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The European Union (Notification of Withdrawal) Bill has cleared the Commons unamended, leaving Theresa May well on track to trigger Article 50 by her self-imposed deadline of the end of March, or possibly even earlier. MPs voted to approve the Bill by 494 votes to 122, and despite rumours of Tory rebellions, only 9 voted against the Bill.
Theresa May will be pleased that she has not had to make any significant concessions during the passage of the Bill. At the point of ‘maximum danger’ for the Government, it strategically announced plans to give the Commons a vote on the draft deal with Brussels before the EU begins its own ratification process. The previously promised vote on the final deal had not satisfied MPs, as it would have taken place after the European Parliament had voted on the deal, and so would have effectively been a vote to ‘take it or leave it’.
However, how meaningful will this newly promised vote prove to be? The phrase “vote on the final detail” is sufficiently vague as to cover multiple possibilities in terms of what MPs will actually be voting for. If they don’t accept the deal, will they be voting to leave on World Trade Organization (WTO) terms? To send Theresa May back to renegotiate? Or to revoke the Article 50 notice and remain in the EU?
Just minutes before the final vote, Labour’s Shadow Business Secretary Clive Lewis announced he was resigning from the Shadow Cabinet in order to defy Jeremy Corbyn’s three-line whip and vote against the Bill. 63 MPs have already served in Corbyn’s top team during his 17-month tenure as Labour leader: by comparison, David Cameron had just 42 in his shadow cabinet when he was opposition leader, and Ed Miliband 46. With a total of 13 other shadow frontbenchers that voted against the Bill, Corbyn’s numbers look likely to rack up even further.
The Bill will now progress to the Lords when Parliament returns from recess. While amendments have been tabled, the Lords would be very brave to try and push these through, particularly following the Government’s warning that they will face an “overwhelming public call” to be abolished if they try to frustrate the Bill.
If the Bill does indeed remain unamended, it could be given Royal Assent as early as 7 March; even allowing the Prime Minister the potential option to formally invoke Article 50 at the European Council Summit on the 9 March.
Senior Account Executive
With the triggering of Article 50 looming large, the political debate will likely shift focus towards the divorce agreement and the financial settlement. The financial services industry however, will be most concerned about the future of the EU-UK relationship, and how London can remain Europe’s financial services capital. How will the UK retain best possible access and lose the least influence?
It has become increasingly clear to most that an integrated equivalence-based UK-EU financial services relationship would overburden the regime. To paraphrase the head of the European Securities and Markets Authority (ESMA) Steven Maijoor, the EU’s third country regime as it stands is a “patchwork of arrangements varying across the various pieces of legislation”. It is too political, too easy to rescind and will leave the UK with insufficient influence over its own financial sector. This was just one of many issues discussed at Cicero’s roundtable this morning with European People’s Party (EPP) ECON MEPs.
If the EU’s current third country framework is inadequate, what would enhanced regulatory cooperation between the UK and EU look like? There are plenty of dovish officials in Brussels, who are enthusiastic about the potential of a cooperation mechanism set up as part of a bespoke treaty. For instance, the European Supervisory Authorities (ESAs) could become a platform for cooperation with third countries; allowing national regulators such as the Prudential Regulatory Authority (PRA) on their boards. The current review of the ESAs could provide a framework to consider inspired solutions.
However, an ambitious scheme requires sufficient political enthusiasm to make it reality and there are plenty who are keen to adopt a more hawkish stance. There is scepticism that the heart of the EU financial system will be regulated by a supervisor who lacks the incentive to supervise activities outside its core jurisdiction.
Whatever the likely outcome, the UK is likely to lose influence over the formulation of European financial policy. And this legislation will continue to greatly influence the UK financial regulatory framework even in the worst case “cliff edge” scenario. Therein lies the irony, the UK takes back more control by working closer with the EU.
Account Executive – Brussels