Unite Brexit Check’s weekly news briefing on the UK’s exit from the EU.
Check back every Friday for an overview of the week’s Brexit-related political, industrial and economic developments.
David Davis has privately suggested that EU preparations for a ‘no deal’ Brexit are “damaging” UK interests and spooking British businesses into moving abroad.
A leaked letter penned by the Secretary of State for Exiting the EU shows he has consulted government lawyers about European Commission “measures” which he believes could breach UK rights as a member state and put Britain at a disadvantage.
The warning comes despite the British government implicitly threatening a ‘no deal’ scenario itself to extract concessions from Brussels, with Theresa May having said that “no deal is better than a bad deal”. (Independent)
Davis’ response came after it was revealed that UK companies working in fields from development to aviation and haulage are being warned that the EU will shut down their ability to operate across Europe and block funding streams from Brussels in the event of a “no deal” Brexit.
In a stark reminder of the high stakes in the negotiations, the European commission has drawn up a series of documents in which it seeks to communicate directly with UK businesses and charities about the damaging consequences of failure to reach an agreement on the terms of withdrawal.
Across a wide range of sectors, the EU makes clear that unless a deal is agreed by October, in time for ratification by the European parliament and the House of Commons before the UK leaves the bloc in March 2019, the status quo will come to an abrupt end. Ambassadors and officials from the 27 EU member states are meeting on Thursday to further discuss their “preparedness” for a cliff edge Brexit, it is understood. (Guardian)
Theresa May told bankers from firms such as Goldman Sachs on Thursday they were a priority for her in the Brexit talks, just as new warnings emerged of job losses in the London financial sector unless there is a trade deal.
May’s comments contrast sharply with her stance before last year’s election when she made a point of showing voters she wanted to break with what some considered an overly cosy relationship between big business and the government.
“It was an encouraging, positive meeting,” a banker briefed on the talks said. “The whole point of the meeting was to say to us, look we know you feel we haven’t prioritised you so far in the negotiations, but we will.” (Reuters)
Meanwhile retailers are warning that new VAT arrangements after Brexit could drastically increase the cost of importing goods from the EU.
Under the Commons Bill, a reported 130,000 firms will have to pay VAT on imports up front after the UK leaves the single market and customs union, including the EU VAT area, next year.
The British Retail Consortium has warned this will create acute cashflow problems and “may require companies having to take out costly bank or insurance-backed guarantees”, forcing up the cost of the imports. (The Times)
The leader of Britain’s trade union movement has challenged prime minister Theresa May to prove that her promise not to cut back workers’ rights under cover of Brexit is more than “just words”.
Frances O’Grady, general secretary of the Trades Union Congress, expressed fears that protections given to workers under the EU working time directive — and separate legislation covering parental leave and other benefits — could be watered down after Britain has fully left the bloc…
Her concern is partly rooted in how some of Mrs May’s senior cabinet ministers believe that Brexit will give the government a once-in-a-lifetime opportunity to cut back employment laws (FT).
O’Grady’s intervention came as the government’s controversial customs bill had its second reading in parliament. During the reading a government minister admitted the UK could rejoin the EU’s customs union after Brexit.
Financial secretary to the Treasury Mel Stride told MPs they would be able to vote on entering a customs union after leaving the EU, but insisted Brexit meant the UK would leave on March 29 2019.
He said: “Clause 31 [of the bill] makes provision for the Government to enter into – or this country to enter into – a customs union with another territory.
“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.” (CityAM)
According to expert independent economic analysis commissioned by the Mayor of London, Sadiq Khan, a no deal hard Brexit could lead to a lost decade – or even longer – of significantly lower growth, with the country potentially having 500,000 fewer jobs in the worst-case scenario and nearly £50bn less investment by 2030 than would otherwise have been the case.
In London alone, there could be as many as 87,000 fewer jobs and the capital’s economic output could be two per cent lower by 2030 than predicted under the status quo.
The findings are in an analysis of the potential impact of five different Brexit scenarios on London and the whole of the UK, commissioned by the Mayor last year from leading economic analysts Cambridge Econometrics. The document also looks at the impact each Brexit scenario could have on nine key sectors of the economy.
Click here to read the analysis in full.