The UK is at a pivotal moment in the Brexit process. It is currently agreeing its positions for the next phase of the discussions, which will focus initially on the transition period and then on the framework for future relations between the UK and the EU. It has potentially just months to complete this, yet the Cabinet remains divided. What does this mean for the UK?

On Thursday 22 February the Cabinet’s Brexit sub-committee met in the lavish surroundings of Chequers, the 16th-century manor that serves as the Prime Minister’s country house. In the weeks running up to it, Theresa May’s Cabinet had been riven with infighting over Brexit, with Boris Johnson and Michael Gove (Brexiteers) on one side, and Philip Hammond (a Remainer), the Chancellor, on the other. There was the realistic prospect of the second phase of negotiations – the stage when the two sides agree transitional arrangements and the framework for future relations between the UK and the EU – being proceeded with Cabinet-level resignations, and the lack of a clear plan.

The Chequers meeting was billed as one of comraderie and compromise, but May was determined to keep her ministers there until a decision was made. In the end it took eight hours and the process was described by one participant as being like a game of Cluedo.

The result was an agreement; albeit one that was described as “baby steps”. There have been reports about what was decided, but this will be revealed in more detail on Friday 2 March when the Prime Minister makes a speech that is expected to be titled: “Road to Brexit: A Future Partnership”. On Thursday 1 March the Cabinet has a special meeting ahead of the speech, and European Council President Donald Tusk visits London for a meeting with the Prime Minister.

Agreement

Ministers agreed that there should be a bespoke trade deal based on “ambitious managed divergence”. This will be split into three “baskets”:

  • industries that need full alignment with the EU, like aerospace;
  • those areas where “shared goals” (like consumer rights) can be agreed; and
  • those where government wants to distance sharply from EU regulation, such as fisheries or agriculture.

The Prime Minister’s Europe Adviser, Oliver Robbins, mapped out the Government’s four-point plan to:

  • demand mutual standards for goods traded between the UK and EU;
  • make a public commitment that British standards will remain as high as those in the EU;
  • pledge to keep rules and regulations substantially similar; and
  • insist upon the creation of a dispute mechanism to oversee areas where the UK wants to diverge from EU regulations (and that the ECJ would have no role in it).

While agreement may have been reached on these with UK Ministers, it is not clear whether this is agreeable to the European Union who have long-argued that the UK is “cherry picking aspects of the EU it likes.” European Council President, Donald Tusk and chief Brexit negotiator, Michel Barnier, have both reportedly cast scorn on “three baskets” model.

Elsewhere

The Labour Party

On Monday the Labour Party announced a change in policy, meaning it now explicitly supports membership of “a new, comprehensive UK-EU customs union” after Brexit. This puts it at odds with the Government, which highlights that Labour’s plan would prevent the UK from striking its own trade deals. Labour’s new position has been billed a victory for the Party’s pro-EU MPs over its historically Eurosceptic leader Jeremy Corbyn.

The danger for the Government is that pro-Remain Tories – the likes of Anna Soubry, Ken Clarke, Michael Grieve and Nicky Morgan – could partner with Labour and other parties to force the Government’s hand.

EU Brexit withdrawal treaty and the Northern Irish Border

On Wednesday the 28 February the EU is expected to publish a draft Brexit withdrawal treaty, which will reportedly omit compromises reached on December on the Northern Irish border and a transition period. The 100-page document will become the basis of the withdrawal deal that both sides want completed by the end of the year.

Analysis

The coming weeks will be crucial for the UK’s Brexit plans. The second round of negotiations are expected to commence shortly and – given Michel Barner’s October 2018 deadline for negotiations to be wrapped up to allow time for the UK and EU Parliaments to approve deal – time is running out. The Cabinet has agreed to the terms outlined at Chequers but is clearly still divided, and facing concerted opposition in Parliament, from within and without.

Theresa May’s Friday speech comes at this crossroads. She has seemingly headed off a rebellion within her Cabinet by the narrowest of margins, but she does not have complete authority, and the Cabinet remains divided. The Prime Minister won the battle, but the war is not yet over.

Timeline

December 2017    Brexit “phase one” negotiations achieved “sufficient progress”.
Likely March 2018 “Phase two” negotiations on trade arrangements commence.
Early 2018 Parliament expected to approve the European Union (Withdrawal) Bill.
October 2018 Michel Barnier’s deadline for negotiations to be wrapped up to allow time for the UK and EU Parliaments to approve deal.
29 March 2019 UK leaves the EU and likely enters implementation period (transition period).
April 2019-TBC Implementation period (transition period) begins.

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