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August 01, 2018

EU softening stance on Brexit

When the history of the Brexit process is written, the Chequers meeting and the white paper will most likely be regarded as the turning points. As Theresa May descends on southern France for a one-on-one with Emmanuel Macron, there are signs from Brussels that the EU is willing to cut a deal. As Alex Barker reports in the FT, the EU is willing to fudge the political declaration to accompany the withdrawal treaty and to set out the future relationship. This is a development we expected all along - and it also concurs with our experience that the EU will never allow a negotiation to fail if a fudge is available. Naturally, a fudge is not going to solve the problem, and stores up trouble for the future. But it gets May past the Brexit date, and it removes the two corner options of a no-deal Brexit and a Brexit reversal. This focuses the political debate in the UK on the future relationship itself, which would be valuable in its own right.

The article cites a senior EU diplomat closely involved in the Brexit talks, to the effect that the priority for the EU is to get the deal done and approved in the House of Commons. The EU would not sacrifice its principles, including the safeguards for Northern Ireland, but would do anything in its powers to get a deal passed. The EU remains hostile to the specific customs proposals set out in the white paper, but the political declaration may include language to explore unprecedented models of future co-operation.

As we have been pointing out, once there is a deal it will also be the EU’s deal. That in itself will make it harder for pro-Europeans in the UK to reject it.

There is some speculation on what prompted the EU's shift. There is now in Brussels a wider recognition than before that a hard Brexit would have severely negative implications for the EU as well, and especially for Ireland which would be under a legal obligation to erect a customs border.

Germany and other exporting countries have no interest in a tariff border for their largest export market. The UK also continues to be seen as an important and useful ally to Germany. 

The FT reported the day before that Michel Barnier and his UK counterparts are edging towards an agreement on financial services, after the UK dropped its previous insistence of an independent arbiter. There are still many open issues, but we are now in a much normal phase of negotiations.

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