Analysis & Blogs
Einstein’s advice for Brexit negotiators: relative urgency depends on regulators as much as on politics
Much has been written at the launch of Brexit negotiations today about the time remaining for negotiators. Michel Barnier has set a deadline of October 2018 for agreeing a withdrawal treaty, which may or may not include an outline of the future UK-EU trading relationship.
When you mention EU states competing to win a prestigious and powerful European regulatory agency from Britain after Brexit, most people would probably think of the European Banking Authority. But the European Medicines Agency is also up for grabs, and the most intriguing bidder is Bucharest.
The early stages of any negotiation are all about positioning. The Brexit negotiation is no different. British Prime Minister Theresa May’s letter invoking Article 50 - and the draft negotiating guidelines issued by European Council President Donald Tusk - are both exercises in positioning. Each sets out objectives and constraints, as the two sides compete to shape the negotiations in their favour.
During a trip to Chicago earlier this month, I reflected on the differences between my time in office and the present. Despite economic gains from globalisation, failures in politics and in policy have led to a crisis of confidence in global cooperation.
One of the big political stories in the UK this week was the ‘u-turn’ by Chancellor Philip Hammond on his budget proposal to raise National Insurance Contributions (NICs) for the self-employed. The NICs u-turn demonstrated a couple of important things about politics and policymaking at Westminster as the UK prepares for the most complex bout of parliamentary activity in its modern history, namely legislating its way out of the EU.
One of the many things the UK will need to do on its way out of the EU is to establish its new ‘most favoured nation’ trading profile at the WTO in Geneva. This means establishing the tariffs for goods, minimum market access conditions for services trade and a number of other notified conditions that will apply in the UK market.
Northern Ireland’s Assembly election on 2 March has come close to delivering a political earthquake, with the nationalist Sinn Fein coming within 1,200 votes of beating the Democratic Unionist Party to first place, while the Assembly could for the first time lack a unionist majority.
If there is a second independence referendum in Scotland, one of the central issues will be which single market matters more, the UK’s or the EU’s? The latest export statistics for Scotland, published last month, reveal what’s at stake.
Having concluded that Euratom is “uniquely legally joined” with the EU, the government argues that Brexit will require the UK to leave Euratom when it leaves the EU.
There has been quite a lot of media coverage of the recently finalised negotiations between the EU and the US Department of Treasury and Federal Insurance Office on a “covered agreement” for (re)insurance services. Notable features of the deal include the national, uniform treatment of collateral requirements, exchange of regulatory information between leading supervisors and mutual recognition of financial oversight regimes. This last point in particular couldn’t be more topical.
Theresa May’s Lancaster House speech has provided much needed clarity about the British approach to Brexit. It has reset the baseline for the negotiation by taking the UK out of the single market.
UK Prime Minister Theresa May has all but ruled out maintaining freedom of movement between the UK and EU post-Brexit. This implies a new migration system, providing recruitment challenges for a range of sectors from social care to agriculture. Businesses should now plan to adapt, but policy...
UK immigration minister Robert Goodwill’s idea of extending the proposed £1,000 a year charge on skilled migrant workers to workers from the EU after Brexit has drawn attention to the big question of what a UK government might be tempted to do to reduce pressure on migration.
There was some comment this week about the fact that the UK’s largest financial services advocacy body TheCityUK has self-consciously ceased to advocate the retention of passporting rights for UK-based financial services businesses after the UK has left the EU. This was presented as a concession of ambition, but it is also a form of tactical retreat.
Campaign group Change Britain has published flawed and incomplete analysis suggesting the UK will gain £24bn a year, or £450mn each week, if the UK government pursues a ‘clean Brexit’ and leaves the single market and customs union.
The EU Advocate General Eleanor Sharpston has delivered an important preliminary conclusion in the European Court of Justice’s (ECJ) review of the ratification requirements of the EU-Singapore FTA. This sounds like an arcane question but is actually a big political issue.
GC has just published a report with colleagues from Herbert Smith Freehills and The Boston Consulting Group looking at some of the implications of a ‘hard Brexit’ for traders between the EU and the UK. Media coverage of the report has focused on the headline issue of tariffs being re-imposed on EU-UK trade. But, among many other things, the report flags the important issue of changes to British investors’ rights of recourse in the EU, which is often not well appreciated by businesses.
In collaboration with Herbert Smith Freehills and The Boston Consulting Group, Global Counsel has co-authored a paper looking at the meaning and implications of a hard Brexit for businesses, aiming to help them understand the role they may play in shaping this or an alternative outcome.
A contest for control of the Brexit process is playing out between the government and parliament in the UK. The complex, opaque rules of parliamentary procedure have suddenly become central to the ability of either side to dictate the tempo and content of the UK’s withdrawal from the EU....
In the months since Brexit there have been murmurings about whether, post-Brexit, Britain could adopt a ‘Singapore model’. A number of Brexiteers in the financial sector have suggested that Britain could become a “super-duper Singapore” through deregulation and focusing on new markets in Asia.
According to one major newspaper, the UK Government is developing a “nuclear” Brexit negotiating threat in the form of a corporation tax cut to 10%. But as with all nuclear deterrents, the question boils down to one of credibility: could and would the UK actually deliver a CT rate of 10%?
Immigration is the simmering political issue at the heart of Brexit. Much of the debate has focused on how far the UK can reclaim control of EU migration into the UK, while retaining some form of participation in, or preferential access to, the single market.
Like many divorces, Brexit is going to be a custody battle of sorts. UK Secretary of State for International Trade Liam Fox has warned (via his preferred UK newspapers) his EU counterparts that attempts to prevent the UK inheriting a large number of FTAs signed on the UK’s behalf by the EU could be met with retaliation by those EU trading partners.
In a week when a UK university, Oxford, was crowned the best in the world, it’s worth reminding ourselves that Brexit gives the British higher education sector a lot to chew on.
As Whitehall limbers up for the UK’s exit negotiations from the European Union by establishing new departments and recruiting new staff, it will be some time before the government reaches its full capacity for managing the negotiations.
One of the consistent themes of the UK referendum campaign on EU membership was just how hard it would be to re-establish trading terms between the two sides if the UK was outside the EU. Following the Brexit result, the negotaion of a future EU-UK deal will turn the conventional logic of FTA negotiations on its head.
Some EU countries will see an opportunity once the UK has departed, while tech companies might end up wishing the British had been kept in. Ten weeks after the UK’s decision to leave the European Union, emotions are still running high in Brussels when you mention the B-word. The mere suggestion that Brexit will raise material problems, that will need careful and pragmatic consideration on both sides of the channel, appears to some as a provocation.
Like most existing forms of being ‘semi-in’ the EU single market, customs union would be a trade-off of ease of trade for an acceptance of EU standards.
As a £400bn investor in the British economy, the Japanese deserve the attention of the UK Government on the question of how Brexit is handled.
As UK ministers lay the groundwork for future trade deals in China and India this week, they might want to keep in mind the challenges posed by these two countries and reflect on where other significant opportunities in Asia lie.
UK trade policy will require ruthless prioritisation if scarce diplomatic resources are to be deployed to the best possible effect. We provide advice based on a series of metrics. The US and China should be the top priorities, although for different reasons. The government should not spend too...
Brexit has the potential to increase significantly the UK’s autonomy in making energy and climate change policy. How much will largely depend on the prior question of what, if any, relationship the UK has with the EU’s internal energy market. Broadly, there are three options: membership, access...
The UK referendum vote on leaving the EU is reverberating across EU politics in a range of ways. Economic and market volatility has brought to the boil a simmering banking crisis in Italy. The huge implications of British exit for the Republic of Ireland have triggered a febrile debate on...
Almost four weeks on from the vote to leave the EU and the FTSE 250 has edged back up to just 0.4% below where it started before the polls closed, while the FTSE 100 has surged by 6.5%. Does this mean that all is well in the UK economy and Brexit is not that big a deal after all?
Among the many implications of a UK exit from the EU is a fundamental change to the way that the UK makes and implements trade policy. As part of the EU, the UK’s trade policy is effectively set by the EU’s common commercial policy. The UK shares a single external tariff regime with the EU – a...
Amid the macho jostling between British politicians to set out ‘red lines’ for negotiating post-Brexit arrangements with the EU, where will British Prime Minister Theresa May turn for guidance?
For any business with an interest in UK trade policy, David Davis' post-Brexit manifesto for UK trade policy is worth a good look, not least because there are some important holes in his assumptions about what happens next for UK trade policy.
While a lot has been written and said about the impact of Brexit on EU member states less attention has been paid to Turkey.
Whatever the result on 23 June Britain faces political risk. If Britain votes to leave there will be political instability in the UK, the process of withdrawal will be messy, and investors will give their verdict on the structural implications for the UK economy. If the UK votes to stay David...
At the end of last week the European Commission released its latest proposed bindings of market access terms in the long-running Trade in Services Agreement negotiations in Geneva.
Fitch Ratings this week concluded that Brexit would increase political risk across Europe by boosting populist political parties, including many who are Eurosceptic, and by changing the political centre of gravity in the EU.
The IMF’s ‘Article IV’ assessment of the UK economy is dominating headlines for its roundly negative assessment of a vote to leave the EU - but beyond its Brexit judgments, the report is a telling insight into the IMF’s current outlook on some key policy questions.
For the majority of businesses in Britain the possibility the UK might leave the European Union - Brexit - is an important issue. The break with the EU and the uncertainty associated with it would raise important questions for business.
Much has been written on the economic consequences...
Europe is in the midst of a crisis over migration. But how worried are Europeans about immigration?
The UK’s new settlement won’t satisfy Eurosceptics, but does establish principles and precedents that will impact on the EU in future if the UK votes to remain. Some are for the better, while others are risky and potentially damaging. If Britain votes to stay in the EU the prime minister will...
The ‘in-out’ nature of the Brexit debate, and the focus on uncertainty about the referendum outcome, obscures another, equally important layer of Brexit uncertainty for business, which is about what a vote to leave the EU would actually mean in practice. There are uncertainties about both the...
This report examines the impact Brexit would have not only on the UK, but also on other countries in the EU.
The key findings of the report are:
- Deep trading, investment and financial links combined with a shared liberal outlook means the Netherlands ranks as the member...
Leo advises companies and investors on medium term political, regulatory and economic risks and opportunities, with a particular focus on the UK. He works with financial services providers and manufacturers, and on cross-cutting issues including tax, corporate governance and economic policy.