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Brexit commentary March 2017

This article, as the headline says, is a commentary on the Brexit negotiations; it is not offering an opinion on “Brexit, right or wrong”.

There are two sets of negotiations that the UK has to complete to leave the European Union (EU):

 

1 negotiating the terms of the “divorce”;

 

2 negotiating our future relationship with the EU.

 

In addition, we will need to establish new relationships with non-EU countries and bodies, including with non-EU markets that were previously covered by EU trade agreements.

 

Triggering Article 50 will start the clock ticking. After that, the Treaties that govern membership will no longer apply to us and the terms of leaving will be negotiated between the other 27 members. 

 

Theresa May has said that she will trigger Article 50 of the Treaty of Lisbon no later than March 2017 (coincidentally, March 25 is the 60th anniversary of the signing of the Treaty of Rome), so that we will officially leave the EU no later than April 2019, but what exactly is Article 50? The treaty, which became law in December 2009, was signed by the heads of state of EU members and was designed to make the EU more democratic, transparent and efficient. Article 50 contains the brief rules for leaving the EU, which no state has done before. It has fiveelements, which briefly are:

 

1 any Member State can withdraw; 2 any State that decides to do so must notify the European Council (EC) of its intention. The arrangements will be set out and will be concluded by the EC, “acting by a qualified majority after obtaining the consent of the European Parliament”; 3 the Treaties cease to apply to the withdrawing State from the date of the agreement or, failing that, two years after the notification, unless the EC and the Member State jointly agree to extend the time; 4 the Member of the EC or of the Council that represents the withdrawing State cannot participate in the EC’s or Council’s discussions or in their decisions; 5 if we were to ask to rejoin the EU, our application would be subject to the procedure in Article 49.

 

How is our departure going to affect the UK? First, freedom of movement will end: on 20 December 2016 Theresa May told MPs that the EU referendum sent a “very clear message…that people wanted us to take control of our borders and...of immigration from the EU...”, although she declined to give a target for how far it should fall. Since what she is committed to is “control”, it is difficult to define exactly what she means, although Chancellor Philip Hammond has said that he could not “conceive of any circumstances” in which “highly qualified, highly skilled people” would be denied entry.

 

Ending free movement of people means, however, that we will also end our membership of, and access to, the single market and this is already having repercussions. More than two million people (7% of the total working population) work in the “crown jewel of Britain’s economy”, the finance and banking industries, which accounts for around 12% of our GDP (the City has a trade surplus of £72bn). There is increasing certainty that losing access to the single market will result in a large number of banks and businesses relocating to European financial centres. HSBC is already in the process of moving 1,000 jobs to Paris, and many US, Swiss and Japanese investment banks, that serve their EU clients from their London offices, are preparing to open new offices, and acquire banking licences, in mainland Europe. The Bank of England is said to be advising banks to prepare for a hard Brexit and the City of London has warned that this could threaten European, as well as British, financial stability.

 

At the other end of the scale, the agriculture, construction and hospitality industries rely heavily on migrant labour. If the government does not guarantee that food growers can retain access to EU seasonal workers, farmers’ leaders have warned that crops will rot in the fields. The President of the National Farmers Union, Meurig Raymond, has said that the industry will need 90,000 seasonal workers by 2021, in addition to the 250,000- plus permanent workers, of whom more than 75% come from the EU. Secretary of State for Environment, Food and Rural Affairs, Angela Leadsom, has told farmers to invest in machinery to overcome the shortage, but Mr Raymond responded that the government would need to support the heavy investment in technology that would be required.

 

There are, of course, many other issues that need to be resolved, including the rights of British expats who live and work in Europe, and those of the 3 million EU nationals who live permanently in the UK. There have already been a number of high profile cases of dual-nationality families being unsure about their future, and Labour’s Shadow Brexit Secretary, Keir Starmer, has said that the Prime Minister needs to take “decisive action” to “end unnecessary uncertainty for EU nationals”.

 

We will endeavour to keep you up-to-date on the continuing negotiations.

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