Brexit transition

EU Offers Brexit Transition, But Says UK Must ‘Accept Rules’

The EU offered on Monday to let Britain keep its membership benefits for 21 months after Brexit to help businesses adapt but it rejected the idea that London could block new EU laws during the transition.

Britain’s Prime Minister Theresa May leaves 10 Downing Street, London, January 24, 2018. Credit: Reuters/Toby Melville

Brussels: The EU offered on Monday to let Britain keep its membership benefits for 21 months after Brexit to help businesses adapt but it rejected the idea that London could block new EU laws during the transition.

Ministers from the 27 other states took just two minutes in Brussels to endorse new instructions to their negotiator Michel Barnier, who will launch talks soon with the aim of sealing a transition package within a couple of months.

The rapid sign-off was a fresh demonstration of the unity they showed in pushing embattled British Prime Minister Theresa May into agreeing outline divorce terms a month ago and a signal of how far they believe they hold the whip hand.

May’s spokesman welcomed the EU agreement, saying it was in line with Britain’s aims, though several differences remained.

One difference aired in recent days as May tries to hold rival wings of her party together has been a suggestion by Brexit Secretary David Davis that Britain should have a way to “resolve concerns” it had on new EU laws passed once it has no vote.

Pressed on how that might work, Barnier said the offer was principally in Britain’s interests and not open to significant negotiation:

“The UK must acknowledge these rules of the game and accept them from the outset,” he told reporters.

“Otherwise … there would be a kind of a la carte single market. That is not possible.”

Italy’s EU affairs minister Sandro Gozi, often sympathetic to Britain, was blunter: “If you leave, you leave.”

EU diplomats also dismissed the idea of Britain having a veto over EU laws after it leaves on March 29 next year, although the transition offer does give London a chance to air its views in EU meetings where its interests are at stake – and notably on issues of immediate economic impact, such as EU fishing quotas.

The pace of EU legislation is slow enough that little which might be decided in the 21 months could be forced on Britain before it had fully left the system on December 31, 2020.

Call to May

By that time, both sides hope to be able to enact a free trade accord to keep goods and services flowing, albeit leaving Britain outside the EU single market and customs union.

Barnier said this timetable was still subject to May and her ministers agreeing a plan among themselves and presenting it to Brussels – and also depends on finalising many issues on the divorce treaty.

While Britain agreed to pay tens of billions of euros into EU coffers on leaving and to give lifetime rights to Europeans living there, many issues have yet to be settled, including the power of the EU courts over the treaty and how the EU–UK border across the island of Ireland will be kept “invisible”.

Barnier said: “I want to remind you, without agreement on all the withdrawal issues, there is no transition.”

He also made clear that talks on the future relationship might start after an EU summit in late March – but only if May spells out what she wants in time for Brussels to put together its own responses. An outline trade package could then be agreed by the time the divorce and transition deal is ready in October.

Showing some willingness to be flexible, the EU ministers are open to extending the transition period if need be to reach a trade pact – though Barnier warned it could not be very long – and also voiced a will to endorse Britain concluding trade agreements with other countries before the transition ends.

(Reuters)

Transition to Be Agreed With Brexit Trade Deal, Says UK’s PM May

May has promised to retain full access to the EU’s single market for two years after Brexit to limit the disruption for companies.

Britain’s Prime Minister Theresa May leaves 10 Downing Street in London, October 23, 2017. Credit: Reuters

London: British Prime Minister Theresa May signalled on Monday that any Brexit transition deal would be put together as part of a wider trade agreement – potentially stripping companies of the time they need to prepare to leave the EU.

International businesses have become increasingly vocal in recent weeks over fears that Britain could crash out of the world’s biggest trading bloc without a deal, sending shockwaves through global markets and fracturing intricate supply chains.

May has promised to retain full access to the EU’s single market for two years after Brexit to limit the disruption for companies. But she told parliament on Monday the full terms of any transition, or implementation period, would be agreed at the same time as the country agrees a new trade deal.

That needs to be completed this time next year, just six months before Britain is due to leave the EU in March 2019.

“An implementation period is about a period which is adjusting to the future relationship,” May said. “That’s the basis on which I put it forward to the EU, and that’s the basis on which we’ll be negotiating an agreement on it.”

May’s spokesman said the government position was as set out in the prime minister’s speech in Florence, responding during a daily briefing session to repeated questions about when companies would see a final transition deal.

“We’re looking to finalise a deal all in one go,” her spokesman said.

Several opposition lawmakers also asked the prime minister to clarify what the stance would mean for businesses.

Concern over Britain’s future trading relationship has been growing for weeks. The country’s five leading business organisations warned on Monday that companies would start moving jobs and investment out of the country if they do not get a transition deal soon.

In a draft letter to Brexit minister David Davis, they warned that time was running out for companies that need to make investment decisions at the beginning of next year.

“Agreement (on a transition) is needed as soon as possible, as companies are preparing to make serious decisions at the start of 2018, which will have consequences for jobs and investment in the UK,” the draft letter from the five groups says, according to a person familiar with the situation.

“And the details of any transitional arrangement matter: the economic relationship the UK and EU have during this time-limited period must match as close as possible the status quo.”

The letter is due to be sent from Britain’s five leading business groups, the CBI, the British Chambers of Commerce, the Institute of Directors, the Federation of Small Businesses and the manufacturing group EEF.

Their intervention follows a tweet from the boss of Goldman Sachs, Lloyd Blankfein, who said last week that he was looking forward to spending more time in Frankfurt after Brexit.

“Just left Frankfurt,” he said. “Great meetings, great weather, really enjoyed it. Good, because I’ll be spending a lot more time there. #Brexit,” he tweeted.

London Mayor Sadiq Khan, a member of the opposition Labour Party who campaigned to remain in the EU, said Blankfein’s comment reflected a wider thinking in the business community and warned that others could follow suit.

“He’s articulating publicly what many CEOs and investors who love working in London have been saying privately, which is that unless they have certainty about what happens after March 29, 2019, they have got to make a plan B,” he said.

“He’s not bluffing. When I speak to businesses each day, they’re not bluffing.”

(Reuters)

Theresa May, Jean-Claude Juncker Call for Faster Brexit Talks

A joint statement described a “constructive and friendly” two-hour meeting, during which they “reviewed the progress made in the Article 50 negotiations so far and agreed that these efforts should accelerate over the months to come”.

Britain’s Prime Minster Theresa May leaves 10 Downing Street in London, Britain, October 11, 2017. Credit: Reuters

Brussels: British Prime Minister Theresa May and European Commission chief Jean-Claude Juncker agreed over dinner in Brussels on Monday that the pace of negotiations over Britain’s departure from the EU should be stepped up.

Announced less than 24 hours before they sat down, accompanied by their chief Brexit negotiators, David Davis and Michel Barnier, and just three days before May returns to Brussels for an EU summit, the meeting was held well away from reporters. Officials offered no immediate detail on the substance beyond the six-sentence communique.

Both sides have been calling for a faster pace of talks as time ticks down to Britain’s withdrawal from the EU in March 2019 and businesses warn that without clarity on what happens after that they may start switching investments early next year.

The joint statement gave little else away, making no reference to the mutual blame game in which London and Brussels accuse each other of creating deadlock: May by failing to detail how much she is willing to pay to settle divorce obligations, the EU by sticking rigidly to a refusal to so much as talk about a future trade deal and transition to that until she does so.

Wary that the prime minister, beset by feuds in her cabinet over a softer or harder break with the EU, might try to divide the other 27 states, some EU diplomats voiced concern she met Juncker and Barnier before meeting the other national leaders.

Barnier has, diplomats say, suggested accelerating talks by starting internal EU discussions on a transition period in which Britain would stay in the single market. His idea hit resistance from heavyweights Germany and France, though the 27 now seem set to agree this gesture in an EU statement to be issued on Friday.

A revised text circulated by summit chair Donald Tusk to EU governments on Monday retained wording that offers Britain the chance of talks on a transition to a future relationship almost immediately after the next EU summit in December. But at German and French insistence, it stressed the need for London to meet a series of key demands from the Union, notably on money it owes.

May‘s spokesman, when asked before the meeting whether she would give more detail on Britain’s financial offer, indicated she would not.

That left some wondering what the point was. “It will either be a very expensive dinner, costing about 30 billion euros, or else – what is this?” one EU diplomat said.

(Reuters)

Weakened May to Give Bullish Brexit Prognosis but Say Ball Is in EU’s Court

May has seen her authority erode since calling and then bungling an election in June, which cost her Conservatives their majority in parliament.

The wording on a slogan is changed after a letter fell away from the backdrop as Britain’s Prime Minister Theresa May addresses the Conservative Party conference in Manchester, October 4, 2017. Credit: Reuters

London: Prime Minister Theresa May, weakened by a disastrous party conference, will give British lawmakers a bullish prognosis for negotiations over exit from the EU on Monday, but tell them that it is up to Brussels to make the next move.

May has seen her authority erode since calling and then bungling an election in June, which cost her Conservatives their majority in parliament.

At her party’s conference last week, her final speech was marred by a coughing fit and letters falling off the slogan on the set behind her. A former chairman of the party announced that a group of Conservative lawmakers was trying to topple her.

Meanwhile, she has so far failed to persuade Brussels to start talks on Britain’s future relationship with the EU, six months after setting a two-year clock ticking on Britain’s exit from the bloc.

May will tell lawmakers on Monday that she was offering Europe a “new, deep and special partnership” with Britain, her office said.

The next move would have to be taken by the other EU member states, but she expects them to accept her offer: “The ball is in their court. But I am optimistic we will receive a positive response.”

Britain had aimed to start talks on its future ties with the EU after a summit in Brussels later this month. But the head of the European Commission said last month that a “miracle” was needed in order to make sufficient progress to push the talks beyond the initial terms of the divorce.

Brussels says it will not discuss its future relationship with Britain until London agrees to pay its outstanding dues, resolves the fate of EU citizens living in Britain and works out a plan for the future UK-EU land border in Ireland.

May aimed to push the talks forward with a speech last month in which she asked for a transition period of about two years, which would see Britain remain inside the EU customs union and single market until its future arrangements could be worked out.

But days before her speech, her Foreign Secretary Boris Johnson wrote a long newspaper article setting out his own plans for Brexit, which many of May‘s allies saw as a move to undermine her authority within the party.

Chief EU negotiator Michel Barnier said 10 days ago that a “new dynamic” had been created by her speech, but there was still not enough progress to move to the next phase of talks on a transitional period or a future trade deal.

(Reuters)

In Bid to Unlock Brexit Talks, Theresa May Sets out Transition Plan

May’s proposals for such a transition, for meeting Britain’s financial obligations and for protecting EU citizens’ rights, fell short of what the EU wanted.

Britain’s Prime Minister Theresa May speaks at the Complesso Santa Maria Novella, Florence, Italy September 22, 2017. Credit: Reuters

Florence: Prime Minister Theresa May set out a plan on Friday to retain full access to the EU’s single market for two years after Brexit to try to reassure business and reset the tone of stalled negotiations with Brussels.

But her proposals for such a transition, for meeting Britain’s financial obligations and for protecting EU citizens’ rights, fell short of what the EU wanted.

EU Brexit negotiator Michel Barnier praised the speech for its “constructive spirit” but asked for more detail. Another official said it had left him “even more concerned”.

In a speech at a 14th-century church in Florence, Italy, May appealed directly to EU leaders to unlock the talks, which have stalled over a series of issues, including the size of the bill Britain should pay as part of its divorce settlement.

She spent much of her 30-minute speech describing the similarities between Britain and the EU, saying that if the complicated talks to unravel more than 40 years of union should fail, the only beneficiaries would be those who oppose democracy, liberalism and free trade.

The sterling fell against both the dollar and the euro during May’s speech, weakening by more than half a cent against the US currency.

Late on Friday ratings agency Moody’s downgraded its assessment of Britain’s creditworthiness, saying Brexit was damaging the country’s medium-term growth prospects. The government said Moody’s view was “outdated” and did not consider May’s most recent comments.

“Clearly people, businesses and public services should only have to plan for one set of changes in the relationship between the UK and the EU,” May told an audience of Italian business leaders and diplomats.

“So during the implementation period, access to one another’s markets should continue on current terms, and Britain also should continue to take part in existing security measures.”

Britain wants to move the talks forward and start addressing how a future relationship with the EU would work, a move May’s government says is vital if they want to find agreement on the divorce bill.

But the EU has stood firm, refusing to discuss trading arrangements until “sufficient progress” is made on the first three issues – the financial settlement, the land border with EU member Ireland and the protection of expatriates’ rights.

Concessions

Beyond her vision for a transition, involving around two years of trading on the same terms, but no payments for access to the EU single market, May pledged to protect EU citizens’ rights in Britain after Brexit, saying that decisions by the European Court of Justice would be taken into account by British courts.

On the financial settlement, she also said Britain would “honour commitments we have made during the period of our membership”.

“I do not want our partners to fear that they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave,” she said.

May has long said Britain will honour its financial obligations, but she did not mention the 20 billion euro figure reported in local media in the days running up to the speech.

She said little on Ireland, beyond noting that no one wanted a return to a “hard border” with British-ruled Northern Ireland that could reignite tensions on the island.

Barnier said her words showed “a willingness to move forward, as time is of the essence”, but that they needed to be “translated into a precise negotiating position of the UK government”.

But the head of the European Parliament’s biggest group, the centre-right European People’s Party, Manfred Weber, said May’s speech had brought no more clarity. “I am even more concerned now,” he added.

British opposition lawmakers were not impressed, with the Labour Party saying the government was “no clearer about what our long-term relationship with the EU will look like.”

Trade union leader Frances O’Grady said the prime minister was pretending that “we can have our cake and eat it,” while a business lobby, the British Chambers of Commerce, underlined its desire to “get trade talks moving”.

It was never going to be an easy speech, with May struggling to appeal simultaneously to the EU, to business and to the supporters of Brexit in her own party who want to hold her to her pledge of a clean break with the bloc.

“It’s clear that we’re out,” one senior Conservative source said, adding that he was pleased to hear May agree that no deal was better than a bad deal.

Acrimony

The speech comes at the start of a crucial week for Europe.

On Sunday, German voters are expected to return conservative Chancellor Angela Merkel to power but also vault eurosceptic parties into parliament, including the Alternative for Germany (AfD), whose nationalist, anti-immigrant ideas echo those of Britain’s UKIP party, a driving force behind Brexit.

Two days later, French President Emmanuel Macron is expected to flesh out his ideas for a “relaunch” of the EU and euro zone, underscoring the bloc’s determination to press ahead with a closer union that excludes the UK.

Britain and the EU do agree on one thing: The clock is ticking, with Barnier saying there is only a year left to find an agreement to give Britain a controlled exit.

May’s ill-fated decision to have an election in June not only used up time but also sapped her authority and gave a stronger hand to pro-Brexit lawmakers who want a total break with the bloc and to reduce any divorce bill to zero.

May’s top team of ministers put on a show of unity in Florence – with foreign minister Boris Johnson, one of Britain’s most prominent hardline Brexit politicians and a one-time leadership contender, sitting in the front row.

“I think what was so uplifting about this speech was it was positive; it was confident about what Britain can do but also about our relations with the rest of the EU,” Johnson said.

(Reuters)

Theresa May Set to Make High-Stakes Brexit Speech

In a speech in the Italian city of Florence, May will set out on Friday her vision for future ties with the European Union and try to fill an apparent policy vacuum.

Anti-Brexit protesters wave flags in front of the Houses of Parliament in London, Britain, September 11, 2017. Credit: Reuters

London: After months of Brexit talks that have made little progress and deepened rifts in her party, British Prime Minister Theresa May will try this week to put the negotiations on track and reassert her authority.

In a speech in the Italian city of Florence, May will set out on Friday her vision for future ties with the European Union and try to fill an apparent policy vacuum that has left her Brexit team adopting what Brussels regards as wrecking tactics in the talks on unravelling four decades of union.

The 60-year-old leader has deliberately chosen an EU city to deliver the speech so that she can speak directly to the other 27 nations in the bloc, but has her work cut out in seizing back the initiative.

May has been largely quiet on Brexit since her Conservative Party lost its parliamentary majority in a June election that she need not have called, saying little beyond expressing her support for “a deep and special partnership” with the bloc once Britain leaves in March 2019.

But days before the speech, foreign minister Boris Johnson laid out his own Brexit vision, challenging her more cautious approach and exposing the fault lines in her party and government.

EU negotiators are also frustrated with what they see as Britain’s policy drift. At talks in August, British officials spent almost three hours picking holes in the legal basis for the bill that the EU expects London to pay to leave.

Sources familiar with the presentation — so detailed it stretched for 11 pages and was illustrated with 23 slides — called it a show of legal muscle. But, as Brexit minister David Davis said, the meeting was even “tetchier than the one before”.

“The reason lawyers gave a two-and-a-half hour presentation is because no government minister had made a decision on policy,” said Andrew Hood, who was a legal adviser to former prime minister David Cameron and still has contact with lawyers in several government departments.

The August talks were almost cancelled by the EU side because of Britain’s lack of position, Hood told Reuters. “I always thought when I was in the foreign office that if you ever need to revert to lawyers you’ve probably lost,” he said.

Hood now advises companies on their Brexit strategy for law firm Dechert but took part in meetings with the EU under Cameron, who resigned last year after Britons voted for Brexit.

The financial settlement with Brussels is one of the most difficult parts of the Brexit negotiations, but the lack of movement so far on even the mechanics of how to calculate the sum shows the difficulties facing Britain.

Rifts, splits and frustration

May is walking a tightrope between hardline Conservative Brexit supporters who want to make sure any payment is as small as possible, and some top ministers who believe Britain must pay to keep ties as close as possible.

Until now, she has largely let her government do the talking by setting out a wishlist for future relations with the bloc that aims for the closest of ties without the costs. May has also stuck to a belief that by playing her cards close to her chest, Britain will force EU negotiators into concessions.

But her silence has allowed other voices to emerge. The main opposition Labour Party says it would keep Britain in the single European market and customs union during a transitional period, the Liberal Democrats are demanding a second referendum and the Scottish National Party wants Scotland to remain part of the EU.

Their opposition is to be expected, but criticism from May’s own team is not, and has raised eyebrows.

In a weekend newspaper article, Johnson wrote that he did not expect Britain to pay for access to the EU’s market, putting him at odds with finance minister Philip Hammond and May, who has spoken of paying in.

At the August talks, left without clear policy direction, Davis and his team’s detailed dissection of the EU’s arguments on the Brexit bill left the bloc’s main negotiator Michel Barnier wondering whether “we can build trust and start discussing a future relationship”.

Weeks earlier, a former aide to May had praised the emerging agreement in her cabinet over the need for a transition deal and a divorce settlement — something that seemed remote after last year’s Brexit referendum.

But though there may be agreement on this in principle, the difference lies in the detail and has opened a deep rift. Hammond wants a transition as close as possible to the status quo while others, such as trade minister Liam Fox, do not want to stay in the single market or pay for access.

Pro-Brexit lawmakers have also balked at suggestions Britain should pay 60 billion euros ($72 billion) for the divorce, and May’s aides have poured cold water on reports that there could be a compromise to reduce the headline figure by paying 10 billion pounds a year to the EU during a transition.

In a move that appeared intended to tighten her control over the Brexit talks, May appointed the top official at the Brexit ministry as her EU adviser on Monday.

But resetting the talks is a tough order, and aides are silent on whether May will use the Florence speech to try to break the deadlock on the financial settlement.

Officials in Brussels are not holding their breath.

“The EU has taken the black veil off and is getting on with its life,” one EU official said after the August talks. “The Brits are either completely overconfident or completely overwhelmed.”

(Reuters)

Top UK Ministers Agree Brexit Transition Period Cannot Halt EU Exit

May’s Brexit strategy has been the subject of open debate among her top team ever since a botched June election which weakened her authority.

Chancellor of the exchequer Philip Hammond attends a meeting with Brazil’s finance minister Henrique Meirelles (unseen) in Brasilia, Brazil, July 31, 2017. Credit: Reuters/Adriano Machado

London: Britain needs a transition period to soften its exit from the EU, but it cannot be used to stop Brexit, two senior ministers said on Saturday, signalling a truce between rival factions in Prime Minister Theresa May’s cabinet.

May’s Brexit strategy has been the subject of open debate among her top team ever since a botched June election which weakened her authority and exposed differences of opinion over how Britain should manage its departure from the bloc.

However the outspoken pro-European finance minister Philip Hammond and ardent Brexiteer trade minister Liam Fox looked to end the debate by setting out a joint position in a newspaper article.

“We believe a time-limited interim period will be important to further our national interest and give business greater certainty – but it cannot be indefinite; it cannot be a back door to staying in the EU,” Hammond and Fox wrote in a joint article for the Sunday Telegraph newspaper.

Hammond had previously angered pro-Brexit colleagues and some voters by raising the prospect of an exit deal that saw little immediate change on issues like immigration when Britain leaves in March 2019, and which could last until 2022.

Such an arrangement was criticised by eurosceptics as a betrayal of the swift Brexit they wanted, and has even raised fears the process would be stopped altogether.

But the article, due to appear in Sunday’s newspaper, said that the government strategy was not being watered down and Britain would leave on schedule albeit with a transition period.

“We are both clear that during this period the UK will be outside the (EU) single market and outside the customs union and will be a ‘third-country’ not party to EU treaties,” they said.

However it also confirmed that immigration controls – one of the key issues for voters who backed Brexit – would not stop all EU workers coming to Britain.

“During this period our borders must continue to operate smoothly; goods bought on the internet must still cross borders; businesses must still be able to supply their customers across the EU, and our innovative, world-leading companies must be able to hire the talent they need, including from within the EU,” they said.

(Reuters)