Brexit Bulletin: Is the British Government in Chaos?
Prime Minister Theresa May is under international and domestic pressure to bring order to her Brexit strategy following accusations it’s in disarray.
“There’s lots of chaos and we don’t understand what the position is,” Italy’s economic development minister, Carlo Calenda, said in a Bloomberg interview. The British government “needs to sit down, put its cards on the table and negotiate,” he said.
Calenda and Dutch Finance Minister Jeroen Dijsselbloem also accused the U.K. of setting impossible demands by inferring it could control immigration, leave the region’s customs union and yet maintain access to the single market.
British Foreign Secretary Boris Johnson told Czech newspaper Hospodarske Noviny in an interview published yesterday that it’s a “myth” to say the free movement of people is a fundamental right. He suspected that the U.K. would probably leave the customs bloc.
Dijsselbloem told BBC Newsnight that the U.K. is “saying things that are intellectually impossible, politically unavailable” and that Brexit would be a “lose-lose situation.”
Guy Verhofstadt, the European Parliament’s representative on Brexit matters, posted on Twitter that he “can’t wait to negotiate” with Johnson so he can show him the European treaty that forms the basis of how the bloc works.
Meanwhile 48 percent of respondents to an Ipsos Mori poll said the government is handling Brexit badly. The Institute for Government think tank also warned it posed a “existential threat” to some departments and that the process appeared “chaotic and dysfunctional.”
Former government minister Jim O’Neill told Bloomberg Television that he doubted "hardly anyone" within the government was prepared for voters to choose Brexit in June, including those lawmakers who campaigned for it.
“The whole system doesn’t really know what it’s done to itself,” said O’Neill, who stepped down from the Treasury in September.
An Olive Branch?
German Chancellor Angela Merkel offered a possible concession to the British yesterday as she wondered whether freedom of labor movement “is valid” and suggested the EU should revisit a deal previously struck with the U.K. to curb welfare for migrants.
“Freedom of movement is valid to me in the sense that a worker earns money for himself and his family in another country,” she said. “The question of when lifelong guarantees come into effect according to the social standard of the host country must certainly be taken into consideration.”
Merkel’s comments hark back to an agreement among EU leaders in February to grant what then Prime Minister David Cameron called “special status” within the bloc aimed at enabling him to make the case for continued membership.
"This could prove to be a very significant change in tone from Europe's most powerful politician," said Pat McFadden, a Labour Party lawmaker. "If the Government has any sense, it will leap on this opportunity to seek both seek Europe-wide reforms to freedoms of movement and negotiate for Britain's full participation in the Single Market."
Bank of England Governor Mark Carney yesterday urged financial services firms not to make any rash decisions on moving operations, saying “planning makes sense; action, in most cases, in general, is precipitous.”
Still, Sabine Lautenschlaeger, vice chair of the European Central Bank’s supervisory board, said many banks had already been in touch to learn more about operating in the euro area.
“We have already many banks asking for interviews and meetings so that they can identify where are our pressure points and where our methods differ” from U.K. supervisors, Lautenschlaeger said. “For sure we are preparing.”
Carney, who stood by his plan to leave office in 2019, said that politicians blaming central banks for weak economic growth were engaging in a “massive deflection exercise.”
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British politicians are worried the Bank of England’s nine-strong Monetary Policy Committee doesn’t reflect Brexit Britain.
“They’re all very worthy and highly qualified people, but they’re all of a type,” Conservative Party lawmaker Kit Malthouse told Carney yesterday. “There’s nobody there as far as I can tell who has any experience or interaction with small business. I’m not aware that there's anybody there who lives in the North who is interacting. Most of the members seem to come from the banking and financial services sector, there doesn’t seem to be anybody from the manufacturing sector.”
He even ventured to suggest “all of them voted to remain in the European Union.” Labour lawmaker John Mann chipped in to ask for more members from trade unions be added to the committee.
Carney responded by saying “there are quite different views” on his panel, which is for the government to appoint. He said positions on Brexit shouldn’t be assumed and that officials regularly talk to businesses and unions in all regions of the country.