Brexit Talks Begin

Managing Director
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Posted on June 21, 2017

Brexit Talks Begin

Despite the unexpected outcome of the Parliamentary election, which has so far led to a minority Tory government, the Brexit negotiations kicked off in Brussels on Monday.

Brexit Negotiations

The UK was expecting that they would have been able to set the sequencing for the negotiations, which in effect meant the UK wanted to kick off parallel trade talks with the EU. This was rejected by the EU who wanted to nail three early issues before entering into discussions around its future relationship with the UK, including trade.

The three issues, which are about the UK leaving the EU, are firstly how much the UK will have to pay to fulfill its legal budgetary commitments to the EU. Figures range between £50-80 billion. Secondly, how to approach the issue of the land border between Ireland and Northern Ireland. No one in the UK, including Northern Ireland or Ireland, wants to see a hard border, but so far there has been no clear solution for what would replace the borderless crossing between the two when the UK leaves both the customs union and the single market. Thirdly, the EU wants to determine the residency status and other social rights of EU nationals resident in the UK and UK nationals resident in the EU.

The EU is clear that these issues of ‘exit’ need to be settled before discussing and agreeing on what the future relationship will be between the UK and the EU. The UK has already signalled that they are looking at EU citizens ‘registering their interest’ ahead of some form of registration process for the three million living in the UK. The UK are underplaying the significance of the scheduling issue, but it does set the tone for ‘divorce first’ then the ‘future relationship’.

Parliament

The Queen’s Speech was delivered this morning at the formal opening of the new Parliament. There are three issues of importance. Firstly, Theresa May has still not formed a majority government as she has been unable to do a deal with the DUP to support the Tories on a supply and confidence basis, which means that the DUP would have supported the government on the big ticket issues, such as the budget, but the rest would be on an issue-by-issue basis.

Secondly, many of the manifesto commitments were dropped including the reintroduction of grammar schools, fox hunting, the pension increase triple lock and what became known as the dementia tax, which would have meant that many home owners in the UK would have had to sell their houses to pay for residential senior care.

This left space for Parliamentary time to Brexit, and at the moment, a hard Brexit. The UK government is continuing to plan to take the UK out of the single market and the customs union. However, with a minority government, this will be tough for the Prime Minister – and it’s all about numbers in Parliament. There are a tiny number of Labour MPs who are Brexiters who would vote with the Government (297 in total), but a far larger group of Tory MPs, who are Remainers. are likely to side with the Labour Party, SNP, and others on a more pragmatic or ‘softer’ Brexit (342 in total). This dynamic ignores its dependence on the outcomes of negotiations with the EU and what the UK may or may not want is not within its power during these negotiations. As the Brexit negotiations unfold and get predictably tougher, it is likely that the May government will find it harder and harder to push through a ‘hard Brexit’, especially if the UK and EU can’t settle the three major issues quickly (Northern Ireland, budget, and EU/UK nationals rights).

May herself is likely to soldier on in the immediate future. It would not be in the Tories’ immediate interests for a leadership challenge, unless the Brexiters feel that the negotiations are not going their way. They could rebel to bring down the government. That would be risky as Labour is currently ahead in the Polls. She is therefore, for the moment, consigned to running a minority government. There is talk of a potential deal with the Liberal Democrats, but it would stick in both of their craws with the fallout to the Lib Dems from their coalition Cameron/Clegg government still with the party. On the positive side, the Lib Dems would certainly want a second referendum on the Brexit ‘deal’.

Navigator's Brexit Response Team

If you have any questions on the implications of Brexit and its implications for your organization, please reach out to Navigator's Brexit Response Team.

If you require immediate assistance, call our crisis response hotline at:

Press 3 for the on-call crisis manager

1 (877) 431-9721

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