The latest on Brexit

brexit setbackA week is a long time in politics.

This time last week, it looked as though we were close to a breakthrough on Brexit. Theresa May seemed to have agreed the Brexit bill at around £40 billion, and it looked as though the next stage would be an accord on the all important international trade agreement.

By last Sunday night diplomats suggested a deal was almost there after a busy weekend of intensive diplomacy. Senior MEPs had already been briefed by Jean-Claude Juncker, president of the European Commission and shown a 15 page draft text intended to be the outline of a Brexit withdrawal treaty.

But just before all concerned were able to crack open the champagne, the deal was scuppered and the negotiations were officially no further forward.

What went wrong?

The proposed Brexit deal unravelled on early Monday, just hours before Mrs May was due to meet Mr Juncker to sign off on it.  The problem was Northern Ireland, and the Prime Minister’s dependence on the DUP to maintain her party’s narrow parliamentary majority.

It is all centred on the border between the Irish Republic, and Northern Ireland. At present, with both the United Kingdom and the Republic of Ireland part of the EU, the border is ‘soft’. It exists, but there is no need for customs inspections or even checkpoints, meaning that farmers and others can move livestock and goods of all description without hinderance.

When Britain leaves the EU, a hard border, with all the bureaucracy and infringements on freedom that go with it looked inevitable. But this would mean breaking the Anglo- Irish agreement, the Good Friday agreement which since April 1998 has all but brought an end to the Troubles, and three decades of terrorism and sectarian violence between rival communities.

The importance of maintaining the soft border was not lost on the negotiators, who arrived at a compromise. In the draft agreement, Northern Ireland would keep to EU regulations after Brexit, while the rest of the UK would adopt a more independent stance.

Just as No 10 appeared to be preparing for victory, the draft was leaked to the Irish broadcaster RTE. It saw the compromise as a victory for Ireland with the UK to conceding on the single market and customs union.

Antagonising Mrs May’s key supporters

By midday on Monday, Arlene Foster, the DUP leader, had been briefed on the proposed agreement but not on the specific wording of the text.  Once the nature of the compromise was made clear she torpedoed the negotiations with a statement warning against regulatory divergence. Her small but vitally influential party could not agree to Northern Ireland being treated in any way differently to the rest of the UK.

She specifically ruled out any move which separates Northern Ireland economically or politically from the rest of the United Kingdom,

The news was seized on by other parties. Nicola Sturgeon, the SNP leader, observed that if one part of the UK could retain regulatory alignment with the EU, and so effectively stay in the single market, there was no reason why others could not do the same. Naturally, Mrs Sturgeon was thinking of Scotland, but observers were quick to point out that there would be nothing to stop London doing so and effectively keeping its financial hub part of the EU.

While this might have its advantages for the investment houses of the City, it would effectively mean no Brexit at all.

Now everything has changed again.

What now?

This (Friday) morning, it looks as though a compromise has been found. At time of writing details are still emerging, but Mrs May and Brexit Secretary David Davis are in Brussels to meet with European Commission President Jean-Claude Juncker and EU chief Brexit negotiator, Michel Barnier. According to Jean-Claude Juncker “sufficient progress has now been made on the strict terms of the divorce”.

This sounds like a breakthrough. The details are still emerging, but it seems that a deal has been reached which will avoid the hard border, secure the rights of 3m EU citizens living in the UK – and let the trade talks begin.

What should you do?

If nothing else, the last week has shown that Brexit is fiendishly complicated, and that whatever the next round of negotiations lead to, it is still impossible to make any firm predictions about what the future may hold for the UK economy.

If you would like to discuss safeguarding your own future, whatever the next developments from Westminster and Brussels may be, please contact us at Continuum.

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