and people would realise how important it is in terms of agreement, to try to find the right outcome.” – City A.M.

UK growth upgraded on global surge and Brexit talks progress

Britain’s economy will accelerate this year as the strong global economy combines with renewed confidence in the Brexit negotiations, once more defying fears of a slowdown. GDP should grow by 1.9pc in 2018 and repeat the feat in 2019, according to the National Institute for Economic and Social Research. That is up from previous forecasts of 1.7pc, and compares with growth of 1.8pc in 2017. Economist Amit Kara said the UK economy is in the process of rebalancing. “We expect the UK economy to rebalance away from domestic demand and towards net trade,” he said. – Telegraph

China’s Huawei said on Tuesday it will spend a further 3 billion pounds on procurement in Britain

China’s Huawei said on Tuesday it will spend a further 3 billion pounds ($4.2 billion) on procurement in Britain as the world’s largest telecom equipment maker seeks alternatives to the United States, where it faces an effective ban. Huawei said its chairwoman Sun Yafang made the pledge in a meeting last week with British Prime Minister Theresa May during a trade mission to China which resulted in deals worth more than 9.3 billion pounds. Huawei Technologies [HWT.UL] has been deepening ties in Britain over the last decade and the British welcome is in stark contrast to the United States, where Huawei has been largely frozen out over thinly veiled national security concerns. – Reuters

European Parliament President believes EU’s unified position can hold in Phase 2

The President of the European Parliament, and the Prime Minister of Croatia, both believe the European Union’s unified position can hold together in the second phase of the Brexit negotiations. EU Parliament President Antonio Tajani and Croatian leader Andrej Plenkovic spoke to RTÉ News at the European Parliament in Strasbourg this afternoon, where they reaffirmed their commitment to the border issue. Following Taoiseach Leo Varadkar’s address to the European Parliament last month, Mr Plenkovic became the second EU leader to address MEPs about the future of Europe. During his opening address the prime minister of the EU’s newest member state – Croatia joined the EU in 2013 – labelled Brexit as “a lose-lose situation. For the UK, for the British people, for the EU as a whole. As a European, I respect it, but I regret it.” – RTE

Tim Martin: leave the EU tomorrow

It’s 18 months since the referendum, but many business leaders are still reluctant to get publicly involved in the debate over what type of Brexit the government should pursue. But Tim Martin – founder and chairman of JD Wetherspoon, which runs almost 1,000 pubs, bars and hotels – is certainly not one. Martin released a “Brexit manifesto” printed on 500,000 beer mats last November. He has agreed to talk to us about how Brexit is affecting his company and what he wants from the process. – Money Week

Court rejects legal bid to show Britain could stop Brexit

A Scottish court rejected on Tuesday a legal attempt to ask the European Court of Justice (ECJ) to clarify whether Britain could unilaterally stop the Brexit process. The case was brought by a group of anti-Brexit lawmakers in an attempt to show that Britain’s decision to leave the European Union could be reversed if London withdrew its notification of Article 50 – the process by which Brexit was formally initiated. But judge J. Raymond Doherty of Scotland’s top civil court declined to refer the matter to the ECJ. “I am not satisfied that the application has a real prospect of success. Permission to proceed is refused,” he said. – Reuters

EU split over plot to fill £11.5 billion funding black hole after Brexit

The forecasted shortfall comes as the EU plans to invest more into the protection of borders, tackling terrorism and defence. EU leaders are set to discuss the budget gap at a summit on February 23. Germany has stated it will make higher contributions to the EU after Brexit, the German news site Suddeustche Zeitung reports. The figure is deliberately being kept open. Germany’s willingness to pay more is not shared by Sweden, Denmark, Austria and the Netherlands, who are apparently resisting encouragement to join from Berlin. It has been reported other countries will be reluctant to pay more when it will benefit countries the breach the EU’s rule, such as Poland. – Express

Nigel Lawson: Margaret Thatcher would have been delighted by the Brexit vote

While Margaret Thatcher would have been appalled by the explicit rejection of Thatcherite economics to which the present government appears committed, I have no doubt that she would have been delighted by the result of the Brexit referendum, and the present government’s determination to implement that result. I can testify that, throughout her time as Prime Minister, she became progressively more disenchanted with the European Union; and after her departure she wrote openly of the UK leaving the EU as the most likely best course. But while she would have been delighted by the prospect of Britain regaining its sovereignty outside the EU, she would have been deeply concerned at the current state of the so-called negotiations. – Lord Lawson of Blaby for Standpoint

Steven Woolfe: All Brexiteers need to pull behind my vision of a low-regulation, Singapore-style UK. That’s what will help Theresa May

This weekend, the Government was criticised from all sides for not making its position on Brexit clear. From the newspaper reports, it looks like the Government doesn’t know what it’s doing. The stories get more embarrassing by the day. I frankly put my head in my hands when I read Angela Merkel needling Theresa May at Davos. If true, how embarrassing. In response, people have told the Prime Minister to get a grip. They have told her to whip her Cabinet into shape and decide a negotiating position for the country. I personally want the Government to be robust with Europe and drive a hard bargain. I want us to leave the single market and customs union. – Steven Woolfe MEP for the Independent

Andrew RT Davies: Brexit. Stop leaking. Ignore the scare stories – and get a move on.

You wouldn’t believe it to read the papers, but last week’s leaks were an exercise in distraction and diversion, designed to deflect attention away from the job and to rekindle the fading hopes of a small – but vocal – minority who will stop at nothing to get their way. The headline figures will have raised a smile in the Blair household, but that doesn’t make them any more trustworthy than his own dodgy dossier – and they’re likely to be about as reliable as the Treasury forecasts peddled out in the weeks and months ahead of the referendum. We have endured a “decade of dubious forecasts”, and at the risk of sending my Twitter feed into meltdown (…whisper it quietly…) this tradition of so-called ‘experts’ telling the public how to think is starting to wear thin. – Andrew RT Davies AM for ConservativeHome

John Redwood: What is a Customs Union – a set of restrictions on trade

It is most important not to confuse a free trade policy with a Customs Union policy. The main point about a Customs Union is the wish to impose tariffs and barriers against the rest of the world that are legal under WTO rules, knowing that the WTO would prefer the members of the Customs Union to lower tariffs and barriers for all. Much of the design of the EU Customs Union was to protect French and German industry from better value or smarter competition from elsewhere in the world, and to protect the exploitation of market niches that they had done well so far. One of the features I most dislike about the EU Customs Union is its aggressive stance towards emerging economies which rely heavily on agricultural production, as the EU Customs Union takes full advantage of the WTO permission to have strong restrictions on agriculture. – John Redwood’s Diary

Bernard Ingham: Dear Theresa… tell it like it is on Brexit or lose out

I am writing this open letter to you on the eve of your Cabinet’s discussions on Brexit because of some notes I made as Margaret Thatcher’s press secretary in her terminal year – 1990. I told her that her worst enemy was her Tory MPs who were not very good at politics. One whiff of electoral defeat reduces them to back-stabbing, gibbering wrecks bent on suicide. So what’s new, you may well ask? You may also reasonably say this does not say much for your prospects since they ditched Thatcher after winning three elections. In fact, I can make a case for your fighting and winning the next election provided you get this Brexit business out of the way soon. – Bernard Ingham for the Yorkshire Post

Peter Lyon: A status-quo transition period would be a betrayal of Brexit

In the coming weeks, UK and EU negotiators will be discussing the proposed “implementation period” – the Prime Minister’s preferred name for the “transition period”. The EU’s Chief Negotiator, Michel Barnier, reiterated the EU’s intransigence on its position for the status quo during the transition period last week. Despite our continuing to pay into the EU’s coffers, the UK would have no MEPs, no Commissioners, have to accept EU laws brought in and, of course, the jurisdiction of the European Court of Justice. It’s all very well Barnier’s opposite number, our Secretary of State for Exiting the European Union, David Davis – telling us last month that we have to “keep sight of the fact that this is a bridge to a new future partnership”, but we seem to be taking one step forward and then another one or two backwards, instead of gripping the bull by the horns. – Peter Lyon for CapX

Asa Bennett: Anna Soubry thinks she, not the Brexiteers, speak for the Tories. Actually, they both do

Since losing the Tories their majority at last year’s general election Theresa May has been vulnerable to the whims of the various camps in her parliamentary party. If a “small cabal of MPs”, as Lord Hague put it in today’s paper, kicks off, they have a good chance of forcing the Prime Minister to appease them to avoid embarrassment. The Brexiteers may have seemed like they had the run of the place. That has been clear over the last few days, with No 10 rushing to stamp on the idea of keeping Brexit Britain in a customs union (thereby limiting its trading potential) after they let their unease be known over the weekend. Their feisty talk, putting it out there for Mrs May’s benefit that the “cavalry is coming” to put the “dream team” in her place, has prompted a fierce Remainer fightback. – Asa Bennett for the Telegraph (£)

Time for Theresa May to get tough on Tory rebels like Anna Soubry – Brian Monteith for City A.M.

Alex Morton: We could have had a radical Brexit. But we’re out of time for one – for the moment

To ditch May now would be a disaster because, given the fight that would follow, we would not have the time to prepare for a ‘no-deal’ scenario. Yet longer term, the radical option is not dead. The original emerging Gove and Johnson thesis was that Brexit showed the country needs a revolution to renew itself. This is also the belief of Jeremy Corbyn, and it took him to 40 per cent in the polls as the Tories ran a dreary establishment campaign. While May must stay for now, it is also true she must stand down in 2019: the Tories cannot renew with her as Prime Minister. Once Brexit is finalised the Party, will have to decide how best to take on Corbyn. The Conservatives will have to decide if they want to run as the party of the establishment or radical renewal. I would argue regardless of the outcome of Brexit, the second choice is the more likely path to victory in the face of the Corbyn insurgency. – Alex Morton for ConservativeHome

Brexit in brief

  • The City has more serious things than Brexit to worry about – Kuangyi Wei for City A.M.
  • Forget the Tory infighting – Mrs May’s fate may lie in the Brexit votes of Labour MPs – Philip Johnston for the Telegraph (£)
  • If the Liberal Democrats are to survive, they need to shut up about Brexit – Olivia Utley for Reaction
  • Brexit Twitter insights – Pushpendra Tiwari and Siddharth Venkataramakrishnan for Cronycle
  • How European commissioners really allocate EU funding – Paul Ormerod for City A.M. 
  • Dublin Down – The Times (£)
  • Brussels dangles EU membership to Western Balkans in bid to reinvigorate the bloc – Telegraph (£)
  • SNP accused of ‘dereliction of duty’ over lack of post-Brexit farm payment plan – Telegraph (£)
  • Tory MP Davies reports anti-Brexit protesters to police – BBC News
  • Demand for City offices to remain strong after record-breaking 2017 – City A.M.
  • Tech trip to Australia and New Zealand is crucial to the City of London’s future – Evening Standard
  • Brexit dynamics in Cardiff Bay – BBC News
  • OBR head Publish Brexit assessments so the public can judge – Telegraph (£)
  • Speed up Brexit talks or risk finance firms ‘pulling the trigger’ on moving, MPs warned – Telegraph