Brexit bites, 31 July 2017

Jul 31, 2017

This past week saw the Brexit negotiations enter the summer break with no further formal talks due to take place until the last week of August.  In other developments, Irish Taoiseach Leo Varadkar has told the UK that Ireland will not play a role in creating the seamless border, a recent report in the UK estimates that customs controls for UK ports will cost £1 billion per year post Brexit, while Philip Hammond hints that the UK is unlikely to lower taxes once it leaves the EU.

No help from Ireland?

Taoiseach Leo Varadkar has warned the UK that Ireland will not play a role in creating a border between the North and South of the country.  The leader said that if the UK wants to have a seamless border, it’s up to them to create it.  Speaking at a media briefing in Government Buildings last week, he reportedly stated:

"As far as this Government is concerned there shouldn’t be an economic border…We don’t want one. It’s the United Kingdom, it’s Britain that has decided to leave and if they want to put forward smart solutions, technological solutions for borders of the future and all of that that’s up to them…..We’re not going to be doing that work for them because we don’t think there should be an economic border at all. That is our position."

The Taoiseach also suggested that if the UK were to put forward a proposal on how the border should operate, Ireland may not agree with it.

The comments came in for harsh criticism from the DUPs with deputy leader Nigel Dodds saying that the Taoiseach’s position was “total nonsense” stating that there was already an economic border between Northern Ireland and the Republic.

Brexit Minister, Simon Coveney added to the war of words by reportedly saying that the UK government is not in the right “mental space” to address the political sensitivities of the border.  EU Commissioner for Agriculture Phil Hogan is also reported as saying that he is “very disappointed” by the UK’s reaction to Brexit and the pace of the negotiations.

Both the EU and UK have already stated that they want to have as frictionless border as possible between the Northern Ireland and the Republic and it is an entire agenda item on the negotiation table; how this will play out remains to be seen.

No tax cuts in the UK?

Philip Hammond has suggested that the UK will not cut tax rates below the EU average in order to be competitive with other EU nations.  Speaking to French newspaper, Le Monde, when asked whether the UK would consider lowering taxes to remain economically attractive after Brexit, the Chancellor reportedly replied:

"I often hear it said that the UK is considering participating in unfair competition in regulation and tax… That is neither our plan nor our vision for the future… I would expect us to remain a country with a social, economic and cultural model that is recognisably European."

Mr Hammond had campaigned for the UK to remain in the EU ahead of last year’s referendum and is often seen as a supporter of a somewhat "soft Brexit", something which has appeared to sometimes put him at odds with his cabinet colleagues who would prefer a cleaner break from the EU.

UK to carry out an assessment of migration needs

UK Home Secretary Amber Rudd announced in the Financial Times last week that she will ask the Migration Advisory Committee to carry out an assessment of migration from the EU and European Economic Area (EEA) in relation to the UK economy as a whole. 

The committee will be asked to examine the UK’s labour market and look at the role EU national’s play in the economy.   The aim of the report is to identify how the UK’s immigration system aligns itself with “modern industrial strategy” to ensure that UK industry can remain resilient.  Ms Rudd said that she wanted to reassure businesses and EU nationals that the UK “will ensure there is no ‘cliff edge’" once we leave the block”.

It’s understood that work will begin on the report shortly.  The findings of the study are unlikely to be available for a number of months and despite promises that there will not be a cliff edge, the fears of EU nationals or businesses that are dependent on labour from abroad are unlikely to be quelled. 

Brexit shorts

  • A report by economic think tank Oxera says border customs checks for the UK after it leaves the EU could cost £1 billion per year 
  • “Is the UK becoming the sick man of Europe?” reports a UK professor
  • Ryanair reissues warning about disruption that Brexit will cause to UK flights in 2019
  • It’s reported that MUFG, Japan’s biggest bank is to move EU investment operations from London to Amsterdam
  • Australia reportedly warns UK against toughening the visa rules
  • The UK government release a guide UK Nationals in the EU: What you need to know
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