First phase of Brexit negotiations in final stretch
The European Council went relatively well for Theresa May - she lives to see another one, in December, which in our view will lead to a deal on the first phase of Brexit. But, as we and others keep pointing out, the second phase is going to be much harder as the UK remains under serious delusions about the scope of a post-Brexit trade agreement, and the ability to run a truly independent immigration regime.
We expect that agreement on a transition will be relatively easy - the rules are clear, the main issue will be length and renewability. We doubt that a trade agreement will be ready in time for Brexit - nor does it need to. The final article 50 agreement will be a relatively narrow deal, setting out the terms of Brexit and the transition.
In his FT column, Wolfgang Munchau makes the point that one of the reasons the mood in the European Council has shifted has been a realisation that May may otherwise not survive, and be succeeded by a far more anti-European leader. Germany in particular needs this deal for two reasons. The country's export surplus with the UK has risen to over €50bn, 1.6% of German GDP. And the Jamaica coalition will be fiscally expansive, and exhaust Germany's room for manoeuvre to plug any EU financing gaps as a result of Brexit. A hard Brexit would cause a severe financial crisis in the EU. Germany has an interest in a cost-neutral Brexit, which means that it needs to keep the conversation going. Angela Merkel also confirmed that she firmly expects to reach a deal in December.
Keir Starmer, Labour's shadow Brexit secretary, has set out a number of conditions for the Labour Party to support the Repeal Bill, the set of legislative measures to transform EU law into UK law after Brexit. He writes that the Labour Party accepts the principle of such a bill (because Brexit would otherwise create a legal vacuum). Labour is making six specific demands:
- agreement on a transition (will happen);
- greater involvement of parliament in the management of Brexit;
- protection and enforcement mechanism for all EU-derived rights for workers, consumers and on environmental standards;
- explicit respect for devolution - to ensure that repatriated powers are not hoarded in Whitehall;
- entrenchment of the EU charter of fundamental rights;
- a final vote by parliament on the approval of the withdrawal agreement.
These seem reasonable demands to us, but the last point is deliberately misleading. Under Article 50, a failure to agree - or to ratify - would automatically trigger a hard Brexit. Parliament will have a vote on the deal in any case but, because of Article 50, this can only be a vote on whether to leave the EU with a deal or without, since the EU can hardly be expected to return to the negotiating table if the deal is rejected. We suspect Starmer wants an embedded re-entry option because the idea of a meaningful vote makes no sense otherwise. But he is deliberately not clear about this, in order to avoid opening big tensions within his own party.
The government could easily give ground on all the other options, but not on the last which is based on a deliberate obfuscation of the legal facts. In the end, the government has the greater powers because there is nothing the parliament itself can do to force a Brexit revocation, as it has no control over the position of the European Council.