British Prime Minister Theresa May met EU leaders yesterday at the first of a two-day summit where she presented a ‘’fair and serious’’ offer that would grant the 3 million EU citizens living in Britain guaranteed rights. With negotiators on both sides addressing the most pressing issues of citizens’ rights, Britain’s debt obligation and the Irish border before discussing any future trade arrangements, Ms. May was eager to make a speedy resolution on the rights of EU & UK citizens.
It is understood that the British Prime Minister last night offered to guarantee that EU citizens who have been living in the UK for five years will be eligible for ‘’settled status’’ while those resident when the country formally leaves the bloc will be entitled to stay for five years to acquire such rights. The controversial red-line matter of jurisdiction of the European Court of Justice, which the UK want to revoke but EU demand it be maintained, was not addressed fully. A government UK source revealed that ‘’the commitment we will make will be enshrined in UK law, and enforceable through our highly respected courts’’.
Exactly how citizens’ rights will be guaranteed is a matter for further in-depth negotiations and Ms. May was adamant that her offer would only come about if reciprocal rights to UK citizens living in the EU were enshrined. The reaction to the offer in Brussels was mixed as many questions remain unanswered but more clarity will be set out on Monday of next week when the UK release a detailed paper.
Negotiations begin as Queen’s speech lays down path for Hard Brexit
Formal negotiations officially began earlier this week in Brussels between the UK and EU and despite the tough rhetoric put forward by the British government, early concessions were made on their side, possibly reflecting their weakened position after the general election. Only weeks ago the Brexit minister David Davis predicted that the ‘’row of the summer’’ would take place over the EU’s insistence that divorce proceedings take place before any talk of a future trade relationship.
This row was short-lived, however, as Britain agreed to settle matters on EU citizens’ rights, Britain’s debt obligation and the border issue between the Republic and Northern Ireland before discussing trade matters. The Irish border problem has already emerged as the biggest challenge, signalled by the fact that the highest-ranking officials from both sides, Oliver Robbins from the UK and Sabine Weyand of the EU, are overseeing the matter.
The UK’s early decision to give way and discuss divorce terms first highlights the diminished position that the Conservative government now has in these negotiations and the rising divisions that exist within Theresa May’s party. This disarray was further heightened by Chancellor Philip Hammond’s solo run when he proposed that his country should seek an interim associate customs union with the EU before a free-trade agreement. Such remarks contrast sharply to others within the government and were widely viewed as a possible autumn leadership bid.
Many hope that the UK government’s weakened position and their new confidence and supply arrangement with the DUP would produce a softer Brexit. However, such an outcome seems unlikely. Although the Northern Ireland party want ‘’as frictionless a border as possible’’ with the Republic of Ireland, their leader in the House of Commons, Nigel Dodds MP, told the house that when the British public voted for Brexit, they voted to leave the single market and the customs union, and Northern Ireland must do likewise.
In addition to this statement that points to a hard Brexit, any hope for a softening were dashed further this week when the Queen’s speech laid out several articles that would bring about a hard Brexit. The speech made clear that the Tory government will hope to pass a number of bills through Parliament that would allow the UK to manage immigration, strike trade deals with other nations and take back control of its fisheries.
New EU laws add to Britain’s exit difficulties
Today marks the one year anniversary of Britain voting to exit the EU and already within that time over 700 new EU laws have been introduced in the UK. With an average of 60 EU regulations and directives being added every month, this swathe of new law adds to the estimated 19,000 pieces of legislation already in place that Britain will need to review and potentially amend.
The sheer number and range of European laws highlights the enormous difficulty that the UK will face as it untangles itself from its 44 year long relationship with the EU. According to Thomson Reuters who carried out the research, the new laws introduced since the Brexit vote relate to a wide assortment of issues, from management of deep-sea fish stocks to sanctions against North-Korea.
To avoid the UK falling off a cliff-edge once it formally exits the EU on the 29th of March 2019, the British government will introduce the Great Repeal Bill which will transpose all EU laws on to the UK statute book. From that point onwards, Parliament will be able to decide which EU regulations and directives to keep, amend or get rid of altogether.
ECB backs Brussels call to relocate Euro-clearing from UK
Last week’s proposal by the European Commission to enact powers that would allow it to shift the euro-clearing industry from London to within the EU has garnered support from the European Central Bank. Benoit Coeuré, a member of the central bank’s executive board approved of the move by the Commission, citing that the current rules are not designed to cope with leading clearers operating outside of the bloc and warned that such a scenario would be risky for the Eurozone economy.
The bulk of euro-denominated derivatives transactions are presently cleared at clearing houses in Britain and is worth nearly €1 trillion a day to the City of London. It is not the first time that the ECB has sought to force euro-clearing out of the City. A 2015 decision by the European Court of Justice ruled that the activity could remain in London, despite the wishes of the ECB who had tried to decamp it to the Eurozone.
This tussle has re-emerged again since the UK voted to leave the EU. There has been repeated warnings by those in Britain that any relocation could damage the European financial system altogether. However, that did not stop Mr. Coeuré from welcoming the European Commission’s decision give the ECB a role in supervising clearing houses given that it is the central issuer of euros.
Compliments of EACCNY member Vulcan Consulting