Brexit reality is starting to bite

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ARCH is likely to see at least four key Brexit battles, whose outcome will frame the next two years of negotiations as Britain and the remaining 27 EU members wrangle over their future relationship. Here’s the rundown: The House of Lords

British Prime Minister Theresa May would undoubtedly prefer Brexit to be underway by March 25, when the remaining members of the bloc will celebrate the 60th anniversary of the Treaty of Rome, which started the process of European integration. Dissident lawmakers in the House of Lords, however, are working to attach amendments to the current withdrawal bill and that could drag on for long enough to threaten the timetable.

Michael Heseltine, a former deputy prime minister for the Conservative Party, wants an amendment that demands parliament gets a final vote on whatever deal is reached during the negotiations. Here’s what Mr Heseltine had to say about the UK government’s authority to quit the EU that derives from the June referendum:

“Should that authority have any time limit or be in any way influenced by the outcome of the unpredictable negotiations? Both questions demand an affirmative answer for me.”

While the House of Commons has the ultimate authority, the House of Lords, where Mr Heseltine now sits, can certainly cause enough mischief to delay the process as it debates the bill this week.

Last night, for example, Mrs May’s government was defeated after the House of Lords said ministers must guarantee the right of EU nationals to remain in Britain after Brexit.

However, MPs will be able to reverse the Lords’ changes when the bill returns to the House of Commons.

But, who knows, members of parliament might decide they quite like the amendments proposed by

their unelected peers, even though they passed the bill unadorned in its first passage through their chamber. With former prime ministers John Major and Tony Blair both making recent speeches calling for those opposed to Brexit to make their objections known, there’s a slim chance that MPs could be emboldened. Access For Financial Services

Earlier this year, the UK banking community gave up on the idea of retaining the so-called passporting regime that allows 5,500 financial firms based in the UK to sell services across the bloc. Instead, its hopes lie with an inferior arrangement called equivalence, designed to allow countries whose laws and regulatory authorities are deemed sufficiently robust to trade financial services with EU members.

But equivalence is a poor cousin of passporting; the rules were not designed to cope with a huge financial centre operating on the EU’s doorstep, and would need to be revised to cope with the new reality.

And politics is likely to play a big role in limiting how much latitude the EU gives to the UK financial sector. The ‘Financial Times’ said it had obtained an EU document proposing to tighten up the equivalence rules, including “continuous follow-up monitoring” of the regime, “on-site” inspections of firms including “effective access” to their data and the right to withdraw the status in the event of “contrary developments”.

Paris, Luxembourg, Germany and Dublin are actively bidding to take business away from London. Once Mrs May triggers Article 50, moves to circumscribe the boundaries of trading and settlement of eurodenominated securities so that they only happen inside the eurozone will rapidly accelerate. Those banks that have been debating leaving the UK are likely to start implementing their relocation plans. If that happens, the impact won’t just be felt in the city itself; about twothirds of the country’s 2.2 million finance workers are located outside of the capital, and more than half of the £176bn (€205.2bn) that the industry contributes to the economy comes from outside London. Scottish Independence Bid

It’s not just in the corridors of Brussels that Mrs May faces political fights.

At home, she’s bracing for Scotland’s First Minister, Nicola Sturgeon, to call a second referendum on independence. That call would coincide with the formal notification of leaving the EU, according to reports. While most polls have shown Scots still opposed to leaving, by the same 45-to-55pc margin that prevailed in the 2014 plebiscite, a BMG survey for the Scottish ‘Herald’ newspaper published on February 8 showed that margin narrowing; with just 51pc in favour of staying within the UK and 49pc wanting to leave. The fact that 62pc of Scotland voted to remain in the EU gives Ms Sturgeon ammunition.

A referendum on Scottish independence, though, is in Mrs May’s gift rather than being Mrs Sturgeon’s right; the prime minister’s reluctance to accede to a plebiscite risks sparking a domestic political fight. The Cost Of Exiting

Last week, Austrian Chancellor Christian Kern became the first EU leader to publicly identify how big the bill will be for leaving the bloc. “The cheque should be around €60bn, that’s what the European Commission has calculated and this will be part of the negotiations,” Mr Kern said in a TV interview. The cost includes past and existing pledges to the EU budget and projects, as well as pension obligations to civil servants.

UK Trade Secretary Liam Fox has dismissed the charge as “absurd”.

Nevertheless, Michel Barnier, the EU’s chief Brexit negotiator, is likely to present Mrs May with that bill as the first order of business once she’s formally notified the bloc. Mr Barnier can try to hold discussions over the rest of the Brexit agenda hostage to Britain agreeing to settle its exit bill.

So far, Brexit has been more a mantra, and a symbol of a movement, than a reality. That’s about to change.