We use cookies to help improve and maintain our site. More information.
close

July 14, 2017

We are entering the technical phase of Brexit

The three position papers by the UK government on various Brexit-related issues did not touch on the vexed question of finance, which will be the subject of discussion at the Brexit negotiations on Monday. But as the FT reports, the UK government has changed its position on the question, and now accepts the reality of a financial settlement. The paper quotes from a written statement by Joyce Anelay, a Brexit junior minister:

"The government recognises that the UK has obligations to the EU, and the EU obligations to the UK, that will survive the UK’s withdrawal — and that these need to be resolved."

The paper reports that Brussels views this statement as going beyond Theresa May’s previous comments, which only talked about a fair settlement. It quoted one source as saying that this change of position will avoid what would otherwise have been the equivalent of an electric shock. But the story also makes clear that this is not a substantive concession. Recognising the principle of a settlement does not mean that the UK will accept the EU’s demands. The EU’s legal case for a settlement rests on "reste à liquider", the accumulated unpaid commitment made by the UK as a member. The open RAL position is estimated to be €32bn gross and €20bn net at the end of 2019, plus an extra €10bn for pensions and other long-term liabilities.

Martin Wolf offers a devastating analysis of the state of play in UK Brexit politics, which he characterises as a complete shambles. We agree with his criticism that the UK government has failed to prepare the ground for the necessary compromises that will need to be in place for a deal to happen. He surmises that one of the reasons is the Brexiteers' failure to comprehend the disastrous consequences of a no-deal outcome. If there is no deal, a scenario he now deems as most probable, 

"the UK would then, in the view of its most important economic partners, have defaulted on its legal obligations. The EU is a creature of law. Members would view such a violation of UK obligations as heinous."

We disagree with the notion of a default on the legal obligations, because Article 50 explicitly states that the laws of the EU cease to apply if there is no deal. But he is right to say that the EU would take an extreme view of a no-deal Brexit, and would refuse association and trade agreements as a consequence until there is a financial settlement. Wolf concludes that the outcome is uncertain, but the no-deal scenario appears the most likely to him. Wolf is clearly in favour of a second referendum, but does not explain what would happen if the electorate rejected the terms. If the referendum were framed as a choice between accepting the terms or asking the government to revoke the Article 50 procedure, it is far from clear that the EU would accept it unconditionally. The fundamental problem with Bregret is the same problem of Brexit itself. You will not know what you are getting until you get it. We see no chance that the EU would accept a UK request to revoke Article 50 unconditionally. 

The three position papers published by the UK government relate to a number of technical and legal issues. They acknowledge that the UK is leaving Euratom, since this is implicit in the Article 50 trigger, but that the UK would seek an association agreement. It reiterates the position that the CJEU’s legal authority will end on Brexit, but makes the controversial point that this would also relate to cases in the period before Brexit.

Domestically, the UK government is facing the problem of a revolt by Scotland and Wales for the Repeal Bill, a bill that transposes all existing EU laws into UK laws on Brexit day. This is a serious threat because the bill paves the legal ground for Brexit under UK domestic law. If it were rejected, there would a legal vacuum. The problem is that EU laws interact with the devolved British state in complex ways. Scotland and Wales criticise what they perceive to be a power grab. We expect intense negotiations. The Labour party also wants to make a whole series of amendments, including to curtail the government's right to overrule the parliament in a number of legislative areas.

Show Comments Write a Comment

July 14, 2017

Don’t be too complacent about the EU

Stefan Lehne and Tomas Valasek argue that there is a danger of complacency by the EU. The cyclical economic upswing is no doubt a good thing, but none of the deep structural issues that have hampered the EU in the last ten years have been resolved, and some are getting worse. In their long article, the authors touch on a number of important policy areas including: the eurozone, immigration policies and Schengen, growing opposition to trade deals, tensions in our immediate neighbourhood, and the impact of Brexit. One of the points they make is that the EU is simply facing too many crises and that the European Council in particular is not good at multi-tasking. There are various structural dividing lines in the EU - North/South and East/West, which have led to fragmentation. 

"... several years of crisis have eroded solidarity among the member states, and populists have reduced governments’ space for making compromises. Trust in EU partners and institutions has declined. Many countries seem to be going through a phase of re-nationalisation. Governments prioritise direct national interests and are reluctant to share further powers at the European level. Leaders are confused and divided about the future course of European integration. The old federalist vision of the EU is dead, but no new narrative has replaced it."

Show Comments Write a Comment

This is the public section of the Eurointelligence Professional Briefing, which focuses on the geopolitical aspects of our news coverage. It appears daily at 2pm CET. The full briefing, which appears at 9am CET, is only available to subscribers. Please click here for a free trial, and here for the Eurointelligence home page.

 

Recent News

  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • September 25, 2018
  • Be careful what you wish for - second referendum edition
  • July 10, 2017
  • EU in self-destruction mode
  • The EU's fault lines
  • Fake News and Fake views
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • August 20, 2018
  • ... and a subtle shift in EU policies towards both Russia and Turkey
  • Nothing to celebrate about the end of the bailout programme
  • Support for Brexit holding up
  • June 20, 2017
  • How to soften Brexit?
  • The deep roots of Brexit: Thatcher and the Germans
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • July 09, 2018
  • German panic about Target2
  • AfD level with SPD
  • How the EU could fail
  • May 31, 2017
  • Getting real in the debate on the euro's future
  • Russia's growing influence in Italy
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • May 28, 2018
  • A no-confidence motion that could backfire
  • The political repercussions of a historic referendum in Ireland
  • Why the lack of an international role for the euro matters
  • May 10, 2017
  • PSOE primary campaign in full swing
  • Czech government crisis escalates
  • Backroom dealing on electoral reform in Italy
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • April 13, 2018
  • German support for eurozone reform next to zero...
  • ... and no support for France on Syria either
  • A French sermon
  • Why the euro endures
  • April 19, 2017
  • Shadows of money
  • Breppe Grillo vs Eurointelligence
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • February 26, 2018
  • Angela Merkel's cabinet
  • March 27, 2017
  • Governing formation troubles - Northern Ireland edition
  • Did Trump present Merkel with a bill for Nato?
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • January 08, 2018
  • Getting real on Brexit
  • Macron in China
  • March 01, 2017
  • The threat of Frexit
  • Fear and loathing of a referendum in Spain
  • How to get around Theresa May’s little ECJ issue
  • Solve the problem
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • August 28, 2018
  • Urban politics and national crisis - the Irish case
  • How anti-semitism became one of the main issues in British politics
  • November 13, 2017
  • A pro-European list: Wauquiez' nightmare
  • Catalan separatism isn't going away
  • Why oh why does Germany behave the way it does?
  • Why the four freedoms matter
  • February 02, 2017
  • Will it come to the use of force in Catalonia?
  • The day Brexit became irreversible
  • Can Trump and May succeed?
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • June 01, 2018
  • Will France and Germany stick together in their response to US trade tariffs?
  • From a eurozone budget to a slush fund
  • September 18, 2017
  • Why Germany cannot lead Europe, let alone the free world
  • Will Macron help to build up Mélenchon?
  • Boris' Coup
  • January 05, 2017
  • French Socialist primaries - old wine in new bottles
  • Le Pen's hard ecu
  • Will Tusk get a second mandate?
  • Themes of 2017
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • September 27, 2018
  • Two ways out of the Brexit impasse
  • February 16, 2018
  • How big will the euro budget be?
  • July 10, 2017
  • EU in self-destruction mode
  • The EU's fault lines
  • Fake News and Fake views
  • November 30, 2016
  • Is Russia behind a massive cyber attack in Germany?
  • Will Fillon move to the centre?
  • The Dutch left field is getting crowded
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • October 15, 2018
  • Black Brexit smoke
  • Bettel can relax and stay in office
  • Solving the crime vs solving the problem
  • April 16, 2018
  • Italy's and Germany's pained response to the Syria attacks
  • On the end of the eurozone's economic honeymoon
  • Why Bulgaria should stay out of the euro
  • Where shall we meet after Brexit?
  • October 16, 2017
  • What‘s the deep meaning of the elections in Lower Saxony?
  • Can Brexit be revoked?
  • Macron's grand narrative
  • April 19, 2017
  • Shadows of money
  • Breppe Grillo vs Eurointelligence
  • October 20, 2016
  • No games please, we are Europeans
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • October 12, 2018
  • A deal so close, and yet so far
  • AfD leaves Germans speachless and helpless
  • June 04, 2018
  • German discourse out of control
  • Wait for European disunity on US tariffs
  • January 24, 2018
  • AfD europhobe to chair of Bundestag's budget committee
  • Watch out for the Labour Party debate on the single market
  • On the productivity puzzle
  • September 18, 2017
  • Why Germany cannot lead Europe, let alone the free world
  • Will Macron help to build up Mélenchon?
  • Boris' Coup
  • May 12, 2017
  • What to do with Germany’s tax windfall
  • How Macron counts on building a majority
  • Options for the eurozone
  • January 05, 2017
  • French Socialist primaries - old wine in new bottles
  • Le Pen's hard ecu
  • Will Tusk get a second mandate?
  • Themes of 2017
  • August 30, 2016
  • Brexit facts on the ground
  • Burkinis and Republican primaries
  • The SPD and TTIP
  • April 25, 2016
  • The death of the Grand Coalition
  • Insurrection against TTIP
  • Juppé to benefit from Macron hype
  • On optimal currency areas
  • Why the Artic region could be the next geopolitical troublespot
  • From a currency to a people
  • October 15, 2018
  • Black Brexit smoke
  • Bettel can relax and stay in office
  • Solving the crime vs solving the problem
  • September 17, 2018
  • About the new partnership between Russia and China
  • EU ponders Irish backstop protocol to help May
  • August 20, 2018
  • ... and a subtle shift in EU policies towards both Russia and Turkey
  • Nothing to celebrate about the end of the bailout programme
  • Support for Brexit holding up
  • July 20, 2018
  • Why preparations for no-deal Brexit are a positive development
  • On confirmation bias in the Brexit commentary
  • June 25, 2018
  • Trump's car tariff to come early
  • On the lack of a sharp focus in the eurozone debate
  • June 01, 2018
  • Will France and Germany stick together in their response to US trade tariffs?
  • From a eurozone budget to a slush fund
  • May 09, 2018
  • A moment of truth in the Brexit talks
  • A leap of faith, Mr Kierkegaard?
  • April 16, 2018
  • Italy's and Germany's pained response to the Syria attacks
  • On the end of the eurozone's economic honeymoon
  • Why Bulgaria should stay out of the euro
  • Where shall we meet after Brexit?
  • March 26, 2018
  • On the run no more
  • Terrorist attack will challenge Macron
  • A double-whammy of geopolitical and financial uncertainty
  • March 05, 2018
  • One rock, two vetos, three governments
  • Rutte weighs in
  • February 12, 2018
  • What the euro debate is really about
  • How Brexit can still falter
  • January 22, 2018
  • Carles Puigdemont's flying circus
  • Macedonia and the insurrection of Greek patriotism
  • On the real hurdles for Brexit revocation
  • And the satellites, too
  • January 05, 2018
  • Catalonia's government by Skype
  • The case for EEA membership
  • December 13, 2017
  • Danish government might fall over taxes and refugees
  • End-of-an-era mood in Germany
  • And now for the hard part
  • Property auctions - a ticking time bomb for Syriza?
  • November 27, 2017
  • Will Northern Ireland scupper a Brexit deal?
  • Last-ditch effort to prevent Irish elections
  • Pressure on Wauquiez
  • November 13, 2017
  • A pro-European list: Wauquiez' nightmare
  • Catalan separatism isn't going away
  • Why oh why does Germany behave the way it does?
  • Why the four freedoms matter
  • October 30, 2017
  • Italy's electoral reform seems to backfire already
  • Bregretometer hits another peak
  • October 17, 2017
  • Catalan separatism has its martyrs
  • European Parliament agrees to restrict posted workers
  • Foreign policy will be key in Austrian coalition talks
  • October 06, 2017
  • Catalan parliament session suspended
  • Can Jamaica fail? (not the country)
  • Portugal to give tax relief to the lower middle class
  • Stagnant wages and Central European populism
  • September 25, 2017
  • Where does this leave eurozone governance reform?
  • Is Mélenchon losing his momentum?
  • Lost in Florence
  • September 15, 2017
  • Juncker dragged into the Catalan fray
  • What to say in Florence
  • How to fill the gap left by the British MEPs
  • September 06, 2017
  • On the failure of global policy coordination
  • The day Catalonia disobeyed?
  • Waiting for Varadkar
  • August 29, 2017
  • The deep significance of Labour's Brexit U-turn
  • The day after the SPD loses
  • August 21, 2017
  • Soft, getting softer
  • Tsipras' chances of a boost
  • On the fallacy of a middle-ground option for the eurozone
  • July 31, 2017
  • Russia sanctions bill becomes US law
  • Spain's Guardia Civil in the eye of the Catalan storm
  • A grand bargain between France and Germany
  • July 25, 2017
  • The impact of Duda's veto
  • How to undo Brexit
  • Front National: Frexit or not?
  • July 21, 2017
  • Day of truth in EU-Turkey relationship coming closer
  • Germany’s over-dependence on diesel technology
  • July 19, 2017
  • The comeback of the British rebate
  • Macron wants complete abolition of housing tax
  • July 17, 2017
  • What Tony Blair's Brexit confusion tells us
  • Schulz advocates compulsory investments
  • Italy’s government has effectively lost its majority