The Brexit process continues to take one step forward and two steps back. Local elections in May did not see the collapse of support for the UK governing party and was generally seen as a success for Prime Minister Theresa May. In many areas where the opposition was expected to make gains, those gains didn’t materialise or were modest at best. Some commentators expected those elections to lead to a potential leadership change in the UK, but there is no real prospect of that following those election results.
In the UK Parliament, all of the key amendments proposed by the UK House of Lords to the The European Union (Withdrawal) Bill were eventually defeated in the House of Commons and the Bill became law this week with the UK’s exit date from the EU now set in statute as 29 March 2019. Any discussions on an extension of the negotiation period must now been seen in that context: Not only is agreement between the EU 27 Member States required, but the new Act would also need to be amended – achieving both would be difficult. This also impacts the ongoing discussion in relation to a second referendum on the UK’s membership of the EU, which now seems to be an unlikely outcome given the terms of the new Act.
So attention turns to this week’s EU Council meeting which starts today. However, the EU 27 have bigger priorities than the UK’s exit from the EU. The migrant crisis in the EU 27 will dominate discussions this week as several Member States, including the Interior Minister of Germany, are threatening to close their borders to free movement of people within the EU. Given the amount of attention to the UK/Irish border and continued access for people to move between the UK and the EU 27, the irony of this should not be lost. The prospects of any meaningful progress on Brexit this week are slim.
Back in the UK, the Prime Minister will be hosting a meeting next week with her Cabinet to agree a path forward for the UK post-Brexit. A white paper is expected to be published shortly afterwards, which should contain some detailed proposals.
Most people I speak to still expect some sort of deal to be done with a transitional arrangement until the end of 2021. However, on 8 June the EU’s lead negotiator effectively dismissed the UK’s proposals on a future customs arrangement and it increasingly looks like the UK will only get a future deal if it compromises further, which would be politically difficult for the Prime Minister.
Time is running very short to make progress and unsurprisingly businesses are starting to make decisions based on an assumption that market access to the EU 27 will be significantly disrupted after March 2019. The continuing uncertainty on the UK’s future relationship with the EU is starting to have a negative impact on investment decisions, many of which had been on hold pending some clarity on what will come next.
At the same time, parties on both sides are increasingly calling for ‘no-deal’ to be prepared for. This will no doubt negatively impact all parties, but the political environment is precarious at best both within the UK and the EU 27.
Keep watching this space!
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