Archive for the 'Article 50' Category

h1

The end of an era. Sir Paul Dacre is said to have edited his last Daily Mail

Monday, August 13th, 2018

We can expect fewer powerful pro-Brexit front pages like these?

The biggest political development over the weekend, I’d suggest, was the report in the Observer about the replacement of Paul Dacre as Daily Mail editor with the Geordie Gregg, of the Mail on Sunday, who has taken a totally different view of the referendum outcome.

Gregg will start in September a couple of months earlier than planned and it is hard to see, given his views, him carrying on with Dacre’s strident approach epitomised in a whole series of striking front pages. UK Press Gazette is reporting that “Dacre is understood to have edited his last Daily Mail

The Mail is enormously powerful both because it has the second largest UK circulation and by some margin the busiest online presence. There’s little doubt that it has a big influence on public opinion. The Observer report noted:

“The incoming editor of the Daily Mail has indicated that he will only gradually tone down the strident pro-Brexit agenda espoused by his predecessor when he takes the helm at the powerful rightwing tabloid at the beginning of next month.

Geordie Gregg has told staff not to expect an immediate change in political coverage when he takes the reins from Dacre who spent 26 years in charge, for fear of alienating readers and because the wider political situation is so uncertain. Instead the focus will be on ensuring that the country achieves the least damaging form of Brexit and developing a more nuanced editorial line by next spring, a shift in emphasis that will be welcomed in Downing Street, where Theresa May is battling to control a revolt from the right of her party.

The planned Greig approach of achieving the least damaging form of Brexit appears to chime with that which is being followed by TMay.

The changeover could also impact on whether there’s a CON leadership challenge and the position of the Etonian hard line Brexiter duo of Moggsy and BoJo. It is hard to see them getting the backing from Greig that you’d expect Dacre to have given?

This, of course, comes at a key time in the Brexit negotiations and in the run-up to the party conferences.

Mike Smithson




h1

The road to No Deal: Brexit’s Rubik’s Cube may simply be too difficult

Saturday, July 28th, 2018

There are too many conflicting interests to simultaneously satisfy

Rubik’s cubes were very much a craze when I was at primary school in the early 1980s. I had one, my friends had one and millions of people across the world had them. No-one I know ever solved one though. Sure, you could solve one side easily enough but to solve all six? Certainly it was possible – you saw people on television doing it – but we simply didn’t understand the maths or mechanics necessary, and didn’t have the vision or capacity to try.

That cube could be a metaphor for Brexit (except that the sides all have feelings and have to be coaxed, persuaded and threatened into place rather than simply rotated – if indeed they’ll go at all). Theresa May is the player – and she could be forgiven for feeling not unlike my friends and me so many years ago.

The simple facts are these: to get an Article 50 exit deal, she needs an actual text which can:
Gain the acceptance of enough of the other 27 EU member states to pass the QMV threshold.
Gain the support of the House of Commons.
Gain the support of the European Parliament.
Not provoke a leadership challenge within her party, either directly from her MPs or as a consequence of cabinet / government resignations.
Retain the support of the DUP.

Is there a deal which could satisfy these four groups? We’ve seen these last two weeks how much push back there was from Conservative ministers and MPs – forcefully supported by Party members – against the Chequers Plan. In effect, the PM has found the limit of how far her Party will allow her to go (for now).

Against which, Michel Barnier, on behalf of the Commission and the Council, has rejected the Plan as being incompatible with the customs union and undermining the indivisibility of the four freedoms and the Single Market. You might think that as the UK government wants to leave the Single Market, its indivisibility shouldn’t be in question – the principle that the UK has signed up to is precisely that you can’t expect all the benefits if you don’t accept all the obligations – but apparently not.

The European Parliament is something of the Cinderella in this drama but we shouldn’t entirely ignore it. While I don’t think it’s likely that it would vote down something that the members states and the Commission was prepared to sign off, it shouldn’t be taken entirely for granted – particularly if they perceive a weakening of the Ever Closer Union principles.

How certain is it that there’s no overlap between what Tory MPs will accept and what can be agreed in Brussels? Will pressure of time mean that red lines on both sides are, in fact, not quite so colourful? The signs are not hopeful. The EU has proven flexible on points of detail but on its main negotiating objectives, it has proven granite-like. And while May has extracted considerable movement from her Party, the fact that public opinion, such as has been polled (I don’t entirely trust the public’s self-assessment of their own awareness on the details of the Plan), is heavily against. May has few arguments or weapons to wield to convince MPs to act against their instincts, other than predictions of doom on No Deal. If she were to be toppled, her replacement would have to be either from the Eurosceptic right or having given absolute guarantees to them. Either way, if May falls, a Brexit deal becomes a whole lot harder.

One scenario which seems popular on social media among convinced Remainers is that parliament will somehow force a deal upon the government. But this fails to understand several points. Firstly, parliament can only approve a deal if there is a deal to approve – and for there to be a deal, the government would have had to negotiation one. Unless they simply take the EU’s terms off the peg. In reality, there would be nothing to vote on. Secondly, who is going to lead this uprising? Labour, under Corbyn? He has other priorities. The SNP? They too have other priorities and preserving the Union isn’t among them. Labour backbenchers? It’s almost impossible to see where the numbers come from unless they ally with a sizable number of Tory backbenchers – and there aren’t enough pro-EU Con MPs for that.

In theory, she could ‘do a Peel’ and split her party to deliver a cross-party majority. However, it’d be completely against her nature and she’d be No Confidenced if she brought back – and advocated – a Single Market continuity option. So she wouldn’t just have to suffer a split, she’d have form a new ministry with (brief) Labour support to get her deal through – which would be then immediately withdrawn, leading to a general election which Corbyn would win easily against the wreckage on the right.

Nor can the usual Brussels tricks of fudging the wording or kicking the can work. There could be an extension to the Article 50 process but to what end? Unless one or both sides are prepared to move substantially then buying more time doesn’t achieve anything. (Although the Brexit Date of 29 March is in the EU Withdrawal Act, my reading is that this can be amended under the Henry VIII powers contained within it). And the probability is that one or other side would revolt against the proposal unless agreement was close on acceptable terms.

But this is one of those occasions when fudge is hard. Either there is no customs border between Britain and Ireland, or there is – and if there is, it’s either in the Irish Sea or the Irish border. Either Britain is in the customs union or it isn’t. Either the four freedoms apply or they don’t. At some point in Schroedinger’s Brexit, the box has to be opened.

On Ireland alone, the EU and Dublin say they won’t accept a hard border, nor will Brussels accept a division in customs arrangements between the Republic and N Ireland. But the DUP and Tories won’t accept an internal division within the UK, and government policy is to leave the Customs Union. These are, and always have been, incompatible.

Some have pointed out that while there’s no majority in parliament for any given deal, nor is there one for No Deal either, which must now also be voted on if nothing’s been agreed by 21 January 2019. However, while parliament can vote to reject the principle of no deal, this vote isn’t binding and in any case, while rejecting a given deal gives ‘no deal’ as a definite alternative, rejecting ‘no deal’ doesn’t do the same in reverse.

And that’s why we are where we are. More than two years after the referendum, not only are the two sides still far apart but as soon as you move in one area, it knocks something else out. It is the Brexit Rubik cube in action.

But maybe there is a solution. I did once solve the cube. I peeled off the stickers and put them back so as to form the completed design. Some would argue that this is cheating but that depends on your view of the rules of the game. With Brexit, the result is what matters, not the process.

A genuine No Deal outcome would be disastrous, with immense disruption to movement, supply chains, rights and contracts – not just in Britain but across Europe and particularly in neighbouring countries. Such a situation would surely be unlikely to be allowed to happen for any time and a whole set of emergency agreements based on mutual recognition of standards, licences and so on (which on 29 March 2019 would be identical to both) would develop. That, rather than the formal A50 process, is the likely deal.

David Herdson



h1

The fly in the ointment? How Brexit may be delayed by no deal

Sunday, July 8th, 2018

For the last year or so, one of my favourite betting markets has been the market on Betfair on whether Britain will leave the EU by 11pm on 29 March 2019.  I wrote about it in February and it has been a market that I have returned to regularly over the intervening months.  The price on Yes, Britain will officially leave by that date has shortened considerably since February and as I write last traded at 1.83. 

I still think that is much too long for all the reasons I gave in my February article and still regard it as a buy.  If a deal is done in principle in October or even December, there’s no obvious reason to extend the time period for a few weeks; all concerned can be expected to get their finger out to get it appropriately ratified in time for the deadline.  If negotiations are stalled, a few extra weeks aren’t going to break the logjam.  So there’s no obvious incentive to delay the effective time of Brexit either way.

I have, however, noticed a route by which the bet might fail which I hadn’t previously considered.  So in the interests of full disclosure, I draw it to your attention.  Personally, I’m not convinced it’s particularly likely.  But if like me you’re heavily invested in this market, you might want to chew it over.

On Friday the Cabinet sought to reach a common position on outstanding aspects of its negotiation.  Huge amounts of nervous energy and analysis were expended on this, right down to the taxi arrangements for recalcitrant ministers. 

I find it hard to muster much enthusiasm for the subject, given that the EU looks set to reject whatever position the government might have alighted on in the interests of party unity.  From this point, it looks likely that Britain is going to end up either with essentially whatever deal the EU eventually decide to offer it or with no deal at all.

Either route looks fraught from here.  I don’t propose to look at the practical aspects of a deal on this occasion; if a deal is to be done then the route to 29 March 2019 becomes a mechanical exercise. 

What if no deal is done? Then Britain looks set to crash out of the EU. This would potentially be humongously inconvenient in the short term at even the most basic of levels. It wouldn’t quite be at the level of the breaking of the sixth seal in the Book of Revelations, which will trigger a great earthquake and the sun will become black as sackcloth of hair and the moon will become as blood, but unless a fair amount of practical action was taken beforehand we could expect to see planes grounded, nuclear power plants shut and large parts of the law would be thrown into complete disarray as EU laws ceased to apply.

When you hear such predictions, your antennae should twitch.In that last paragraph there were two key bits: the word “potentially” and the words “unless a fair amount of practical action was taken beforehand”. You could expect a fair amount of practical action to be taken. Even if there is the most almighty falling out and no deal is done, it is in no one’s interests to cause chaos. So there will be a substantial effort to avoid the worst of the consequences.

There is, however, a substantial risk that if no deal is done, that is only apparent at a very late stage. Presumably everyone will keep working towards doing a deal until there is a final late showdown. If so, there may not be the time to make that substantial effort.

And this is the one set of circumstances where a short delay to Brexit might be in everyone’s interests. There wouldn’t be a logjam that needed breaking, just a bit of time to make sure that the sticking plaster was in place and the sealing wax had dried. It appears that the EU has been giving this some thought, as the Austrian Chancellor recently suggested. Ironically, the single most likely circumstance in which Brexit might be delayed is if no deal is done at all.

I have to say that I am now expecting a deal.  Theresa May is evidently working towards one.  The harder line Leavers in the Cabinet appear to have no stuffing in them for a fight.  The consequences of no deal are causing everyone who has thought about it in any detail to flutter their eyelids and have palpitations. 

The government is so dysfunctional, however, that a deal cannot be guaranteed.  It seems that there is no majority in Parliament for any one deal, or for no deal at all.  How this pans out is far from clear.  I still think backing Brexit to take place by the current appointed date and time is a very good bet, but there are ways in which it could lose.  This is one of them.

Alastair Meeks




h1

Punters now make it a 63% chance that the UK will leave the EU on March 29th next year

Friday, June 22nd, 2018


Betdata.io

The big unknown now is the Leave campaign funding investigation

As can be seen from the chart the Brexit “will it happen on time” market has seen a fair bit of turbulence since the start of the year with YES now a 67% chance.

The recent bumps have been cause by the progress of the exit bill through both houses of parliament.

At the moment the one thing that we know about that could cause movement is the Electoral Commission investigation into the leave campaign spending and whether or not what was done was lawful.

We should know the outcome in the next few weeks and there are signs that the Commission could rule that it wasn’t. If that happens then expect it to trigger off huge legal battles by those arguing that this undermines the democratic legitimacy of the referendum. In that situation this market will move.

  • Note: I’m off to my niece’s wedding and this will be my last post today
  • Mike Smithson




    h1

    A handbag is needed to break Brexit’s dialogue of the deaf

    Saturday, June 9th, 2018

    Too many sides are frustrated by incomprehension

    “Brexit means Brexit”, Theresa May once said – and if only it did. Leaving the European Union was never meant to be an easy thing and Britain is making a fine show of just how difficult it can be. The structural and procedural problems are, however, not even half the problem; the greater part of it is an inability of the government to meaningfully talk to the EU, to parliament or even to itself. So many people and institutions are thinking in ways that lie outside the parameters that the people they’re talking to are used to thinking within that Brexit has become a fog of mutual incomprehension as people simply talk past each other.

    Ireland – which never knowingly simplifies anything political – remains as good an example as any. The British government wants no hard border but wants out of the Customs Union and Single Market, though parliament might force it back into one if not the other. Dublin is if anything even more keen to ensure no border and has the Commission’s forceful backing in that. However, the EU is equally insistent that there can’t be any breach in the external borders of the Single Market or Customs Union, meaning it is insisting that N Ireland remain in the Customs Union, with or without the rest of the UK – something that would be unacceptable to the government or the DUP, respectively.

    Considering how keen all sides have been to pay lip-service to the Good Friday Agreement, this is more than a bit hypocritical. In fact, there’s nothing in the GFA about an open border, bar generalisations: a hard border might be against the spirit of the GFA but it wouldn’t be against its letter. Why is this happening? Because the EU cannot understand how important the unity of the UK is to the DUP, it can’t see how important it is to Leave activists for the UK to leave the CU, it will only consider its own initiatives, and the UK government won’t recognise how wedded the EU is to its principles and practices. All sides are talking past each other.

    The same is true at home. Keen Leavers expect the government to just get on and do it, not understanding how difficult this is in practice without causing serious economic damage; keen Remainers fail to recognise the immense damage that would be dealt to trust in politics were they to block the referendum result, or water it down to such an extent it became meaningless.

      The consequence of all this is, inevitably, that very little has been agreed. Hence the focus on the Backstop Agreement. This is extremely dangerous territory for the government for two reasons. Firstly, the more focus there is on the Backstop Agreement, the more it becomes, de facto, the actual agreement. And secondly, but relatedly, the more acceptable the Backstop Agreement is to the EU, the more incentive it has to play so hard on the substantive negotiations that they cannot succeed.

    And yet even on the Backstop Agreement, it’s the UK which is making concession after concession. Or, if you prefer, is writing off objective after objective in the hope of getting some – any – agreement. If this all sounds a bit familiar, that’s not coincidental: it’s pretty much exactly the story of Cameron’s original negotiations which took a year of hard work but resulted in so little that the deal was junked within a week as a campaigning issue.

    The one negotiating tactic that Cameron did not take, and which May has not taken, was to walk away. In not so doing, both PMs implicitly confirmed to the EU that any deal was better than no deal, despite earlier assertions. The problem with that is that if the PM comes back with a really bad deal, she might not get it through parliament, which’d not only be No Deal but No Deal and No Time.

    In truth, both sides’ negotiating teams know that No Deal after Brexit would be economically disastrous from Britain, if that state lasted any time – though it would be bad for the EU too, and especially for Ireland, for whom so much European trade comes via Britain. But unless a red line is seen to mean a red line then the other side will keep pushing hard wherever they want.

    And to add to that is the culture that in Europe a deal is always done. The deal might be done at the final hour (or sometimes even beyond the supposedly final hour), but Eurofudge remains the sweet of the day – as it most certainly is with Brexit.

    Unfortunately, fudge is not what Brexiteers want. The Fudge Culture is exactly what they object to: of the diplomatic-ministerial class making agreements far above the people, whose votes mean little; the Project rolls on. Brexit was an explicit rejection of not just the Project but its methods. As such, a failure to disengage from either the methods or the EU itself will go down very badly. Indeed, such a deal will surely be unsaleable to those who believe in Brexit, or even many of those who believe in honouring the referendum result.

    Boris may, in his own way, have been right that it’s the Trump playbook that’s needed now. Given the positions adopted by the Commission and by Ireland, the options are close to being No Deal or No Brexit, which are equally unacceptable. Given the positions of the DUP and Tory Brexiteers in the Commons and the cabinet, that means No Deal.

    So if the course of No Deal is set then far better to bring it on now, declare the unacceptability of the EU’s current negotiating positions, terminate the talks and walk out, than wait to be ambushed by the steamroller of events in December or next year. That at least gives time to pick up the pieces. And having shaken things up and proven that red lines really do mean red lines (as well as potentially a hard border in Ireland and no £39bn), perhaps new options might open up that wouldn’t do otherwise.

    Which is why Mrs May needs to discover the Prime Ministerial Handbag.

    David Herdson



    h1

    Brexit exit date punters get nervous following the Electoral Commission ruling on Leave campaign funding

    Saturday, May 12th, 2018

    Mar 29 ’19 still favourite but not as strong as it was

    Yesterday’s ruling about Vote EU’s referendum expenses has inevitably led to those betting that the March 29th date will be achieved reviewing their positions. In recent weeks the market had been moving strongly towards it happening on time and it is still odds on.

    But as the Betdata chart, based on actual Betfair trades shows there has been movement. It simply adds to the uncertainty and allows some of the Remain camp to shout “foul”.

    Still being considered by the Commission is the spending of the official Vote Leave organisation and if that goes against then you could expect the betting to change even more

    This is not a market I have played. I still think the March 29th date will be met but there is a lot of politics going on with anti-Brexiteers looking for any opening to impede Britain’s exit. Seeking to discredit the result because of campaign finance failures leading to the issue being referred to the police is to them manna from heaven.

    Mike Smithson




    h1

    Richard Nabavi says EU leaders should remember European history

    Sunday, November 19th, 2017

    Napoleon and Queen Louisa at Tilsit

    Excessive reparations aren’t a good idea

    Angela Merkel might not, just at the moment, be giving Brexit her full attention, given the difficulty of converting the results of Germany’s September election into a viable coalition government. Nonetheless, Brexit is a big problem for her and for the other EU27 leaders, and one which cannot simply be ignored. European, and especially German, history has important lessons which they should heed.

    In 1806, Frederick William III of Prussia went to war against Napoleon, who had invaded much of what is now Germany. It didn’t work out well for Prussia, which suffered a series of humiliating defeats. By July 1807 Prussia was on its knees, suing for peace. Napoleon’s terms, in victory, were draconian, including the complete dismemberment of Prussia, and huge reparations. Louisa, Frederick’s queen, met Napoleon in a personal attempt to persuade him to be more reasonable, but she was ignored. Prussia had no choice but to submit to Napoleon’s vindictive conditions, which shocked Europe. The Prussians never forgot the insult, even after they got their revenge at Waterloo.

    In 1871 the boot was on the other foot. Prussia was now the arrogant victor, and France was outraged to discover that it was now treated the same way. The cycle continued, catastrophically, in the 1919 Treaty of Versailles, until it was finally resolved, but only after the destruction of much of Europe, in the magnanimity of the post-WWII settlement.

    Of course, we do things differently today. The UK is not a warmongering state which has wreaked havoc across Europe, raping and pillaging huge swathes of the continent, and giving rise to an understandable, if counter-productive, thirst for revenge. Instead, it is a nation which has peaceably decided, wisely or unwisely, to exercise a right enshrined in Article 50 of a treaty formally ratified by 28 European nations. Yet the mindset of the EU27 seems to be worryingly akin to that of France in 1919: the UK is expected to pay reparations for having the temerity to exercise its right to leave the EU.

    The UK has already agreed to continue its full payments for a two-year transition period after we formally leave the EU. That means that the EU will have had four full years’ notice before any drop to its budget from the day Article 50 was triggered, and nearly five years’ since the referendum. That should be enough to cover any residual liabilities, and give the EU27 time to adjust their financial plans, surely.

    It might be that the relative negotiating strengths of the two sides are so uneven that the EU27 think that they will be able to extract their €60bn+ reparations for this slight to their amour-propre, and for the knock-on effects on their budget, just as Napoleon judged that he could ignore Queen Louisa’s appeal at Tilsit in 1807. That doesn’t make it a good idea for them to try to do so – especially if they offer nothing concrete in return and pitch their demands at a level which the Prime Minister, weak and buffeted on all sides, cannot accept. The shared interests of the UK and the EU27, and their close economic relationship, mean that this isn’t a zero-sum game; both sides will lose badly if it is mishandled.

    Richard Nabavi



    h1

    Sir Robert Peel and the Corn Laws – the ghost that haunts Theresa May

    Saturday, November 11th, 2017

    There is a way to avoid a Crash Brexit – but it’ll destroy May, her party and trust

    All parties of any age have ghosts that haunt them: spectres from disasters of the past so great that they dare not be forgotten yet dare not be truly remembered either. Indeed, they may not really be remembered in detail at all; their legacy today lying not in memory or even mythology but in the culture and behaviour that evolved to ward off the evil spirits; a culture buried so deep that it never really need be explained other than a short ‘that’s not how we do things here’ to the new and the naive.

      For the Conservatives, the darkest of several ghosts that stalk the party is that of Robert Peel. It was Peel who inadvertently created the Conservative Party by splitting, and splitting from, the Tories that preceded it over the issue of the Corn Laws.

    That he did so on a point which was one both of principle (he was genuinely in favour of free trade) and of practical humanitarian assistance is a complicating factor but the reaction still probably finds an echo in the traditional Conservative scepticism of ideologues. What the split also did was hand the country to the Liberal coalition for most of the next thirty years.

    Why does this matter? Because Theresa May could well find herself in something of a similar position to Peel. Fortunately, the stakes won’t be quite as high. No matter how hard Brexit is, millions are not going to die. Even so, a failure to reach an Article 50 agreement by 29 March 2019 – a date likely, and foolishly, to be set in stone by legislation as the deadline for withdrawal – would almost certainly prompt a severe recession as the dislocation to the economy hit home.

    Unfortunately, there’s an element of crying wolf here. Remain over-egged their predictions of what voting out would do, and some have similarly over-egged their predicted consequences from an orderly withdrawal. A disorderly withdrawal, however, is something very different. Trade would be seriously interrupted, yes, but the effects of a shift overnight to a whole new regulatory regime without that regime being properly prepared for and implemented would go far wider, touching directly or indirectly almost every aspect of daily economic life, parts of which could seize up.

    This is, obviously, something the government wants to avoid. However, it’s not obvious that it can. Its self-imposed conditions, on the ECJ’s role and on freedom of movement, run directly counter to the EU’s red lines on the integrity of the Single Market, the need for a frictionless Irish border and how any deal on expats’ rights is enforced. There is of course also the question of the divorce bill – though there at least the dispute is down to details rather than principle, even if the nature of those details differs by tens of billions of pounds.

    Might the EU move? It’s possible. On expats’ rights, there should be scope for compromise and the EU really ought to be able to roll back on its insistence that the ECJ guards how the deal is implemented in Britain. Mutual recognition of courts within their jurisdictions ought to be possible. Ireland is another question though. Not only is the EU red line meaningful there, there will be pressure from the DUP, as well as within the Conservatives, to ensure the integrity of the UK isn’t undermined by placing borders between Ulster and Britain.

    That conflict could be resolved if Britain remains in the Single Market but that then has to run counter to the insistence on Britain regaining sovereignty on immigration and legislation – promises that May has made.

    The PM made them for good reasons. At one level, it’s the spirit of what the voters backed. For Brexit to mean Brexit, and to be seen to mean Brexit, that means not just leaving the legal construct of the EU but leaving behind its restrictions and duties (and, inevitability, its benefits too). Staying in the Single Market would leave precious little behind. But for those same reasons, that same policy is currently holding together the Conservative party both in its support and in parliament.

    Which is where we come back to Peel’s ghost. As with the repeal of the Corn Laws, there is a majority in parliament for a soft Brexit; it’s just that it involves gaining the backing of the opposition over the majority of the PM’s own party, with a very strong chance of the same result, in both the short and the longer term (Vince Cable can rest easy: the ‘same result’ is about the opposition, not the modern-day successors to the Whigs). But the cost to the PM and her party would be grievous and the benefits may be overrated.

    Will May feel obliged, if the negotiations do go down to the wire, to sign whatever’s on offer so as to prevent a Crash Brexit? If she does, she would no doubt lose her leadership and, knowing that, could only propose it if she were willing to go all the way.

    Which I don’t think she would. We all know that she’s in a weak position, pulled by the EU in one direction – the government has done pretty much all the conceding so far – and by her Eurosceptics on that other. Ultimately, the pull of her MPs will be the stronger but either way, she has to follow, not lead.

    What that means is that a Crash Brexit is a very very real possibility. The red lines on both sides always meant that was the case and the likely writing into law of the UK’s deadline for leaving only increases that chance. But while Brexit may break many things, the party system won’t be one of them. Not beforehand, anyway.

    David Herdson