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Brexit update: parliament is back in session

Brexit update: parliament is back in session

This has been a very busy week for the UK government. Parliament is back in session after the summer recess, Brexit Minister David Davis has spoken to MPs about EU negotiations and Theresa May has attended her first G20 summit as Prime Minister. 

More than two months after the Brexit vote, have we had any more details this week? Let’s look at the three biggest Brexit developments.

1. Brexit Minister David Davis faces MPs

Although Davis’s speech was billed as an opportunity for the government to set out their Brexit strategy, details were thin.

I set out in a previous blog that free movement of people and membership of the EU single market is considered a package deal by EU leaders. On Monday, Brexit Minister David Davis accepted this, and stated that if single market membership stops us from fully controlling our borders, we are unlikely to remain members. The next day, Theresa May corrected him, with her spokesperson briefing that this was Davis’s personal opinion, not government policy, although we should remember that May has stated that immigration reform will be a red line in Brexit negotiations.

Davis’s statement wasn’t received well by everyone; when he told MPs that Brexit means, “exiting the European Union”, he was heckled with, “Is that it?”.

2. Major Leave campaign promises aren’t going to happen

During the referendum campaign, Vote Leave made two big pledges about what could happen if we voted to leave:  £350m a week to the NHS, and an Australian style points based immigration system.

Despite Leave campaigners and Tory MPs Michael Gove and Boris Johnson announcing the points based immigration system, and Boris subsequently being appointed as Foreign Secretary in May’s Cabinet, Theresa May has apparently ruled out points based immigration reforms. This was on the basis that it would not necessarily cut the number of migrants coming to the UK – which in the case of Australia has been true, although the system could be tweaked to change the number of migrants admitted. Although Theresa May has been reluctant to promise security for EU migrants already in the UK - and criticised for using them as bargaining chips - Chancellor Phillip Hammond was quick to promise that highly skilled business people and bankers would have special conditions on their migration.

Shortly after the referendum result was announced, Leave campaigner Nigel Farage, then leader of UKIP, said the £350m a week pledge was a “mistake”, and Chris Grayling (now Secretary of State for Transport in May’s Cabinet) stated that it was, “only an aspiration”. Theresa May has so far not commented on this, but as it would be a popular policy we can probably assume that no comment means it’s unlikely to happen.

3. Japanese Brexit demands

It’s in the context of the G20 summit that the Japanese government released a 15-page report on their requirements in Brexit negotiations. This is a bold and unexpected intervention from a foreign government, but when we look at the scale of Japanese investment in the UK it shouldn’t be surprising that the Japanese government is worried. Last year, half of Japanese investment in the EU goes to the UK, and 140,000 jobs are linked to Japanese investment (think Mitsubishi, Nissan and Honda). To lose this investment would be to lose thousands of jobs, and significant tax revenue.

The UK is referred to as the ‘gateway to Europe’ in the document released by the Japanese Brexit taskforce, and trade with the EU is considered fundamental to foreign investors in the UK. Alongside this, businesses want to know that they will be able to recruit a skilled workforce, which suggests that they will want to be able to hire EU wide.

The impact of Brexit on the economy has so far been due to uncertainty – even though we haven’t left yet, we’re looking at a potential economic slowdown, seen a decrease in hiring new employees and a weaker pound. Businesses like to know how healthy an economy is before they invest.

Have we learnt anything new about Brexit?

This week we’ve had vague statements from the government this week about being “ambitious” in negotiations, and no concrete details. But the publication of a specific list of demands from the Japanese government has brought the conversation around Brexit back down to earth, reminding us that the UK will not be able to simply dictate the terms of an exit agreement. Not only will the government need unanimous agreement from the remaining 27 EU member countries, they will need to look after the investment interests of dozens of other countries invested in the UK; Japan will not be alone in expressing concerns about the impact of Brexit on their UK based businesses.

Based on the little information we have so far from Ministers, there is no guarantee that all the concerns of the Japanese government will be addressed. However, the one thing becoming clearer is that Theresa May has an impossible job; there will be losers in the Brexit negotiations, and May won’t be able to please everyone – arguably not even her own Ministers. The job of the left is to make sure the needs of working people in the UK are heard as loudly as the governments and businesses queueing up to make their case.

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