Government has contingency plans ‘for all Brexit scenarios’
Contingency planning for Brexit is being carried out “for all scenarios”, the Government has confirmed.
Foreign Affairs Minister Simon Coveney has confirmed that, should the North leave the customs union, some customs checkpoints will have to exist.
“If goods are travelling on the island of Ireland and move from one customs union to another, there have to be customs checks somewhere, whether that’s in a farmyard, in a factory, in an office or in the back of a truck,” said Mr Coveney.
“So we want to avoid that, we have been very clear and consistent on that. Some people have accused the Irish Government of hardening or changing its position in the last few days —that is not the case.”
In the Dáil, Taoiseach Leo Varadkar confirmed that contingency planning “for all scenarios” is under way.
Mr Varadkar also sought to deny that work has been undertaken to develop border infrastructure to deal with a worst-case scenario, but the Revenue Commissioners has undertaken work to explore the implications of Brexit.
It has been confirmed that Revenue Commissioner officials have been engaged to determine all “legal and practical implications of a range of scenarios” relating to Brexit.
Senior Government sources have admitted that this includes dealing with the movement of goods and services across the border to the North.
Mr Varadkar has insisted that work on developing borders is not under way and he denied that he stopped the Revenue Commissioners from developing such contingency plans.
“We are certainly not designing customs forms, nor would it be within our remit to do so as it is an exclusive competency of the European Union,” he said. “We are not looking to hire Border staff or anything of that nature and any planning operates on a contingency basis.”
Mr Coveney said he did not think hard border check points will return, and added that “everyone is committed to ensure that doesn’t happpen”.
“I don’t think that we are going to see physical checkpoints on the border,” said Mr Coveney. “Everyone is committed to ensure that doesn’t happen. But that doesn’t mean there wouldn’t be border infrastructure somewhere else on the island of Ireland, in terms of checking systems.”
However, he did accept that some form of checking will have to exist if the North does exit the Customs Union.
He said: “If you have some regulatory diversions, there has to be some checking system. If you don’t perate to the same rule group, there needs to be some checking.”
Meanwhile, former taoiseach Bertie Ahern said that he does not see any return to the tower blocks and high security along the border.
“I don’t think there is any possibility of us getting back to tower blocks and high security,” said Mr Ahern. “I don’t think that’s what it is but what we want is a border that allows free trade, free movement to continue.
“Europe are good at finding imaginative solutions and I think we need to get an imaginative solution to this.
“It’s not good enough for the European Union, the British government and the Irish Government to all say they are all in favour of totally open, frictionless border and then we end up that we can’t find one that works.”
Theresa May’s plan to write the date of the UK’s separation from the European Union into law has been dismissed as a “gimmick” and led to fresh warnings it could provoke a Tory revolt as MPs debated the Brexit legislation.
The Prime Minister wants 11 pm GMT on March 29, 2019, enshrined in law as the point that the UK breaks away from Brussels.
But as the Commons began its first day of detailed scrutiny of the European Union (Withdrawal) Bill, the move was condemned by Labour and relations within the Tory party were described as “stormy” as a result of the Government’s handling of Brexit.
Meanwhile, Brexit Secretary David Davis sought to reassure businesses that progress was being made in talks with Brussels and said agreement on an implementation period between the date of leaving the European Union and the start of a new trading relationship could be secured “very early next year”.
But the European Parliament’s Brexit co-ordinator Guy Verhofstadt suggested there had been “no progress” in the talks and cast doubt on whether EU leaders would give the green light to move onto the next phase — covering the implementation and future relationship — at a crunch summit next month.
In the Commons, the socalled repeal bill began eight days of detailed scrutiny, with key votes expected later in the process.
Pro-EU Tory Anna Soubry said a private meeting between Conservative MPs and party whips on Monday evening was “stormy”, with critics going beyond the usual potential rebels.
And in further sign of the difficulties faced by the Government, which will be forced to rely on DUP votes for a majority, senior Tories spoke out in the Commons.
Former chancellor Ken Clarke said the amendment on the date was “not just ridiculous and unnecessary — it could be positively harmful to the national interest”.
Ex-attorney general Dominic Grieve said the move was “very strange” and could damage the government’s negotiating position by limiting the flexibility available to ministers.
Shadow Brexit secretary Keir Starmer said the Government’s bid to write the date of withdrawal into the law was a “desperate gimmick” from the prime minister in an effort to keep her party’s Eurosceptics in line.
Mr Davis addressed financiers following warnings from business leaders that unless an implementation period is agreed by Christmas, firms will increasingly be forced to make arrangements to move work to other EU nations.
Mr Davis acknowledged that investors needed certainty and “without such an implementation period, some of these decisions would need to be taken in the coming January”.
“That is why we want to agree this period as soon as the EU have a mandate to do so. Which I believe can be done, very early next year.”
But Mr Verh of stadt warned that the UK’s offer on citizens’ rights does not go far enough to allow Brussels to conclude that “sufficient progress” has been made in divorce talks at next month’s summit of EU leaders.
Analysts are more optimistic than the UK government that an agreement will be reached with the EU next month to move Brexit talks on to trade, even as Theresa May’ s political troubles continue to weigh on the country’s beleaguered currency.
A Bloomberg survey of seven banks pegged the odds of a UK-EU accord in December at 68%. That’s more than UK Brexit secretary David Davis, who put the chances of a breakthrough by December at 50-50, according to European business leaders he briefed at a meeting this week. His spokesman, however, denies he made the comment.
Commonwealth Bank of Australia’s Peter Kinsella sees the probability of a deal at 80%, the highest in the survey, with the lowest estimated by Mizuho Bank’s Neil Jones at 35%.
The most bullish sterling forecast is from Nomura International, which sees it rising 7% to $1.40 by year-end on the back of deal, while Commerzbank’s call for the currency to weaken as much as 10% in the absence of an agreement is the most bearish.
Sterling fell as much as 1% earlier this week to $1.3062 after the Sunday Times reported 40 members of the UK parliament were ready to sign a letter of no confidence in the British prime minister.
It later pared losses to close at 1.3116, before slipping again by 0.3% in the most recent session.
The opposition Labour party accused Ms May of lacking the support of her own party to deliver the Brexit transition period she’s proposed. Implied volatility on pound-dollar options expiring in a month jumped 151 basis points over the past two days, heading for the biggest such increase since October 2016.
With just over two weeks until EU officials meet in Brussels and begin drafting the conclusions for the December EU summit, Britain needs to make an offer on the divorce bill to move talks on to trade. Despite a ticking clock and a weakened government, strategists are optimistic that the UK will agree to a deal in time, boosting the pound.
Here’s a roundup of analysts’ views ahead of the December meeting:
No mu ra International sees a 60% probability that the EU will allow talks to move on to trade in December.
“The leaked letter is just capturing people’ s attention ,” says currency strategist Jordan Rochester, referring to the Sunday Times story. “My mind will change if 40 MPs become 48,” Mr Rochetser said.
“It still requires Theresa May to do something in the next two weeks but I am assuming she will do just enough to get things moving as it’s not in her interest to slow things down further,” said Commonwealth Bank of Australia.
“The UK has a history of playing this domestic political uncertainty with Brussels and extracting concessions from Brussels,” says Mr Kinsella, senior currency and rates strategist at Commonwealth. He sees an 80% probability of a December deal. The pound is “priced in for the very negative scenarios” meaning it could gain up to 3% if progress is announced in sais Mr Kinsella.
Standard Bank head of currency strategy Steven Barrow sees the likelihood of talks advancing to trade in December as “quite high, 75%”.
“The market clearly seems more worried after the weekend but I don’t think the stories made much difference,” he said.
Mr Barrow sees the pound gaining to $1.32 on a December agreement
Comm erz bank sees the probability of moving talks with the EU on to trade fol- lowing the December summit is “a little below 50%,” said economist Peter Dixon.
“Both sides want to come to an arrangement, but the British are dragging their heels on accepting the extent of their liabilities,” he said.
“Two of the three issues on the EU’s agenda have not been taken sufficiently seriously by the UK.”
For the pound, “the risks are for a much sharper depreciation due to the lingering risk that the negotiations fail,” according to currency strategist Thu Lan Nguyen Mizuho at Commerzbank.
There is a 35% chance of a deal by December, according to head of hedge fund sales Neil Jones at Mizhuo.
The market’s thinking is that Ms May is on the way out, given only another eight votes are required to oust her, said Mr Jones, referring to the newspaper story.
He sees the pound around $1.35 if progress in December, and “$1.28 initially” if there is no agreement.