The Cicero Brexit Insights team is producing regular updates, comment and insight on both the broad themes and the technical detail of Brexit. We aim to give readers a clear view of the issues and challenges as they are seen in Brussels, London and Member States. This week the EU team looks at the current EU dominance of the negotiation, and the UK considers what the war of words means for future negotiations.

 

An eventful week saw the fallout from the now infamous Downing Street dinner and the publication of the European Commission’s draft negotiating mandate. Both events reinforce the impression that the two sides are far apart in their expectations of the negotiation and their preparation for it. The EU has established a powerful, united and clearly defined position. If the reports of the meeting in Downing Street are to be believed, the opposite is true in the UK.

But although the EU has clearly dominated the early stages of the negotiation, there is a degree of unease among the EU27. Barnier’s draft negotiating mandate was met with sceptical headlines in Germany for example, with Der Spiegel reporting “Barnier’s poisonous list” and a Sueddeutsche Zeitung headline of “EU pursues Brexit strategy of upmost harshness”. Brian Hayes MEP spoke for a growing body of opinion when he said that a €100bn financial settlement was “utterly unhelpful” and that “Ireland stands to lose if talks simply fail at the first hurdle”. The leaders of the Netherlands, Ireland and Denmark recently agreed that the talks should not be “hijacked” by small issues. Dutch Prime Minister Mark Rutte said that talks should move onto trade the “sooner the better”. Donald Tusk sought to calm the atmosphere yesterday saying “If we start arguing before [the talks] even begin, they will become impossible. The stakes are too high to let our emotions get out of hand.”

This reflects the fact that the EU’s position is more nuanced than is portrayed in the Council and Commission texts. The political atmosphere in the UK is brittle and the possibility of the negative mood poisoning talks irretrievably is real. The prospect of leaving without a deal is a disaster for the UK. But it is not much better for the EU. It is the worst outcome for EU citizens’ rights and the EU budget, and presents a severe risk to financial stability. Some Member States will see a significant impact on their economies. As Donald Tusk said “at stake are the daily lives and interests of millions of people on both sides of the Channel”. This is cause for moderation. The EU may have the stronger hand, a deeper understanding of the issues and far greater resources but this counts for little if there is no one left to negotiate with.

James Hughes
Director

 

This week has been one consumed by verbal tit-for-tats rather than substantive debate over the exit negotiations which lie ahead, with both the Prime Minister and Brexit Secretary accusing members of the EU institutions of attempting to ‘bully’ and ‘threaten’ the UK electorate. This to-ing and fro-ing follows a series of leaks, or ‘Brussels gossip’ as Theresa May calls it, detailing an apparent disastrous dinner at No.10 with the President of the European Commission, Jean-Claude Juncker, last week. This week’s ensuing war of words peaked when Theresa May took the unprecedented step to outright accuse EU leaders of trying to ‘sabotage’ the UK’s upcoming general election just as Mr Tusk, President of the European Council, called for calm, conceding that the stakes are too high to allow emotions to get out of hand.

Although much of these exchanges can be chalked up as, at best, electioneering on behalf of Theresa May and, at worst, name calling by both sides, bubbling underneath all of this is the risk that more serious and substantive issues get wiped up in a frenzy of rhetoric. This week has already seen the supposed final ‘Brexit bill’ for the UK, currently believed to be anywhere between €60m to €100m, depending on whether your accountant is based in Brussels or London, get caught up in the commotion of words.

The spats this week have also renewed calls from those more ardent Brexiteers within the Conservative party to question whether a UK/EU post-Brexit deal is even a priority for the UK. While clearly a knee-jerk reaction to feathers Mr Tusk and Mr Juncker have ruffled, the increased talk of no deal will no doubt cause alarm among the business community, particularly in light of comments made by leading investment banks about the viability of the City of London post-Brexit.

In the future, both sides will want to avoid such bickering if negotiations are to be not only amicable but also timely in meeting the spring 2019 deadline.

Luke Seaman
Senior Account Manager

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