Brexit briefing: Weekly news roundup

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.

Brexit negotiations

David Davis has accused the European Union of acting in bad faith over Brexit transition plans. He said the EU was “unwise” to publish a document that said Brussels could suspend the UK’s single market benefits during the Brexit transition period.

The legal document setting out the EU’s terms for the transition period, published on Wednesday, contained “discourteous language”, according to the Brexit secretary, who described the text as political, not legal.

UK negotiators want the UK to be treated in “the same way as EU member states” during the transition period and were said to have been “blindsided” by the demand from the EU, contained in a footnote to the draft section of the transition agreement, that the EU should have “a mechanism” to suspend certain benefits the UK gets from continued participation in the internal market, should a dispute arise and Brussels decide there was no time to refer the matter to ECJ (Politico).

Responding to Davis’s claim during a press conference this morning (9 February), the EU’s chief negotiator Michel Barnier stated that the EU was “not being in the least bit discourteous or vindictive” and did not want to punish the UK, but that it had to construct a legally sound agreement and make progress on it.

Meanwhile, UK negotiators have been warned that the EU draft withdrawal agreement (and this was confirmed by Barnier) will stipulate that Northern Ireland will, in effect, remain in the customs union and single market after Brexit to avoid a hard border.

British officials negotiating in Brussels were told by their counterparts that there could be a “sunset clause” included in the text which would make it null and void should an unexpected or unimagined trade or technological solution emerge that would avoid the need for border infrastructure.

But as it stands, the UK is expected by Brussels to sign off on the agreement, due to be published in around two weeks time, which will see Northern Ireland remain under EU law at the end of the 21-month transition period, wherever it is relevant to the north-south economy, and the requirements of the Good Friday agreement (Guardian).

Finally, it’s reported that the UK negotiating team was keen to continue talks in Brussels next week but that the EU side refused. British officials suspect the EU of stalling in a bid to pile on more time-pressure ahead of the European Council in March, though the EU side says it’s because the UK parliament is now in recess so further talks should wait until after that.

Economy

Japan’s ambassador to the UK said Brexit was a high stakes issue and that no company would be able to stay in the UK if it was not profitable, after a meeting between Theresa May and 19 top Japanese bosses, including from Mitsubishi, Honda, Nissan, Toyota and Panasonic.

Koji Tsuruoka told journalists: “If there is no profitability of continuing operations in the UK – not Japanese only – no private company can continue operations. So it is as simple as that.”

Mrs May had told the business leaders that Brexit would allow the UK to strike a free trade deal with Japan and that the government’s industrial strategy made the UK “more attractive”.

However, asked about the threat to Japanese companies if the UK did not secure a frictionless trade deal with the EU after Brexit, Mr Tsuruoka said that they had come to the UK on the basis that they would have access to European markets and therefore “it is expected that they will have free access”.

“This is all high stakes that all of us, I think, need to keep in mind.” (BBC).

North-east England could suffer a 16% hit to regional economic growth and the West Midlands 13 per cent in the event of a “no deal” Brexit according to the government’s leaked regional impact papers.

Northern Ireland could face a slump of 12% if Britain leaves the EU without a deal, the analysis shows.

The forecasts, which were shown to MPs on Wednesday after parts were leaked to Buzzfeed last week, model the 15-year impact of the UK staying in the single market, doing a trade deal with the EU or leaving without a deal.

In each scenario in the forecasts, growth would be lower, by 2%, 5% and 8% respectively, than currently forecast over a 15-year period.

In north-east England growth would be 3% lower if the UK stayed in the single market, 11% under a trade deal and 16% with no trade deal compared with staying in the EU, the forecast says.

The research suggests London would fare the best, with reductions of 1%, 2% and 2.5% in each of the three scenarios.

Scotland’s estimated hit would be 2.5%, 6% and 9%. Wales would see reductions of 1.5%, 5.5% and 9.5% (BBC).

Politics

Ministers have clashed over the future of the Irish border, following pro-Leave MPs’ claims that the Treasury is engaged in “scaremongering” over the implications for the peace process of a “no deal” Brexit.

On day one of Theresa May’s cabinet Brexit committee this week, chancellor Philip Hammond and home secretary Amber Rudd were among the ministers who argued for the closest possible alignment between the UK and EU after Brexit to avoid the return of a “hard” Irish border. According to one member of the committee there was “no breakthrough” on Northern Ireland and they needed to think about it some more (FT).

Day two of the Brexit war cabinet focussed on the future relationship with Europe, with Theresa May reportedly urging members to be “bold” in aiming for a unique relationship with the EU after Brexit, but they again failed to reach any agreement on Britain’s phase two negotiating position.

May is said to have ordered her squabbling ministers on an away day to Chequers to try and put an end to her Brexit civil war (Mirror) though Sky’s political correspondent Tom Rayner said on air today that such reports were “wide of the mark”.

In depth

In a role reversal not even the most prescient dared to anticipate, Greece is growing faster than the UK and outperforming it in financial markets. That’s because Greek citizens, who rejected bailout terms from EU creditors in a July 2015 referendum, never embraced a rupture with Europe or the return to a drachma-based economy.

Now that Europe is leading the developed world in growth, productivity and job creation after the euro gained 14.2 percent last year — the most among 16 major currencies and the strongest appreciation since 2003 — Greece is the biggest beneficiary and Britain is the new sick man of Europe (Bloomberg).