We like to refer to ourselves as professional contrarians at Atlas. The diversity of background and thought in our office is something we cherish and seek to improve. Charlie and I debate our business decisions, as well as our client advice, and find ourselves swapping sides on a regular basis. Maybe we’re dedicated followers of Socrates and Hegel or maybe we’re just argumentative, I don’t know.
However, I like to think it makes our decisions more robust and our political advice proofed, as far as possible, against unintended consequences. In a bid to be true to this ideal, I sat down this morning to challenge two bits of current ‘received wisdom’. Punditry is having a hard time of late. So, we wanted to test the ideas that having a weak PM will make Brexit talks a disaster and that a hung Parliament means we will get a softer Brexit.
Does having a weak Prime Minister mean Brexit talks will be a disaster?
On Monday David Davis went to Brussels to kick off the Brexit talks, with the urbane Michel Barnier (see our earlier blog on who we are negotiating with). Yesterday’s Financial Times reported the weakness of Theresa May would cast a shadow over our Brexit negotiations (FT, £), a view shared widely amongst the commentariat.
However, in early May, Keir Starmer, Labour’s Brexit Spokesperson wrote in the Guardian: “To get a good deal, Britain needs all the goodwill possible, and to show subtlety and flexibility. At times like this, nuance and leaving options on the table are benefits, not drawbacks.” He continued: “[The Prime Minister’s] rigid and complacent approach is weakening Britain’s position.”
Does it not follow that a humbled, less rigid negotiating team, more sensitive and responsive to its Parliamentary critics back home and more prepared to contemplate concessions, might fare better? Can weakness be a source of strength to gain the UK team additional bargaining power?
One could argue (for the sake of the discussion) that the problem so far has been ‘hard-brexiteers’ resistance to accept the reality of our relationships across the EU. This was the concern of the former UK Ambassador in Brussels, Sir Ivan Rogers, who urged civil servants to provide their political masters with “unvarnished [views] - even where this is uncomfortable”. By extension then, a precarious balance of power at home, could force the Prime Minister and her Brexit Secretary to face this reality, and accept the wealth of Whitehall and Parliamentary advice on how we should address it.
One could also argue that our European neighbours, driven by mutual concern and economic inter-connectedness might be in a more conciliatory mood. In the immediate aftermath of the General Election, German EU Commissioner, Günther Oettinger, said the EU needed “a government that can act. With a weak negotiating partner, there’s a danger the negotiations will turn out badly for both sides … I expect more uncertainty”. Angela Merkel also softened her rhetoric this week, saying “I want us to reach a good agreement and this should be in the interests of both sides.”
Headline writers will continue to indulge in divorce talk and other polarised rhetoric, but with the downside risk for both, we believe Brexit negotiations could yet become more of a civilised “conscious uncoupling.” Rooted in a more open embrace of our economic reality, we might see a more productive discussion about the options for our future relationship with the EU, on which note…
Does the election result mean we will get a ‘softer’ Brexit?
As we have previously discussed, how you feel about Brexit depends both on how you voted and whether you’ve got over your #brexithangover. Hopefully you won’t be able to detect whether we like our eggs ‘hard’ or ‘soft’ boiled in our analysis below. But it is hard to override ones cognitive biases so we’re relying on you, dear reader, to point them out to us.
When the election was called the pound (a crude proxy for confidence in our economic future) rallied. This was explained by analysts as a reaction to the belief that a bigger majority would set Theresa May free from the euro-sceptics in her party and thereby deliver a ‘soft Brexit’.
The pound sunk to a seven-week low the day after the hung Parliament result was delivered, which - if you agreed with the initial assumption - means that the city at least now feels that possibility is more remote or at least uncertain. If my metropolitan elite mates on Whatsapp and Facebook are anything to go by however, many hope the result will save them from ‘hard Brexit’ – or even make a Parliamentary or Referendum vote to reverse our decision more likely. The political view is more uncertain. The outcome depends on the Parliamentary arithmetic; how many ways there are to count to 326 and how long the Prime Minister lasts in her job.
Articulating the divisions within the Conservatives as between ‘sensibles’ and ‘creationist’ on Brexit, the Evening Standard – now edited by George Osborne don’t forget – foresaw a potential softening last week. People read the same support for softening into Philip Hammond’s Mansion House Speech yesterday. Emboldened by the vulnerability of the Prime Minister ‘sensible/soft’ Cabinet Members might align with potential rebel ‘Remainers’ (ten or so MPs) including Ken Clarke, Nicky Morgan, Anna Soubry, Alistair Burt, Dominic Grieve, Sir Nicholas Soames, Heidi Allen and some of the new Scottish Conservative MPs, led by Ruth Davidson (who as an MSP has influence but not a Parliamentary vote).
Last week, David Davis speaking on the Today programme indicated there might be compromises over the Great Repeal Bill and human rights. Presumably a move to head off this kind of rebellion at the pass. However, he argued leaving the single market and customs union were “fundamentals” albeit softened with “If people can think of elements that are better and negotiable, I am listening.”
A cross party parliamentary group on Brexit has also been suggested as a way of agreeing a set of presumably ‘softer’ terms, an idea backed by the SNP (35 MPs). The problem with this thinking is that Jeremy Corbyn doesn’t seem to be quite on board. Since the election, Jeremy Corbyn has spoken about a “jobs-first Brexit” and “tariff free access to the single market” although his stance is still considered less than clear. To defeat the Government the official opposition needs to be united (262 MPs). That possibility was undermined today, as 30 Labour MPs signed a statement saying they would “fight unambiguously for membership of the single market”. Alistair Carmichael MP responding to the Queen’s Speech live on Sky News earlier, said the Liberal Democrats (12 MPs) would table an amendment on remaining in the single market. So, the stage is set, but do the numbers add up? The reason we will hear more about this in the coming weeks is because, without seven Sinn Fein MPs, the numbers start to look tantalisingly close.
In the pro-hard Brexit camp, the Democratic Unionist Party (DUP – ten MPs) are already wielding their influence, with no formal ‘confidence and supply’ deal agreed so far. The impending deadline is the 28/29th June, when their support will be needed to pass a vote on today’s Queen’s Speech. The inclusion for £1bn on infrastructure and £1bn for the NHS in Northern Ireland is no coincidence. With 40 odd hard-line Conservative ‘Brexiteers’ any kind of get out of jail free vote by parliament or plebiscite to reverse the referendum result remains remote. Even a soft Brexit outcome still looks like wishful thinking. The only thing certain is continued political uncertainty.
What next in negotiations?
On Monday, the UK and EU teams agreed dates, order and priorities for the forthcoming negotiations. The EU and UK will negotiate for one week every month. Working groups will form on citizens’ rights, financial settlements and “other issues.” Katrina Williams (UK) and Sabine Weyand (EU) will take charge of Irish border plans, which David Davis said took up more time than any other issue on the first day of the talks.
The UK will publish its detailed demands next Monday. Every issue is to be agreed “as soon as possible,” according to the EU’s lead negotiator Michel Barnier. The EU and UK will move to discussing their future relationship if the Council agrees there has been “sufficient progress” in divorce talks. That’s widely seen as a victory for the EU: it will be divorce first, future relationship next, dashing UK hopes that a trade pact could be negotiated in parallel.
So, it’s one nil to the continent, if you’re planning on keeping score.
AROUND THE TABLE
- The negotiating rounds will consist of plenary sessions and negotiating group meetings.
- Plenary negotiating sessions should be co-chaired by the Principals and/or Coordinators who have the overall responsibility for managing the negotiating process and provide necessary guidance, as appropriate.
- The following initial negotiating groups have been established: - Citizens' rights; - Financial Settlement; - Other Separation issues. In addition, a dialogue on Ireland / Northern Ireland has been launched under the authority of the Coordinators.
- The Principals may decide to establish additional working groups, subgroups or organise breakout sessions.
- Each round of negotiations should comprise public officials of both sides only.
- First round: w/c 17th July
- Second round: w/c 28th August
- Third round: w/c 18th September
- Fourth round: w/c 9th October
Want to know more? Get in touch with your Brexit questions here.