Final Stage. A new personal and political dynamic emerges along with a potential new timetable

As Michel Barnier, in one sense rightly put it in Brussels yesterday, the Brexit negotiations are at their “final stage.” In reality, they will not be absolutely settled until the full legal terms of the future relationship are known and that might not emerge until the end of the transition period in late 2020. There has, nonetheless, been a clear sense of a shift in gear over the past few days.

On Monday, the UK Government released its proposals for financial services and competition policy in the post-Brexit era. Mr Barnier and Dominic Raab, the Brexit Secretary, formally held talks yesterday and technical deliberations will continue this morning. The two main players will meet again next week and most weeks until the final version of the Withdrawal Agreement is settled and a ‘Future Framework’ for the UK and the EU-27 is secured. Yet as an essential element in this saga, the UK will tomorrow start to publish multiple contingency plans for a ‘no deal’ scenario – even though these documents will be open to the charge that they are better at identifying the issues than offering serious answers. It is a delicate balancing act but one that is easier with the House of Commons still in recess mode.

Has much changed on Brexit during the dog days of August? Quite a lot, albeit in a subtle manner. There are three elements to this. The first is the consequence of a changed personal and political dynamic with the departure of David Davis from the scene and the arrival of Mr Raab to replace him. The second is the emergence of a fresh option in terms of the timetable as to when a deal might be done. The third is an increasing if unspoken acceptance in Downing Street that the settlement when it comes is more likely to be ‘Chequers Plan Minus’ than ‘Chequers Plan’, but that this might not be such a tragedy when it comes to finding an outcome that enough Conservative MPs can live with.

The People Factor

In theory, Mr Barnier and Mr Davis were not badly matched to be the respective lead negotiators for the EU-27 and the UK on Brexit. Both were of a similar age and generation. They had known each other since Mr Barnier was Minister for European Affairs in the French Cabinet and Mr Davis was Minister of State for Europe in the mid-1990s.

In each case, their appointment constituted a rather surprising comeback when their careers in front-line politics seemed to have ended. Indeed, at one stage it looked that if they managed to align their interests effectively, one could move on to be the President of the European Commission (as is still plausible) while the other could have found himself cast as the compromise candidate to succeed a politically wounded Theresa May after the 2017 election shock (in contrast with Mr Barnier, it is fair to say that there is now no chance of that happening).

In practice, it did not work like that at all. Mr Davis was exceedingly suspicious of Mr Barnier. The contrasts in background and style were stark. There was no positive spark at all between them. The personal chemistry between Mr Raab and Mr Barnier, although the former is 25 years younger than the latter, is manifestly better. The age gap masks the fact that there is far less of a background or a style gap. Mr Raab was a very smart Oxford student, who moved on into the law, then became a Foreign Office high-flyer at a young age, then Chief of Staff to two Shadow Cabinet members before becoming a Member of Parliament in 2010 and rapidly advancing up the ministerial ladder. This is more akin to the history of those who rise to the top in France or within the EU than is generally true in Britain.

This may also explain the second aspect of The People Factor. Mr Raab’s relationship with Oliver Robbins, the Prime Minister’s principal adviser on the EU and Brexit, is light years better than the one which Mr Davis ‘enjoyed’ with him. That Mr Raab and Mr Robbins can work effectively together is again the result of similarity in background and style. They were a year apart at university, both very clever and interested in the operations of power. One went into the Foreign Office and the other to HM Treasury, but each could easily have taken the career path of the other. The UK delegation is working much more smoothly internally than it was and no longer appears to be at odds with itself.

A new schedule?

There are currently three major EU events concerning Brexit which are inked into the calendar. These are a meeting of the EU-27 in Salzburg on 19 and 20 September at which a common approach to the Future Framework should be agreed and thus an alteration in the mandate that Mr Barnier has in his dialogue with the United Kingdom.

There is then a formal EU Council Meeting in Brussels on 18 and 19 October which is the earliest realistic moment when a bargain could be concluded. Finally, there is another EU Council Meeting in Brussels on 13 and 14 December which is close to the last credible moment when a deal could be done before the 29 March 2019 deadline when the UK ceases to be a full member of the European Union, not least because any agreement has to be ratified by both the UK Parliament at Westminster and by the European Parliament as well.

Both sides can see difficulties in this schedule. While finding a fix for the Irish border dilemma by the October Council should not prove unduly challenging, nailing down both the Withdrawal Agreement and the Future Framework by that date does seem extremely ambitious and could only occur if the Future Framework were so high-level that ministers would be legitimately accused of offering MPs a ‘Blind Brexit’, the chance to vote to leave the EU without any precise idea of what may then follow.

Waiting all the way to December, however, is also unappealing. Who knows what twists and turns will have been seen within the parliamentary Conservative Party by then, especially with Boris Johnson now free to act as the loosest of loose cannons? It would also imply pushing the actual vote on the terms of the UK’s departure from the EU in to the first week of January 2019. That is tight.

So the notion now doing the rounds (and in itself evidence of the enhanced personal and political dynamics at work) would be to allow for the option of a special one-day EU Council in the first half of November to endorse both the Withdrawal Agreement and the Future Framework. The ideal time for Mrs May would be the second week in November when the House of Commons is on a short recess (6-12) which would allow her to make whatever final compromises may be demanded.

Chequers Plan Minus

That further concessions will be needed is obvious. The original version of the Chequers Plan has a number of features that the EU will not be inclined to tolerate. These include the complicated (and completely unprecedented) Facilitated Customs Arrangement which the Prime Minister has been the champion of, despite little enthusiasm for it even among her loyalists within the Cabinet.

There will also be some hard talking to be done about the distinction between ‘goods’ and ‘services’ which is far from straightforward. It is also unlikely that the EU will accept the blueprint for the future of financial services which has been published (although the one on competition policy has better prospects). There will also come a time (although it may be possible and prudent to defer a debate on this until after the UK has left the EU and entered the transition period) when the vexed matter of whether the UK should make a contribution to the EU budget in return for market access is raised. The end result is hence likely to be closer to the ‘Canland’ end of the spectrum than the ‘Switzada’ model that the Chequers Plan envisaged (see this past edition of Insight for definitions).

In terms of the management of Conservative MPs, though, a partial rowing back from the Chequers scheme might make political life far easier. A judgement call on this will have to take place once the Conservative Party conference is completed.

Tim Hames
Director General, BVCA