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Brexit Bulletin: No Hard Border

  • Second U.K. position paper to outline plans for Irish frontier
  • British customs plans given lukewarm welcome in Brussels

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You wait months for the British government to publish a single position paper on Brexit and then two come along almost at once.

A day after Prime Minister Theresa May’s team sketched out a vision for future customs arrangements with the European Union, today will see it address the issue of the border between Northern Ireland and the Republic of Ireland.

British and European negotiators need to show “flexibility and imagination” to devise post-Brexit arrangements on the island that preserve free movement of people and goods across the border, the Brexit Department said in an overnight statement. 

“Top of our list is to agree upfront no physical border infrastructure — that would mean a return to the border posts of the past and is completely unacceptable to the U.K.,” the department said.

The 310-mile crossing will form the bloc’s only land border with the U.K. after Brexit and it’s shaping up to be one of the trickiest parts of the talks. While both sides want to avoid obstacles to trade, Britain’s desire to leave the EU’s customs union makes that tough. 

Irish Prime Minister Leo Varadkar has warned that he won’t help the U.K. set up border checks and ordered officials to scale back examining technological solutions to minimize disruption along the frontier. The U.K. will propose remaining a member of the Common Transit Convention to facilitate the movement of goods and new “trusted trader” arrangements that would ease commerce for larger companies. Smaller firms, accounting for more than 80 percent of cross-border trade, would be exempt from customs processes.

Meanwhile, Germany’s election campaign is touching on Brexit. Chancellor Angela Merkel pledged to protect fishermen in the talks, while opponent Martin Schulz said that a proliferation of U.K. position papers could be “not meaningful.”

Brexit Latest

Cabinet SplitThe Sun reports on Wednesday that Foreign Secretary Boris Johnson and Trade Secretary Liam Fox want any post-Brexit transition to run no longer than a year.

EU Urges Patience | EU negotiator Michel Barnier responded to the U.K.’s customs proposals by stressing the need for agreement first on citizens’ rights, a financial settlement and Ireland’s border. Guy Verhofstadt, the European Parliament’s point person on Brexit, was less diplomatic. “To be in & out of the Customs Union & ‘invisible borders’ is a fantasy,” he tweeted.

Red Tape Warning | In making two suggestions for how post-Brexit customs will work, the U.K acknowledged both would likely inflict red tape on businesses. That will come as a surprise to many who backed Brexit hopeful that leaving the EU would rid them of paperwork. 

Political Angst | “Anglo-Saxon political angst” is spurring a shift in investment from U.S. and British equities to Europe, according to a survey of fund managers by Bank of America Merrill Lynch. Money managers of $587 billion polled from Aug. 4 to 10 cut allocations to the two nations to a post-financial crisis low, while boosting positions in European shares.

New Party? | James Chapman, a former chief of staff to Brexit Secretary David Davis, plans to launch a new political party to reverse Brexit. His critiques of May’s team — including his former boss — have raised plenty of eyebrows in Westminster. This morning’s was against Trade Secretary Liam Fox. Separately, former Deputy PM Nick Clegg is to publish a book on how to avoid Brexit. 

On the Markets | A divergence in political outlooks between Britain and France is evident in the stock prices of the largest construction companies, according to Bloomberg Gadfly’s Lionel Laurent. Shares of Eiffage and Vinci are outperforming Balfour Beatty and Kier Group.

And Finally...

British commuters may soon start paying a price for Brexit. Those who travel by rail to work have their fares reset each January depending on how far the retail prices index rose in July. Data out Tuesday showed RPI inflation rising 3.6 percent, the biggest July gain since 2011, after the decision to quit the EU sent the pound sliding.

Commuters pack into Waterloo Station
Photographer: John Stillwell - PA Images/Getty Images

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