Diary Day 390: we have reached an impasse. 

My #Remainer’s Diary Day 390: in Brussels the fifth round of negotiations ended in deadlock. At a press conference Michel Barnier, referring to the question of how much Britain would pay to settle the accounts, said: “This week, however, the UK repeated that it was still not ready to spell out these commitments. On this question, we have reached an impasse, which is very worrying for thousands of projects everywhere in Europe and also worrying for those who contribute.” 

He said he could not advise the next European Council meeting that there had been sufficient progress for the talks to move on to the future relationship after the UK left. He said it was important to respect the “sequencing”. 

This means no progress before December. The pound fell in currency markets at the news. 

Jess Geier MEP, vice chair of the European Budget Committee, told Channel 4 News: “There is not an offer. There is a speech in Italy. There will be an offer when Mr Davis comes back to the negotiating table with a piece of paper and says this is the British offer for settling the accounts… In the moment we have a quotation from a speech in Florence. I mean, are we in the 19th century? This is not how we do politics in the European Union any more. We need to have something on the table to negotiate…” 

Gary Gibbon of Channel 4 News said what was really significant was that it transpired that the real obstacle was not the European Commission but the Council of EU27 leaders and not least Germany. 

There is no sign of a softening of the EU27’s stance on this, though British newspapers attempted to make something of a draft paper for the European Council meeting suggesting, in effect, that discussions begin amongst themselves in preparation for later discussions with the UK. 

Former Irish prime minister and former EU ambassador to the US John Bruton, speaking in Brussels, told the Evening Standard that “the Foreign Secretary — who should be an authoritative figure, in terms of understanding the needs of other countries — has set forth red lines that, quite literally, make any deal completely impossible. And yet he continues to be Her Majesty’s Foreign Secretary.”

He said: “Even if the UK were to be allowed to move on to the trade negotiation, they don’t have a worked-up proposal… I have serious doubts about whether the current UK Government is able to come forward with a proposal on the future relationship without splitting fatally.” 

And a few hours earlier Arlene Foster of the DUP told ITV News that a hard border along the Irish Sea would be a disaster for Northern Ireland and a red line for her party. She emphasised that Theresa May understood that this could not happen. 

Ms Foster emphasised that her party’s reason for entering into the confidence and supply agreement with the Tories was to bring stability to the UK. 

The frontier between Ireland and the UK runs partly across the island and for the remainder of its length, along the Irish Sea. That invisible line through the fields of Northern Ireland and the waters of that sea will be the EU frontier after Brexit. It is scarcely possible to exaggerate the importance of this. The DUP campaigned for Brexit. But a majority in Northern Ireland voted Remain. There are more important things to the DUP than Brexit. A hard border is unthinkable. So the DUP is saying it will not allow a hard Brexit. And without the DUP, the Tories cannot get it through the House of Commons. 

In Westminster the Government told MPs that the debate on the EU Withdrawal Bill was being postponed. 

Solicitors for the Good Law Project wrote to DExEU threatening judicial review proceedings unless within 14 days the Government releases the 50 or more studies it has obtained on the impact of Brexit. We already have advance warning that the studies contain bad news. That case will be one to watch. 

Also in London (for the moment) the European Banking Authority published a 69-page opinion in response to the “unprecedented situation” of the Article 50 notification. Among other things the EBA opines that “existing authorisation standards should not be lowered and that the same procedures and standards that have always applied should continue to do so. In addition… firms seeking authorisation should undergo a rigorous assessment against the relevant requirements. Firms should provide a clear explanation of the choices they are making in terms of the substance of the incoming entity, and “empty shell” companies should not be authorised.”

The EBA also expresses the opinion that for the provision of investment services in the EU, adequate prudential supervision and oversight for institutions established in the Union should entail “an updated prudential framework… Investment services provided by third country investment firms should also be subject to adequate prudential rules and oversight.”

“Third country” firms will, if Brexit goes ahead, include UK firms. 

The EBA also “notes the potential for Brexit to impact on ongoing resolution reforms, not least in the area of building loss absorbing capacity.” It states that it is important that “institutions and authorities consider the implications of the departure of the UK for the build-up of MREL [the minimum requirement for own funds and eligible liabilities] and take steps now to mitigate relevant risks.”

Ominous for the City of London. 

Brexit is looking less and less feasible. 

Diary Day 389: planning for scenarios. Speaker Bercow says MPs absolutely do have the right to say no to Brexit. 

My #Remainer’s Diary day 389: the Chancellor of the Exchequer, Philip Hammond, giving evidence to the House of Commons Treasury Select Committee, said the Government had “planning for all scenarios, including a no-deal scenario”. It had already allocated £250m to Departments from the reserve for preparatory work. 

But he said: “I am not proposing to allocate funds to Departments in advance of the need to spend. We should look in each area at the last point at which spending can begin to ensure that we are ready for day one of a no-deal scenario. That is when we should start spending hard-earned taxpayers’ money. Every pound we spend on contingent preparations for a hard customs border is a pound that we can’t spend on the NHS, social care, education or deficit reduction.”

He said he didn’t believe that the Government should make “potentially nugatory expenditure” until the “very last moment”. “We will be ready… but we will not spend it earlier than necessary just to make some demonstration point.” 

He said that the Government would not reopen departmental spending settlements, because “the money that is required to be expended against the contingency of a no-deal scenario will come from the reserve”. 

On quantum, he said it was “a moveable feast. Obviously, one can plan for the most extreme scenario. Let me give you an example: it is theoretically conceivable that, in a no-deal scenario, no air traffic will move between the UK and the European Union on 29 March 2019. However, I don’t think anybody seriously believes that that is where we will get to. 

“There are a range of outcomes, and at a point in time we will need to determine what a realistic worst-case scenario that we need to plan and invest for is. On that specific point… mutual self-interest means that, even if talks break down and there is no deal, there will be a strong compulsion on both sides to reach agreement on an air traffic services arrangement.”

In answer to questions, he said that the key concern of business was for certainty. 

Asked by Charlie Elphicke, MP for Dover, why we did not invest in “world-class, cutting edge—the best possible—customs systems, border systems, infrastructure and roads to the border… which we need anyway?“, Mr Hammond replied firmly: “It’s not investment that we need anyway. That is the point. The investment we are talking about is not generic; it is specific to the outcome. For example, if we agree with the European Union… the maximum facilitation model for the customs border, that will require a certain type of infrastructure and certain IT investments. If we have no agreement with the European Union and we operate a WTO-terms, hard customs border…, we will need different facilities and arrangements in place.” 

He is saying the Government can’t plan because it doesn’t know what to plan for. 

Mr Hammond does understand the seriousness and complexity of the challenge for, and from, Ireland. He said: “On the island of Ireland, an integrated agri-food business has developed, which is extremely important for the economies of both Northern Ireland and the Republic. An integrated energy market has developed, which is not just important but literally essential for both Northern Ireland and the Republic of Ireland. The challenge is protecting this extensive pan-Ireland economy against the potential of a different regime operating in the north from the south as a result of Brexit.” 

This is why I think eventually the DUP have got to back off from Brexit. It will ruin their own supporters. It is not feasible. 

There was a surprising moment when Kit Malthouse, Tory, suggested that “the UK had “no obligation to operate the [customs] system. The lorries will be rolling in unfettered one day, and if they roll in unfettered the next day, it does not really change anything.” 

I am sure smugglers will read that idiotic suggestion with great interest. 

Mr Hammond skilfully sidestepped repeated attempts to get him to say whether or not the Treasury’s view was that the U.K. would be better off after Brexit. 

His evidence can be found in full on the Parliament website. 

In Berlin, Germany’s Economy Minister Brigitte Zypries said that Germany would experience trade difficulties due to Brexit but Britain will suffer more that the EU27 when it leaves. A new “spirit of revival” would benefit the whole EU. She said the German economy was growing faster than expected and would grow by 1.9% in 2018. 

The European Union Youth Orchestra announced it would no longer be based in London, but in Ferrara and Rome, Italy. This was in response to an invitation from the Italian ministry of culture. The Orchestra was founded by the Italian conductor Claudio Abbado. 

In the evening the Speaker of the House of Commons, John Bercow MP, told the Hansard Society that it was an “opinion, rather than a constitutional fact” that MPs were obliged to vote through Brexit because of the referendum result. “There will be some members of parliament who say, I want to be able at the end of all this if I’m not satisfied, to say no, to try to persuade other members of parliament to say no, and to hope that ‘no’ might delay Brexit or prevent Brexit. Do they have a right to argue that point of view? They absolutely do.” 

An obvious point, but one it’s good to hear that the Speaker has made. 

Diary Day 388: it’s not a game, and we are being kept in the dark. 

My #Remainer’s Diary Day 388: Michel Barnier responded to a question from a journalist about Theresa May’s tennis metaphor by saying: “We are working. Brexit is not a game. Don’t forget it.” 

Donald Tusk, the President of the European Council, dismissed any chance of “sufficient progress” on the financial settlement, citizens’ rights and the Irish border being made by the time of the summit on 19 October. He indicated that if there was still no progress after Christmas, both sides might need to move on to an emergency footing. 

Mrs May took part in an LBC phone-in during which she refused to say how she would vote if there was a fresh referendum. 

Lib Dem deputy leader Jo Swinson said it was “staggering that even the prime minister isn’t convinced by the government’s approach to Brexit”. 

More than 120 MPs signed a letter calling on DExEU to publish the impact assessments it has obtained and accusing it of keeping “not only Parliament but the public in the dark”. The letter says: “Leaving the European Union will have a huge impact on our economy for generations to come. We believe it is important that there is a full and frank debate about the impact of Brexit on our economy, jobs, trade and living standards and what can be done to mitigate risks. That is only possible if analysis of the impact of Brexit is published.” 

As expected, the Office for Budget Responsibility said the average rate of productivity growth of 0.2% over the past five years was a better guide for 2017 than its previous forecast of 1.6%. It attributed this low rate of growth mainly to low business investment, which was likely to persist. 

Not a good day. 

Diary Day 387: problems with the provinces. 

My #Remainer’s Diary Day 387: SNP Leader Nicola Sturgeon said as her party’s conference took place in Glasgow that in the EU referendum “people didn’t have a clear idea of what they were voting for.” She continued: “The case for another referendum on the terms of the deal may actually become difficult to resist.”

Asked if she was calling for a second referendum, she replied: “I don’t think we’re there yet but this is something that will be discussed and debated.”

She said: “…increasingly the UK right now is engulfed in chaos, we are seeing a developing disaster, in my view, with the Brexit negotiations. And the case for Scotland taking control of our own future, having the decisions that shape our future in our own hands, in my view gets stronger by the day”.

While opinion polling does not at present suggest a significant shift on Scottish independence since the 2014 referendum, the SNP is watching and waiting. 

Pete Wishart, MP for Perth and North Perthshire, told a conference fringe that “the Scottish nation will be crying out for” another independence referendum “as they start to experience the horrors of Brexit”.

He went on to say Brexit “could collapse in two years’ time. We could be leaving without any deal, with the EU just thoroughly bored with the whining UK and their delusional nonsense and useless demands.”

Mr Wishart also said the SNP had to “respond nimbly” to suggestions of a more federal UK from other parties.

A federal UK is not the full Scottish independence they ultimately want, but it is a step towards it. 

In London, Theresa May read out a statement to the House of Commons in which she talked about a transitional period of about two years after March 2019 and said that she wanted a “new, deep and special partnership” with the EU but that “the ball is in the EU’s court”. 

Great excitement as observers tried to discern meaning in what she said. Steve Richards, writing a stinging opinion piece in the Guardian, saved a lot of futile effort by just calling the statement woolly. 

In Brussels, European Commission spokesman Margaritis Schinas said at a regular briefing that there was “a clear sequencing” to the negotiations and there had been “so far no solution found on step one… So the ball is entirely in the UK court for the rest to happen.” He added that the UK could refer to the plenary debate in Strasbourg on the subject. 
So much for tennis match metaphors. 

The fifth round of the Brexit talks began. The negotiators returned to the “divorce” issues of the financial settlement, citizens’ rights, and Northern Ireland. 

Irish Prime Minister Leo Varadkar tweeted that the country was working with the support of the EU to prevent a customs border. 

The trouble is that no one can say how this is possible. It is not possible. The EU’s external border will run across Ireland. 

Patrick Smyth wrote a detailed analysis of the problems in the Irish Times. In a nutshell, there are two parts to them. One is trade tariffs. The other is that the EU requires animal health inspection at all third country borders. 

One way to avoid animal health checks at the North-South border would be a special regime to keep animal health in Northern Ireland compliant with EU standards. But that would require a border with checks between the rest of the UK and Northern Ireland. There is no functioning devolved government at Stormont to consult on this. So it is being handled from Westminster. But the DUP, which is propping up the Tory minority Government, is implacably opposed to any barrier between Northern Ireland and Britain. 

The statistics show that Irish-UK trade is seven times the size of North-South trade. Agriculture and food products are especially important. So to Ireland’s PM Mr Varadkar, the UK–Irish border is more important than saving trade with Northern Ireland. 

Northern Irish farmers are facing ruin, and no one is speaking up for them. They could be added to the heap of innocent victims who are collateral damage in the Tory Party’s struggle to cling on to power.  

Diary Day 386: the irreversibility myth. The EU external border problem. Pressure. 

My #Remainer’s Diary Day 386: I have been saying for months that the Article 50 notice is unilaterally revocable by the UK. It seems that the Prime Minister has had advice to the same effect. 

Jessica Simor QC says she has been told by “two good sources” that the PM has been advised “that the article 50 notification can be withdrawn by the UK at any time before 29 March 2019 resulting in the UK remaining in the EU on its current favourable terms.” She has sent a Freedom of Information Act request to Theresa May asking for disclosure of the advice. 

Quite how she will get round the doctrine of legal professional privilege is obscure. tt could be waived, but this secretive Government is unlikely to do that.  

Nick Clegg, the former leader of the Lib Dems and deputy prime minister 2010-2015 during the coalition, told the Observer: “The claim that article 50 is irreversible was always a myth put about by Brexiters who want to stop the British people from changing their minds… Article 50 was never the one-way conveyor belt to Brexit as claimed by the government. It can be stopped at any point.” 

In international law, generally, a notice given under a treaty is revocable, unless the treaty says otherwise. This treaty does not say otherwise. Article 50 provides for a notification of a member state’s intention. An intention can change. If the UK ceases to have that intention before March 2019, it can so inform the EU27 and stop the journey to the train crash. 

Under Article 50, how the intention is ascertained is a matter of domestic law. The UK Supreme Court held that Parliament was sovereign. Parliament authorised the Government to give the notice. It could direct the Government to revoke it. 

The question that baffles me is what on earth the DUP thinks it is achieving by shoring up the Conservative minority Government. Some problems posed by Brexit are not just difficult but insuperable given the parameters that the PM has set, and one of those is the external EU border which Brexit would cause to run across Ireland. 

A report by Ireland’s Office of the Revenue Commissioners leaked to the news channel RTÉ said an open border between Northern Ireland and the Republic will be impossible from a customs perspective and that it would be “naive” to believe a unique arrangement can be found. The report says that customs checks on the south side of the border will be unavoidable. 

With regard to Dublin port it says that existing physical infrastructure and traffic streaming are “likely to be stretched, if not overwhelmed”. 

This is the looming problem that the Leave campaign made light of. The insoluble problem. 

Brexit means that a united Ireland, in the EU, would make everyone on that island better off compared with being part of the UK, outside the EU. Ireland’s divisions were never simply about competing loyalties, but they were mainly about them. Now it’s different. The economic advantages would be overwhelming. 

I think the confidence and supply agreement with the DUP is going to buckle and break under the strain of what the Government’s pursuit of Brexit is doing to Northern Ireland. 

Chris Johns, writing in the Irish Times, compared the Conservatives today, “in the grip of zealots”, with Mrs Thatcher and the poll tax, “an issue that led to her demise but one that is wholly trivial compared to the ideological madness of Brexit.”

A headline to Andrew Rawnsley’s weekly opinion piece said simply: “Terrible as things are for the Tories, the cabinet is too paralysed by fear to move against the prime minister.” Thus she hangs on. 

The cabinet will not move, but something eventually must, like tectonic plates in earthquake zones. It’s the pressure. 

Diary Day 385: the Admiral Byng principle applied. America First policy wounds Northern Ireland. 

My #Remainer’s Diary Day 385: the Conservative Party removed the whip from South West England MEP Julie Girling and South East England MEP Richard Ashworth because they had supported the resolution passed by the European Parliament that “sufficient progress” had not been made in the Brexit talks to begin talks on the UK’s future relationship with the EU. 

Mr Ashworth is a former leader of the Tory MEPs’ group and Ms Girling is a former chief whip. The present chief whip, Dan Dalton, consulted 10 Downing Street before the decision was made. 

The current policy of the Government is at odds with the fundamental beliefs of some of the Tory MEPs’ group. No wonder these two rebelled. 

So the Admiral Byng principle has to be invoked. He was ordered to relieve the British garrison on Minorca but was given neither the time nor the resources to do so. Having declined to waste his ships and men on a task he judged bound to fail, he was arrested and court martialled for “failing to do his utmost”. Pitt, the PM at the time, pleaded with the King, George II, for clemency, suspecting that the Admiralty was blaming Byng to divert attention from its own failings. But King George and Pitt were political enemies, so Byng was shot in 1757. 

The Tories are fracturing. 

The US Department of Commerce added another tariff to the one previously imposed on the new C-series aircraft made by Bombardier, bringing the total tariff above 300%. Delta Airlines, based in Atlanta, has ordered 75 of the aircraft, a deal worth an estimated $5bn. 

The US Government’s actions result from a complaint by Boeing followed by a preliminary ruling in its favour by the Americans on supposedly technical grounds. It seems there are two investigations going on. The original imposition was in response to alleged unfair state subsidy enabling sales at a price below the cost of manufacture. The US now adds an anti-dumping levy as well, apparently. 

A final ruling by the US International Trade Commission is expected in February. Despite its name, the ITC is not an international body. It is a federal agency of the US with quasi-judicial functions and its members are appointed by the POTUS subject to confirmation by the Senate. 

The Department said it will instruct US Customs and Border Protection (CBP) to collect cash deposits of duties. This is the reality of economic nationalism, protectionism. 

The alleged unfair subsidy claim is based partly on the decision by Northern Ireland’s power-sharing administration and the UK Government in 2016 to invest almost £135 million in the establishment of the C-Series manufacturing site in Belfast. The provincial government of Quebec has also allegedly subsidised the C-series programme by means of a payment to help Bombardier’s operation in Canada in 2015. 

However, the merits are unclear. Boeing is a big – the world’s largest, according to Boeing – manufacturer of military aircraft, which are bought by governments. That is not in the normal sense a commercial market at all. It arguably involves state aid. Bombardier also says it is common in the aircraft manufacturing industry to launch a new line at below cost, and that Boeing has done so itself, thus is guilty of hypocrisy. 

The US’s actions bode ill for the UK in general and Belfast in particular, where 4,000 people work for Bombardier at the former Shorts factory. The wings of the new aircraft are to be made there. 

Steve Turner of the trade union Unite, to which most of the Belfast factory’s workers belong, called for Boeing to attend urgent talks with the UK and Canada’s prime ministers and trade unions, otherwise the dispute would lead to “similar tariffs and sanctions on Boeing’s current and future work on behalf of the UK Government and across the EU to protect our wider aviation sector from further protectionist assault”. 

What intrigues me is the strain that the UK Government’s confidence and supply supporter, the DUP, must be under. The Bombardier factory is in East Belfast, described as a DUP stronghold. The EU is the only bloc in the world big enough to take on the US and win on disputes like this, and it has done so. It could do so again. But the DUP supports Brexit. How does this make sense? 

As for Unite the Union, its position makes as little sense as the DUP’s. Its general secretary Len McCluskey is a big supporter of Jeremy Corbyn, and both of them back Brexit because, apparently, the EU is a capitalist conspiracy that impedes progress to a socialist utopia. Or something. 

Liberal Democrat leader and former business secretary Sir Vince Cable said: “This is another blow to the idea that there is going to be a gold gilted trade deal to be done with Trump’s America post-Brexit. It is a fantasy that the UK can promote free trade in partnership with a US Government which believes in economic nationalism.” 

There is this, too: Northern Ireland has a large number of farmers and exports beef and dairy products. There is no advantage, and enormous disadvantage, to them in leaving the EU. At present, the UK does not need any EU quotas because it is in the EU, in the Single Market. As if to underline the craziness of the DUP’s stance, the US has joined forces with a group of agricultural producer nations to object to the UK and EU splitting third country agricultural import quotas so as to give some to the UK after Brexit. 

Right now the sunlit uplands of advantageous trade with the US are under a thick cloud, thanks to the White House’s America First policy. And President Trump will stick to that policy, because the angry voters who put him in the White House want it, whether it is good policy or not. 

Another plank of the Leave campaign’s platform gives way. 

Diary Day 384: the writing is on the wall. 

My #Remainer’s Diary Day 384: at a meeting of EU27 ambassadors with Michel Barnier, a group led by Germany rejected the idea of opening transition negotiations with the UK before the terms of departure had been agreed. One ambassador said: “We are not here to save the Tory party.” 

Meanwhile in Berlin the Managing Director of the Federation of German Industries (BDI) Joachim Lang warned firms to prepare for a “very hard Brexit”. He said: “Anything else would be naïve.

“After four rounds of negotiations, German industry looks with concern at the progress of the Brexit negotiations. The British government is lacking a clear concept despite talking a lot.”

In London former Tory party chairman Grant Shapps, referring to Theresa May, told BBC radio: “I think she should call a leadership election.” He said the writing was on the wall. Apparently MPs use a WhatsApp group for this plotting. However, others questioned whether he really had the support of 30 MPs as he claimed. As even the CIA cannot decipher Whatsapp encryption we have to wait to find out in a more old fashioned way. 

“The writing is on the wall” is a reference to a Biblical story in the Book of Daniel. As King Belshazzar held a feast at which he and his men drank from sacred vessels from the looting of the First Temple, a miraculous hand appeared and wrote on the palace wall the Aramaic words for “measured, measured, weighed, divided”. This was interpreted by Daniel as an omen of the fall of the Babylonian empire. It fell. 

Very apt, Mr Shapps, but not quite in the way you meant. 

There is a magnificent painting of Belshazzar’s feast by Rembrandt in the National Gallery in London. 

The New York Times wrote that continental Europeans were wondering how much longer they would be dealing with Mrs. May. “Even if she survives, they fear she may be unable to deliver on any agreement she strikes.” 

Joachim Fritz-Vannahme, director of the Europe program at the Bertelsmann Foundation, suggested that Michel Barnier was sitting back, waiting for the Conservative government to implode. “Why should they start to shape some better progress in the negotiation, at a crucial moment, when you have May’s leadership put into question, and the little blonde pirate buccaneering about?” 

Why indeed. 

The author of the Mainly Macro blog, who is Simon Wren-Lewis, a professor of economic policy at Oxford University, ventured an explanation of the terrible UK productivity figures. He wrote that “Productivity growth reflects technical progress and innovation, and they tend to continue despite recessions.” 

To explain why that was not happening in the UK, he attributed the failure of firms to invest in innovation to the effects on confidence of uncertainty resulting from three large shocks: the recession following the global financial crisis (GFC), the absence of a normal recovery as a result of austerity, and then Brexit. 

He wrote: “Once the recovery (of sorts) finally began in 2013, productivity growth picked up. That sustained growth came to a halt when the Conservatives won the 2015 election, and the possibility of Brexit began to be an important factor for firms.” 

He suggested that after the GFC, a belief by firms based on previous experience that after a period of “using the hammer” policymakers would apply stimulus was shattered by austerity and then destroyed by Brexit. 

He concluded by suggesting that discoveries and innovations which were still happening around the world were not being adopted by UK firms because “we are seeing what happens when most firms lose confidence in the ability of policymakers to manage the economy.” 

If anyone has a better explanation, I would like to hear of it.