POLITICAL & COMMERCIAL INTELLIGENCE

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12SEP18 COUNCIL VS COMMISSION

The EU Commission and the EU Council are continuing their battle for control of the bloc’s policy agenda. Today, President Juncker delivered his State of the Union address – and his insistence that the UK cannot remain in the Single Market, or any part of it, post-Brexit is aimed squarely at next week’s Salzburg summit.

10SEP18: PLANS FOR 80% SUCCESS AT SALZBURG

EU sources have reiterated to GUIDE their concerns to support May in office and avoid the risk of an early general election in the UK. To help the UK Prime Minister, European Officials are readying statements for Salzburg that stress the 80% of the draft Withdrawal Agreement text that has already been agreed. Various EU27 governments are preparing to laud the consensus on issues like security cooperation, to buy time for further discussion on the rest of the deal.

06SEP18: BOUNDARY CHANGES

In Parliament, there has been a subtle change in mood about proposals to change constituency boundaries and reduce the total number of seats in the Commons. There are still big obstacles to the reform – not least a desire to have more MPs outside the Executive to hold it to account – but the hard left sees an opportunity for mandatory reselections and some Tory MPs are eager to address the current system’s bias in Labour’s favour.

05SEP18: SNP and Westminster

It’s easy to overlook how the SNP’s difficulties continue to grow, with a potent mix of sexual assault claims and policy problems damaging the brand. If the nationalists’ problems lead to greater support for Ruth Davidson and her colleagues, an interesting question comes up: could Scottish Tories do well enough to dissuade Davidson from moving south?

04SEP18: 5G POLITICS

The new 5G test bed in the West Midlands reveals much of the future of government policy – and public sector investment. Linked to the National Productivity Investment Fund, the programme is the latest evolution in public spending designed to support a post-Brexit economy. The choices being made now will shape the future of private sector contributions to public services.

03SEP18: Barnier's pitch

The EU Commission and the EU Council are fighting each other for control of their side of the Brexit talks. Michel Barnier’s latest pronouncement is pitched as a warning to the British, but it is really geared towards the member states. Barnier stresses his personal opposition to Chequers – because he hasn’t been given the official mandate he wants to do so yet – and he appeals directly to various industry lobbies in each member state, over the heads of their own governments. So far, the Council has given the Commission free rein because it keeps winning British concessions. If the concessions stop, the rein will be tightened, too.

31AUG18: Populists vs free trade

Italy’s Matteo Salvini and Hungary’s Viktor Orban are having ongoing talks about a new “League of Leagues” that coordinates nationalists across the EU. The top policy item for such a group would be immigration and how to stem it. However, a joint approach on tactics in the European Parliament would also impact everything from signing off budgets to signing off trade deals – including any prospective one between the EU and UK. A full UK-EU FTA is barely a glimmer in the eye of the Chequers White Paper, so what European nationalists do after next year’s EU Parliamentary elections will have a real impact on the UK’s future economic ties with Brussels.

Briefing from EU27 sources 03Jul18

Sources within the Commission and various EU27 member states describe how the EU’s Brexit strategy has recently evolved. The EU27 now plans to allow the Commission to continue to push HMG for as many concessions as possible, with no intention of member states ‘stepping in’ to encourage a more conciliatory approach. In the meantime, the EU27 plans to prepare a series of measures that would mitigate the most perilous aspects of a ‘no deal’ scenario in the short term, or that could be enhanced to be used at the end of an extended transition period when there will be a similar failure to concede to a comprehensive free trade agreement with the UK. In other words, the EU27 is planning to punish the UK now or in the future, while increasingly limiting the damage that does to member states.

New concessions sought by the EU from HMG will include: extra territorial control over financial services institutions (that, if accepted by the UK, would be proposed to other jurisdictions, too); long-term HMG commitment to subsidising future MFFs via channels (especially R&D programmes) that are effectively beyond Parliamentary scrutiny in the UK; demands for recompense for alleged ‘state aid’ infractions by HMG; and extending the ‘implementation period’ to prolong HMG’s adherence to current and incoming law.

In the meantime, the Council and Commission is preparing compensation measures (which are expected to focus on fiscal issues) that can be offered to Ireland when the EU27 forces Dublin to apply a ‘hard border’ with Northern Ireland. Similarly, the Commission is creating various bodies (like the Agency of Space Programmes of the EU) that can steadily usurp institutions that maintain UK involvement after March 2019 – this is intended to allow the EU27 to allow and exploit UK involvement is specific fields only for as long as it takes to build up alternative arrangements that exclude the UK.

The GUIDE to the week

So, Christmas 2019 is sorted. Tim Shipman has agreed to write the third instalment of his modern political chronicles, due out in the autumn next year. But for now, here’s our take on the week in Westminster…

London calling

Jeremy Corbyn will hint at a more pro-EU stance next week. Labour sources tell us this is about positioning ahead of the local elections, where the party is determined to take some Tory scalps and maybe even win talismanic councils like Westminster and Wandsworth. Voters in the capital might find Corbyn’s proposition less attractive if they knew about Labour's thoughts on a 20% wealth tax – and after May, Labour intends to revert to whatever Brexit position causes the Government most harm in Parliament.

A trouble, not the troubles

It went without comment in the UK media, but in Leo Varadkar’s latest Brexit speech the Taoiseach insists there should not only be ‘no hard border’ between Northern Ireland and the Republic, but that there should be ‘no new barriers to the movement of people or to trade’ at all. Given that last year’s UK-EU27 Joint Report puts the UK on the hook for the cost of any new measures (on either side of the border) that Ireland or the EU determines are needed, this new bar could turn out to be higher and much more expensive.

Mo’ money, mo’ problems

This week it was confirmed Labour raised more cash than the Tories in the last quarter, but that might not last. Next Thursday sees measures from the Trade Union Act 2016 come into force – including restrictions on funds for political parties and an ‘opt-in’ system for new union members who want subs to go to Labour. As well as threatening the size of Labour’s coffers, the change is also likely to increase the party’s reliance on Momentum.

For more details of our political intelligence work on Brexit and domestic politics, please get in touch.

Predicting politics

Back in November 2016, we predicted that the National Cyber Security Strategy would lead to “the explicit shift of liability for cyber breaches in the public sector to suppliers from the private sector”. The story made it into the public domain yesterday, with the Sunday Telegraph reporting infrastructure firms working with the Government face “fines of up to £17m for weak defences or failing to notify regulators about cyber attacks”.


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