So UK-EU relations are set to come back into focus in a big way in Sept. Not bc the end of month deadline - that should be ignored. But bc the gaps between the two on the Protocol are so huge, it's unclear if a compromise can be found without serious drama in between
1/
On timing: @EU_Commission proposals to HMG command paper will need to be socialised with EU capitals & @Europarl_EN. So the parameters of what's poss on EU side will only be clear towards the end of the month. That makes an extension to grace periods almost inevitable
2/
This won't be the “standstill” @DavidGHFrost is demanding. EU officials are clear that can only happen if HMG dynamically aligns to EU rulebook in intervening period. This is more about giving space for talks to succeed. Can they?
3/
There is definitely a willingness among member states to look at customs & SPS solutions for NI-only and specific features of GB-NI trade. As long as they don't affect integrity of Single Market. This is not a macro re-negotiation, but a tweak at margins - where necessary 4/
So Frost & Co will have to temper their demands. For eg, getting rid of the ECJ's role in policing the Protocol is not a red line for the EU - it's simply IMPOSSIBLE. It would effectively mean removing NI from the CU & SM. As we know, that ain't ever gonna happen 5/
Lurking in background is Govt's threat to trigger Art 16. Senior UK officials tell me @BorisJohnson was ready to do this in July, but was convinced to give G7 & negotiations one last push. From implicit threats, Frost is now also explicit that Art 16 threshold has been met 6/
But A16 only says some obligations can be suspended, not which ones or how. The other party can then retaliate. Per Art 7, 1 month of talks is needed before measures can be taken. Bottom line: it wd dramatically worsen legal & political uncertainty - without resolving anything
7/
Can a compromise be found? At a minimum, it's going to be a very long, hard slog. Almost like another mini-Brexit. Was this always Govt plan? Perhaps. Imperative in 2019 was to get Brexit done - at any price. Now HMG wants to revisit & re negotiate all the gory details
ENDS
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The review to reform EU fiscal rules begins soon. 3 key points: 1/ Process brings risks; 2/ There's an emerging consensus on debt, not investments; 3/ COM is toying with completely overhauling governance - empowering members states to determine their own fiscal trajectories 1/
Process is key - & brings risks. Member states must submit Stability & Convergence Programs to Bxl by mid-Apr. For this they'll need an idea of what fiscal rules in 2023 will be. But we'll only have a new Govt in Berlin in.. Dec? Maybe Jan? That leaves Q1 next yr to do a deal 2/
Absent consensus, COM may be forced to issue a Communique - instead of concrete legislative proposals - pointing to what new rules will likely be. It's here when fiscal hawks (@VDombrovskis is key) will likely urge old rules & EDPs to apply - despite tightening they imply 3/
So it's good there's a compromise over social care. But the bigger picture has been totally lost in the details of today's debate - namely that the UK is already aiming at tighter fiscal policy, while ROW & certainly the EU remains very focussed on supporting the econ recovery 1/
This is largely borne out of differences between @BorisJohnson and @RishiSunak. The PM wants to spend on levelling up, subsidising net-zero, new manifesto commitments and much more besides. He has his eye on the Red Wall 2/
Sunak thinks spending was ALREADY too high pre ~£400bn Govt has spent on Covid relief & is worried about debt servicing costs (given BoE projections of 4% inflation). He also wants to (re)build the party's credibility on fiscal policy vs Labour & is channeling Tory members 3/
On achievements. I think Merkel’s main one is fact she stands for reassuring stability - domestically & internationally. She has been unimaginative about reforming EU, BUT her attention to detail & emotional intelligence have helped EU weather countless crises over past 16 yrs
2/
She has also competently managed Germany's prosperity after her predecessor pushed through important supply side reforms that made the economy more competitive. BUT it's quite difficult to think of flagship domestic reforms which have taken place during the Merkel era
3/
It tests the different possible centre-right candidates in the 1st round next April – with and without a run by the far-right pundit @ZemmourEric 2/
The main takeaways of the survey. @EmmanuelMacron tops the poll in the 1st round with 24 to 26% of vote, whatever the opposition. This is equal to or better than the 24% he scored in the first round in 2017 3/
Interesting Elabe poll for Les Echos today on the relative popularity of the runners on the centre-right. Broadly, it confirms what we know – Valérie Pécresse is rising; Xavier Bertrand standing still; Michel Barnier lagging; the others nowhere 1/
Valérie Pécresse has had a good summer. Bertrand a disappointing one. He had gambled on being far ahead of the centre-right “pack” by now. He isn’t. Pécresse has almost caught up. In terms of opinion among voters with centre-right sympathies, she is even slightly ahead 2/
So Elabe says that 28 % of all French voters have a positive image of Pécresse (2 points up in a month). Bertrand is stable at 31%. But among centre-right voters Pécresse jumps 12 points to 69% approval, overtaking Bertrand who climbs by 3 points to 62% 3/
Properly speaking Michel Barnier is not a candidate for the French presidency, he is a candidate for a centre-right primary which does not yet exist. At least four other potential primary candidates are declared or expected 1/4
Barnier – aged 70 & with no big political constituency or profile in France - is unlikely to win such a primary (if it happens), let alone the presidency next April. His aim could be to boost his domestic profile in the hope of getting a biggish job in a future government 2/4
There were bigger press headlines in Fr today for the decision by Laurent Wauquiez (Auvergne-Rhone-Alpes president) NOT to enter a primary than Barnier’s announcement that he would. According to press reports, Les Républicains, will probably announce a primary in a few weeks 3/4