Brexit Bulletin: May’s Plan – Bloomberg


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Theresa May’s latest Brexit plan is to break free from some key European rules immediately after the divorce – including some on financial services – while staying close to others for longer, Tim Ross reports.

The first changes would come into force after the transition period and the idea is to try to take advantage of the opportunities presented by the divorce, according to senior U.K. officials. The plan hasn’t been agreed on by May’s ministers, who are meeting this week to discuss what kind of post-Brexit relationship they want to seek with the EU.

Theresa May.

Photographer: Dario Pignatelli/Bloomberg

The priorities are likely to include ripping up regulations that financial services want to escape. (Remember that Barclays CEO Jes Staley told May to be prepared to sacrifice market access to get control of banking rules.) The blueprint will also involve quitting the EU’s customs regime to allow the U.K. to strike new free-trade agreements, and replacing the much derided Common Agricultural Policy. It would then be up to future governments to decide whether to move further away from the bloc’s rules.

The plan marks a change from earlier proposals, such as the one described by Brexit Secretary David Davis whereby Britain would stay close to EU rules after the split, but with the freedom to diverge in future if it wanted to.

The European Commission will probably consider the proposal another attempt at cherry-picking. The EU has been increasingly vociferous about its desire to keep a level playing field after the split. Ultimately it might all hinge on the arbitration mechanism that the two sides agree to – if the U.K. diverges in one area, it will have consequences for market access.

But May’s plan fits into a broader drive inside the government to identify and promote the opportunities that Brexit will bring for reforming the economy, such as overhauling the EU’s agricultural subsidies and negotiating trade agreements with third countries. For the pro-Brexit camp, which has slammed parts of the government for trying to stick too close to the EU after the split, being able to strike trade deals with other countries is a key part of their narrative.

Brexit Latest

Making Pledges Legal | The European Commission is struggling to translate the U.K.’s Brexit pledges on Ireland into a legally binding text, even before they present it to the U.K. in negotiations, according to people familiar with the EU side. Officials have made at least two failed efforts to come up with suitable language to meet Irish and European concerns, Dara Doyle reports.

War Cabinet | May’s inner circle of top ministers met for two and a half hours on Wednesday to talk Brexit, and discussions focused on the Irish border issue and immigration, Tim Ross reports. Ministers didn’t agree on a plan for resolving the border conundrum, officials said. They meet again on Thursday.

Brits’ Rights | Judges at the European Union’s top court will get their first chance to rule on whether Britons living in the EU after Brexit automatically lose their EU citizenship. A Dutch tribunal on Wednesday said it will refer questions about the EU citizenship status of Britons to the European Court of Justice. Jolyon Maugham, a barrister fighting Brexit, said the case could also lead to all Britons, even those living in the U.K., keeping their EU citizenship.

Don’t Bank on It | Eight banks have taken formal steps to seek a new license in the European Union and four more are planning to “significantly extend their activities in the euro area,” because of Brexit, Sabine Lautenschlaeger, vice chair of the European Central Bank’s oversight arm, said on Wednesday. While about 50 banks have met supervisors and are in a pre-application phase, she said time is running out and banks shouldn’t count on a transition period to delay their decision.

Carney’s Credibility | The Bank of England will lay out how it expects the economy to perform over the next three years at noon on Thursday in London. Trouble is two-thirds of its forecast period comes after Brexit day, and there is little clarity about the future trading relationship. The small optimistic tweaks to forecasts that are expected could be at best short-lived and at worst wildly off the mark. That risks undermining the credibility of an institution that along with most of the economics profession is being accused by Brexit backers of bias.

More Gloomy Leaks | The government’s Brexit estimates show the retail industry could face a 20 percent rise in costs after the divorce and car makers could see a 13 percent hike in manufacturing costs, Sky News reports, citing leaked documents. In the event of a no-deal Brexit, North East England would take a 16 percent hit to GDP over 15 years, while Northern Ireland would suffer a 12 percent impact, according to the documents cited by Sky.

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