Following the Prime Minister’s speech on her Brexit plans, the Supreme Court decision on Tuesday, yesterday's white paper promise, and today's bill for triggering Article 50 I thought it worth an update.
Supreme Court Decision & Draft Bill - Still notifying in March
The Supreme Court has ruled that Parliament must authorise the Government to issue the Article 50 notice. It was a split decision and the minority view being similar to the Northern Irish High Court is interesting for lawyers, but at heart this is no longer an issue. The bill is already before Parliament and a vote is due next week. Labour are supporting the Government though they have division on it and so meeting the end of March deadline to trigger the notice is still possible.
Prime Minister's Speech
The Prime Minister’s speech last week was very positive and good news for those like me concerned about our technology sector. It set down 12 principles for her Government post Brexit:
1. Certainty
2. Control of our own laws
3. Strengthen the Union
4. Maintain the Common Travel Area with Ireland
5. Control of immigration
6. Rights for EU nationals in Britain, and British nationals in the EU
7. Protect workers’ rights
8. Free trade with European markets
9. New trade agreements with other countries
10. The best place for science and innovation
11. Co-operation in the fight against crime and terrorism
12. A smooth, orderly Brexit
For the City, the most important point is confirmation that the Government accepts that membership of the Single Market will cease with the UK’s departure from the EU. In its place the Government will seek to preserve access to Europe on a new basis, to be defined in the course of the negotiations that will follow the triggering of Article 50.
The current arrangement of 'Passporting' that allows UK-based financial institutions to provide their services cross-border to clients throughout the EU without any requirement to establish a local presence or obtain a local licence may not survive this process. The Prime Minister’s speech emphasises the importance of ensuring a good outcome for the City from the forth negotiations and ensuring market access but for now we do not know if it will be by a sectoral arrangement akin to the Swiss approach, based on equivalence or something else.
TheCityUK, City businesses, and the City of London Corporation are all working to guide the Government and most seek a bespoke deal. with the EU on financial services.
The UK is to leave the EU customs union. Under its rules, the EU operates as a trade bloc, with common external tariffs and customs barriers, and negotiating trade deals as one. As a member of the customs union, the UK cannot negotiate other bilateral trade deals. It is therefore not surprising the UK will operate outside it in order to pursue trade deals, we already know the USA, Australia, New Zealand and Canada are interested in deals and no doubt others too.
The Prime Minister was equally clear on the need to avoid a mutually disruptive ‘cliff-edge’ scenario as the UK shifts into a new arrangement with the EU. The Government’s objective is to reach an arrangement for a phased implementation of new arrangements. The Prime Minister will not seek an unlimited period of transition, but recognised that for different sectors the time needed to phase-in the new arrangements may differ.
TheCityUK has issued a paper setting out the financial and professional services industry’s key priorities from the Brexit negotiations. The City Corporation contributed to this useful document, available here.
City's Special Representative to the EU will be busy in 2017
Jeremy Browne’s 2017 schedule started with visits to Croatia, Slovenia and the Netherlands. Jeremy Browne’s future programme includes visits to Italy, Brussels, Austria and Ireland. At the request of the Foreign & Commonwealth Office and Department for International Trade, Jeremy will be taking part in the Italian Stock Exchange’s tenth UK-Italy Business Awards speaking on a panel with the UK’s Ambassador, Jill Morris, and CEO of Borsa Italiana to discuss the UK-Italy relationship and views from the financial communities.