UK Transport and Brexit News & Views No. 27

Mark’s Week
As we speak, the Brexit negotiations have finally begun. It is already possible to draw some general conclusions and more specific ones for the transport sector. The UK’s weakened hand, as a result of the inconclusive elections, is resulting in a softening of tone and substance in London. Three important concessions have been made in the past week by the UK Government. First, the demand that the talks start with consideration of citizens’ rights, the UK’s financial liabilities and Northern Ireland has been agreed. Second, the UK’s proposal to hold trade talks in parallel with these discussions has been dropped, at least for now. Third, the proposal by the Commission for a monthly cycle of negotiations, with just four days a month effectively devoted to the talks, the rest for consultation and deliberation, has been accepted, including recognition that the Commission will work in a transparent manner.  In return we have seen some conciliatory moves from the EU27, in particular by German Foreign Minister Sigmar Gabriel who told Sunday’s Welt am Sonntag newspaper that “maybe there is now a chance to achieve a so-called ‘soft Brexit’.”  The Irish Prime Minister is hoping to convince the PM to allow Northern Ireland to remain in the Single Market, when he meets Theresa May today. So what does this mean for transport? Well clearly the EU27 and the European Parliament clearly have the upper hand, but are also, as a result, more prepared to compromise. So we should act swiftly to demonstrate our willingness to be part of that compromise. But from my discussions with them there is still a desperate need for the UK to submit a clear plan for what a post Brexit UK-EU transport relationship would look like. For example, Government and the industry remains split on whether we should argue, as the UK Chancellor and major business groups argued this weekend, for transitional arrangements for customs and other aspects of transport.

1. Article 50 negotiations begin in Brussels
Article 50 negotiations begin in Brussels today following a joint statement issued by the Department for Exiting the European Union and the European Commission.  Amidst growing concern that Britain is running out of time, with 6 weeks lost to the UK election, May is keen to demonstrate progress – even if this means starting negotiations before the Queen’s Speech. May’s struggle to secure a majority in the House of Commons has raised a host of questions about whether she will be forced to change some of her original goals for Brexit. It is not 100% clear what mandate Mr Davis is going in with. Today’s agenda: 11am to 6pm (Brussels time), with a joint press conference at 6.30pm. Mr Barnier will speak English but translation will be provided so that he has the option to speak French.

2. Softer: Hammond, Green & Rudd on manoeuvres to soften Brexit – remaining in Customs Union for a transitional period is now seriously in contention
Britain’s Brexit position is once again in flux. But one thing is clear — it isn’t being dictated by Prime Minister Theresa May. Philip Hammond is preparing to lead a battle within the government to soften Brexit. According to leaked briefings — another sign of the collapse of No. 10’s authority — Hammond was prepared to warn the prime minister of the dangers of a hard Brexit without transitional measures to cushion the blow of leaving the EU single market and customs union. Another leak in today’s papers reveals he has been joined in the fight by Home Secretary Amber Rudd. The new First Secretary of State Damian Green — an arch Remainer and May ally who is now deputy prime minister in all but name — is also on their side. Green has also been appointed to a slimmed-down sub-committee of the cabinet that will decide Brexit, alongside Hammond, Rudd, David Davis and Boris Johnson, in a move that tilts the balance of power toward the soft Brexiteers.

3. Harder: but many argue remaining in the Customs Union is incompatible with Brexit
BrexitCentral argued last week that UK remaining in the customs union would be incompatible with Brexit – since we would not be able to strike our own trade deals around the world, rendering the entire Department for International Trade defunct. Brexit Central highlighted five articles making the case for Britain’s withdrawal: one by Shanker Singham, one by Lord Leigh of Hurley, one by Dan Lewis, one by John Longworth and one by Brian Monteith. This view is supported by many in the Tory Party, including Johnson, Fox and Davis.

4. Britons and business also want May to rethink Brexit. 
Meanwhile Britons want Theresa May to change course away from her plan for a hard Brexit, a poll revealed. Fewer than half of people quizzed think she should continue trying to leave the EU on the negotiating terms she set out before the general election. Business Europe issued an official press release urging for transitional agreements. “BusinessEurope […] urges negotiators on both sides to reach the withdrawal agreement without delay so as to be able to focus as early as feasible on transitional arrangements where appropriate and finally on the future relation.” Five major UK business bodies, including the British Chambers of Commerce have made similar demands.

5. The rail industry sees itself as anchor during stormy times
Rail Delivery Group (RDG) Chairman, Chris Burchell believes the industry will be an “anchor in stormy seas” as the UK prepares to leave the EU. RDG estimate that more than 100, 000 jobs will be created in the next decade.  “As we invest, we will create more long-term, secure jobs, and that means more opportunities, more taxpayers, more national wealth. This is what the railway is offering the next generation of young people thinking about their future.”

6. Aviation industry with ‘most to lose’, time to act is now
Chris Chalk, speaking as a member of the British Aviation Group, offers a comprehensive analysis of the potentially devastating impact of Brexit on both the UK and the European aviation networks. “Now is not the time to sit and watch what happens, but rather be a part of the evolution; working with your governments and trade bodies to maintain stability over political rhetoric.  Will the outcome be a stable transition over the coming years keeping our airports safe, secure, affordable and an increasing pleasure to use?”

7. Aerospace industry calls for status quo in all but name
During its annual assessment of the industry, leaving the EU in 2019 with no Brexit deal will be “chaos, the worst possible outcome” for Britain’s aerospace industry, the trade body Aerospace, Defence, Security & Space warned, threatening that rising regulatory costs incurred due to Brexit would outweigh the cost to relocating jobs. Fabrice Bregier, chief operating officer of Airbus said that the plane make would not have diffulty in setting up new plants else where in the world but told media “My objective is not to find an alternative, it is to continue the win-win partnership that has demonstrated its value.”

8. UKTiE has also put together the latest timetable for Brexit. We will keep this up to date as the process develops: