Analysis & Blogs
The last few months have seen a growing awareness of the challenge facing both the EU and the UK in adapting their customs processing systems for the reimposition of a hard border between the two sides once they are no...
One of the most contested issues, before and since the referendum on UK membership of the EU, has been the potential impact of Brexit on the UK economy. The exercise is almost as difficult now as it was before the referendum, because we still don’t know what Brexit will mean for the UK’s trading relationships, or the regulatory environment in Britain, two issues that will have a significant bearing on the long-term economic consequences.
Complex, arcane and underperforming, the EU Emissions Trading Scheme has emerged as Brexit’s unlikely first billion euro problem. Superficially, the challenge is a technical one; how to manage the uncertainty over what...
The baseline for the trade relationship after a no-deal Brexit would be WTO rules. In practice – and depending on the political atmosphere – there would at least be some enhancements to this baseline in the form of bilateral agreements between the EU and the UK on specific issues that are...
As Global Counsel and Herbert Smith Freehills convene a discussion on the UK’s future relationship with Euratom, this paper provides an overview of the legal and political background. The paper also identifies some of the potential options for mitigating the impact on the UK. Lastly, the paper...
While in Australia at the start of this month, one question that came up repeatedly was how Australia should approach its trade relationship with Europe. Australia is on the verge of launching a formal trade negotiation with the EU. This comes just as the UK is negotiating its exit from the EU, which is why Australia is also ‘scoping’ a future deal with Britain. Australia must therefore decide how to balance its interests between the bit of the EU where the economic relationship is strongest - the UK - and the other 27 states.
Brexit was conspicuous by its absence in the German election campaign. Migration, Islam and relations with Turkey dominated the only TV debate in early September. Relations with the second largest European economy were not even mentioned once. The EU itself also hardly figured in the campaign, beyond the usual vague commitments to the union, and having more of it.
News this week that the EU and the UK have agreed on a methodology for dividing current farm trade quotas between them was expected at some point. These ‘TRQs’ are in effect a piece of EU property that the two sides needed to agree how to divide.
The Irish border is one of the few Brexit issues for which the positions of the parties to the negotiation are precise and clear. They are also irreconcilable, as things stand. For the Irish government, it is politically indispensable that there is no return to a hard border. This is not just a question of customs controls and the economic costs created by processing delays and charges; it is also about the social impact on communities that straddle border and political symbolism in a country where this is especially important.
Putting a monetary value on nature provides a stronger economic case for ambitious environmental policy supported by public and private investment, but it also leaves that value, and the investment case, hanging on politics. As British Environment Secretary Michael Gove attempts to project a vision of a ‘green Brexit’, natural capital is the buzz word on which assertions are being built, and the Natural Capital Committee (NCC) will be key architects of a 25-year environmental plan promised within the Conservative Party manifesto.
The British government papers on Brexit published this week leave you wondering if cabinet ministers really understand what the UK is proposing and the implications. The customs paper proposes an interim agreement that “could involve a new and time-limited customs union between the UK and the EU Customs Union, based on a shared external tariff and without customs processes and duties”.
Yesterday, the UK floated a set of ideas for managing the future of the customs frontier between the EU and the UK. They were broadly divided between two proposals: a first, based around some very practical ideas for using technology to streamline the movement of goods across a future EU-UK customs border. The second was a much more radical idea that the UK would offer to implement the EU’s own external border protocols on its behalf as part of a wider approach that would remove any need to process goods moving between the two markets.
Unless you’re fond of ambling, it’s the choice of the destination that usually determines the path you take. The Brexit negotiation is no stroll in the park, but it now looks like one of those cases where it is the path that will determine where we end up.
Speaking before the European Economic and Social Committee this week, European Commission Brexit negotiator Michel Barnier painted a black picture of a post-Brexit world in which the UK failed to come to terms with the EU. A return to WTO rules for trade between the two markets; high customs duties, burdensome controls and higher transport costs.
The setting before Parliament of the UK government’s legislative agenda for the two years leading up to the expected exit from the EU, has provided a further opportunity for ‘soft’ Brexiters in the UK to rekindle a debate about how detached from the EU the UK should aim to be. After the UK election, my colleague Jade Rickman and I examined the renewed debate over the possibility of customs union between the UK and the EU.
In collaboration with Herbert Smith Freehills and The Boston Consulting Group, Global Counsel has co-authored a paper looking at the impact of Brexit on the energy sector in the UK and the EU. The paper identifies key energy and climate change policy implications as well as highlighting the role...
The question of UK membership of NAFTA seems to be doing the rounds again. This is not entirely surprising. Both Australian and Canadian trade officials – including Ottawa’s former chief NAFTA negotiator - have recently called for the UK to join existing trading blocks, such as NAFTA, as an easy fix to potential Brexit-related disruptions to UK trade and production. The idea in itself is not new – back in the early 1990s some members of Congress in the US hoped to convince London to swap the EU for NAFTA.
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...
Stephen is a Senior Director of Global Counsel. Stephen has more than 15 years of experience in European and British public policy and regulation, chiefly in the field of international economic policy, trade policy, cross-border financial services policy and European integration.
Roberto is a Senior Associate in Global Counsel’s Europe team. He has worked in the European Parliament in Brussels, as a researcher on climate and security policy for a European foreign policy think tank in Madrid, and in the EU delegation in Bangkok.