UK government could be inching towards customs union

Headline UNITED KINGDOM: May could inch towards customs union

Headline UNITED KINGDOM: England reopening carries major risks


Significance This followed a landmark speech on January 17 in which she added more clarity and detail to her previous stance on the United Kingdom’s departure from the EU. May indicated a willingness to leave the single market, strongly implied that the United Kingdom would not be part of the customs union in its current form and asserted that she would rather quit the EU with no permanent or transitional deal agreed than accept an arrangement which limited the United Kingdom’s future freedom of action. Impacts The government is likely to meet its preferred timetable for triggering Article 50 even if it has to obtain approval from parliament. The United Kingdom will probably lose its passporting rights, which allow UK-based banks to sell their products across the EEA. Paris and Frankfurt will probably benefit as banks may seek to move some of their staff out of London.


Subject The United Kingdom's new cybersecurity strategy. Significance The UK government on November 1 published its Cybersecurity Strategy for 2016-21. The new strategy doubles the previous investment in cyber to 1.9 billion pounds (2.4 billion dollars) during a time of government cutbacks, making it clear that the government regards cybersecurity as a priority. Impacts Despite serious investment, the government will still face a challenge in recruiting those with the required cyber skills. Given the expertise in the private sector, public-private partnerships will continue to be vital for protecting UK networks. ‘Naming and shaming’ cyber aggressors may become more prevalent as states seek to deter further cyberattacks. Governments may also increasingly focus on developing offensive cyber tools that can be used to counter-strike.


Significance This comes after the Telegraph reported last week that Soros had donated 400,000 pounds to the group. There is an ongoing debate as to whether the United Kingdom will in fact leave the EU. Central to it is the question of whether the UK government can unilaterally revoke its decision to trigger Article 50 in March 2017. Impacts Voters would be less likely to support the revocation of Article 50 if the Council imposed conditions that made membership less attractive. Revoking Article 50 and remaining in the EU would reduce damage to the UK economy. If Article 50 is revocable, Eurosceptic governments could be tempted to use the prospect of triggering it as leverage in EU negotiations.


Subject UK-EU trade talks. Significance The United Kingdom will leave the EU on January 31, 2020, but will abide by EU rules as part of the transition period, which runs to December 31, 2020. During this limited period of time, London and Brussels will seek to negotiate a permanent trading relationship. While the transition deadline can be extended, the UK government has committed not to seek an extension. Impacts The impact of no trade deal or a 'thin' one may force the UK government to increase taxes in order to meet spending pledges. UK financial services will rely on an equivalence deal with the EU; London hopes to agree this by mid-2020. The EU’s future trade policy will focus on having stronger sanction powers as well as legal ones for those that unfairly undercut EU firms.


Headline UNITED KINGDOM: Trident renewal to shape new coalition


Headline UNITED KINGDOM: Agenda points to May’s weakness


Significance The UK government remains divided over how its relations with the EU’s customs union should be arranged after Brexit, while the EU is unimpressed by any of the suggestions put forward by London to date. This issue is central to both the future EU-UK trade relationship and the debate about how to resolve the question of the intra-Irish border. Impacts Any physical infrastructure on the Irish border would become a target for violence. A hard border could increase support for Irish reunification among Northern Irish Catholics. Different customs regimes in the EU and the United Kingdom could lead to smuggling.


Significance A ‘no deal’ outcome from the negotiations would have massively disruptive effects on both sides of the Channel. Impacts A ‘no deal’ outcome would create political bad will which would impede cooperation with remaining EU states across a range of issues. The short-term costs of adjustment and trade disruption will be additional to the costs of leaving the single market and customs union. The UK government could lose its reputation for competence.


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