quarta-feira, 12 de outubro de 2016

Britain’s Brexit delusions / London’s secret weapon against ‘hard Brexit’

Britain’s Brexit delusions
Theresa May talks tough on Brexit, but the prospects do not look good for an orderly transition.

By PAUL TAYLOR 10/11/16, 5:32 AM CET

Just eight months after David Cameron promised Britons “the best of both worlds” if they voted to stay in the European Union on his renegotiated terms, Britain is hurtling toward the worst of all worlds — a swift, hard Brexit on unfavorable trade terms.

The dynamics of British politics since the June referendum have vaporized the softer options with breathtaking speed, while London’s main continental partners have their own domestic reasons to prefer a quick, clean break. Some European government officials say privately that only a nasty economic shock will make the U.K. more realistic in negotiations on their future relationship.

In Britain, both major parties have interpreted the message of the June 23 Brexit vote as a mandate to leave the EU by the 2020 general election, control immigration and regain full parliamentary and judicial sovereignty. That, in essence, is what Theresa May, Cameron’s successor as prime minister, promised the Conservative Party conference last week.

But it is incompatible with staying in either the single market or the EU’s customs union. The former requires countries to implement all EU rules in national law and allow free movement of goods, capital, services and — crucially — people. The latter would mean continuing to let the European Commission negotiate international trade deals on Britain’s behalf, rather than seeking the bilateral free trade agreements with countries like the U.S., China, India, Canada and Australia that May promised.

True, May did say that the planned “Great Repeal Bill” to abrogate the European Communities Act that gives EU rules precedence over British statute would incorporate the existing body of European legislation into U.K. law before parliament starts the long process of amending or scrapping rules it doesn’t like. She also said the government would not roll back EU-mandated workers’ rights. That might appear to favor an orderly transition.

Yet the prospects do not look good for negotiating favorable market access arrangements for the interim period between the likely Brexit date in spring 2019 and the day when the EU and Britain reach an eventual agreement on a future free trade pact.

British business leaders and international bankers, who overwhelmingly backed remaining in the Union, are pressing Downing Street for a long grace period to ease the pain of Brexit. They want time to adapt before the EU slaps tariffs on imports from Britain and scraps the “passports” U.K.-based financial firms need to sell services across Europe.

The British have built a track record since 2010 of self-delusion, misreading European debates and overestimating their own power and support in Berlin.
It is not clear that May will be willing or able to pay the price for, say, a five-year standstill on trade and market access. That would likely entail continuing to apply both past and future EU laws and standards during the transition, making Norway-style payments into the EU budget for market access, and upholding free movement of labour.

The first two conditions might just be acceptable, although hardline Conservative Euroskeptics and the U.K. Independence Party would howl with outrage. Pledging to keep the door open to EU migrants for years after Britain leaves would be political dynamite — as well as an electoral gift to the virulently anti-immigration UKIP, which poses a continued threat to both Labour and the Conservatives.

Rise of the populists

Unable to resolve the contradiction between single market access and controlling immigration, May and her ministers are denying that they face any such choice. Perhaps some of them genuinely believe the time is ripe for European governments, under pressure from their own populists, to reinterpret freedom of movement in a way that is compatible with British voters’ concerns.

Last week’s strong statements by German Chancellor Angela Merkel and French President François Hollande showed just how deluded that idea is. Neither is willing to countenance a debate about splitting the EU’s so-called four freedoms that would divide the 27 for the sake of a country on its way out. The unity and strength of the remaining EU is their top priority, as it is for the European Commission and European Parliament.

“This is a turning point for our country,” May said Wednesday, calling for more government intervention to tackle social and economic inequality.

There is a strong determination in Berlin, Paris and Brussels that Britain should not get a better deal on leaving than it was offered to remain in the EU, and that the terms of its departure should be such as to deter any prospective emulators. When they negotiate with May, EU leaders will be looking over their shoulders at their own Euroskeptic populists — Marine Le Pen, Geert Wilders, Frauke Petry.

The government’s threat to make British firms register and report their foreign employees, even if ministers backed away from it after widespread criticism, alienated some of London’s friends in the EU. It reeked of the “national preference” ideology espoused by Le Pen and Wilders. How May can reconcile such knee-jerk nationalism with her vision of a “global Britain” open to the world is a mystery.

British efforts to sow division among continental Europeans by highlighting the potential cost of tariffs on imports of German cars or Italian prosecco have also been counter-productive so far. The head of the BDI German industrialists’ federation, Markus Kerber, reminded BBC listeners that only 7.2 percent of German exports go to Britain.

Diplomats note that even when German business chiefs did lobby Merkel against imposing sanctions on Russia, she brushed their pleas aside. Besides, German officials see potential investment gains for Germany as a result of Brexit, and they don’t see status-conscious Brits abandoning their BMWs, Mercedes or Porsches for U.K-made Japanese cars.

Conservative leaders are still asserting that tariffs would hurt the EU more than Britain because the Union has a trade surplus with the U.K. Boris Johnson, the foreign secretary and Leave campaign mascot, is a master of this sort of “Europe wouldn’t dare” rhetoric.

Long respected as Europe’s most skilled negotiators, the British have built a track record since 2010 of self-delusion, misreading European debates and overestimating their own power and support in Berlin.

Now May has been forced for political reasons to set a March deadline for triggering the EU’s divorce clause — Article 50 — time is on Europe’s side, not Britain’s. If the two-year period provided to negotiate an exit treaty expires without a deal, economic ties would fall off a cliff and London-based banks would lose their “passports” overnight.

To avert that fate, the prime minister has fewer cards to play than her cabinet colleagues suggest. She should have understood this from London’s failure to draw key partners into exploratory talks before setting a date for Article 50.

Even Joseph Muscat, the pro-British prime minister of Malta, which will hold the EU presidency when May fires the Article 50 starting gun next year, sent London a stern message that it will have about as much say in the negotiations as Greece did in its bailout talks. So much for “taking back control.”

Paul Taylor writes POLITICO‘s Europe at Large column.

London’s secret weapon against ‘hard Brexit’
The capital’s business leaders bank on Labour Mayor Sadiq Khan to stand up to Theresa May.

By CHARLIE COOPER AND FRANCESCO GUERRERA 10/11/16, 10:44 PM CET Updated 10/11/16, 10:49 PM CET

LONDON – Theresa May’s plan for a “hard Brexit” is about to come up against a very large obstacle. It’s big, it’s rich and it’s used to getting its way. It’s called London.

The capital’s business leaders and financial giants, worried about the impact tougher immigration controls and departure from the single market could have on their revenues, have identified London Mayor Sadiq Khan as their champion.

“[Khan’s] got to secure a place at the table,” Colin Stanbridge, chief executive of the London Chamber of Commerce and Industry told a meeting of the London Assembly’s economy committee Tuesday. “He needs to keep fighting for that, and we need to keep backing him to be in there to make sure that London is represented in these negotiations.”

During the hearing at the capital’s gleaming City Hall building, Stanbridge and other leading representatives of London’s business and finance community struck a markedly gloomier tone about Brexit than the confident voices emanating from just along the river Thames in Westminster.

A “hard Brexit” that takes Britain clean out of the single market, and leaves the U.K. to trade with the EU under WTO rules, will do “significant” harm to the financial services sector, said Miles Celic, chief executive of the influential industry body TheCityUK.

His members are watching the political situation closely, he said. “They will make contingency plans. The sooner we have some clarity the better.”

The City of London has been scrambling around for some good news on Brexit ever since May entered Downing Street in July but hasn’t found much.

The government’s insistence on pulling out of the single market and the loss of “passporting rights” that allow them to sell their services across the Continent from London has prompted large banks to make concrete plans to move some of their operations elsewhere.

Khan is widely seen as a friendlier figure in London’s financial circles although some banking executives are well-aware of his limited powers and influence among the current ruling elite.

While many doubt he can secure a “seat round the table,” his first few months in the job have won him admirers.

“I have to say I’ve been really pleased with what the mayor has been doing,” Celic told the committee. “He’s been making exactly the right points in terms of the need for close access to the European market and for the ability of people to come here.”

Earlier in the day, Khan railed against the government’s “lurch towards a hard Brexit” in a speech to the Confederation of British Industry.

He urged May to “be on the side of business and the City of London” but warned that “some people at the heart of government are willing to lead us ever closer to the cliff edge,” causing “significant economic damage” to Britain.

In the immediate aftermath of the June 23 referendum, Khan himself demanded a seat at the Brexit negotiating table. May has since made it clear that there can be no “opt-outs” by any region of the U.K. and her desire to present a united front when she sits down with EU leaders after triggering Article 50 next year will likely preclude her from including Khan.

But a spokesperson for the London mayor told POLITICO that he has held “positive meetings” with May and the Chancellor Philip Hammond, who has taken a softer line than the so-called “three Brexiteers:” Boris Johnson, the foreign secretary, Brexit Secretary David Davis and International Trade Secretary Liam Fox.

“He is clear that his priority is to make sure London’s key tasks are reflected in Brexit negotiations held by the prime minister and other ministers,” the spokesperson said.

However, the damage that Brexit jitters could do to London’s economy is already becoming clear, leading figures told Tuesday’s London Assembly committee.

Jayne-Anne Gadhia, chief executive of Virgin Money, told Assembly members that a lack of clarity around the U.K’s future relationship with the EU was already likely to hurt the jobs market in financial services.

She said she had been closely watching internal recruitment decisions in an effort to manage costs amid the ongoing uncertainty.

“I don’t think I’m alone in that… just as we start to work out what the future holds I suspect that everybody is managing their costs, and that will have a knock-on impact on employment I suspect,” she told the committee.

The wider business community is also nervous.

“There is a need for stability,” Stanbridge told the committee. “We don’t want a running commentary but we would like to know a bit more about what we’re asking for [from the EU].”

London’s competitors were already beginning to make hay, he said, pointing to Berlin city authorities’ recent decision to open a branch in London’s popular Camden Town neighborhood, aimed at poaching young tech professionals for the German capital.

“We need to make sure we keep that talent,” Stanbridge said.


Charlie Cooper and Francesco Guerrera  

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