British prime minister Theresa May is heading to Brussels this week for the European Council Summit meeting but she shouldn’t expect a warm welcome.
The remaining European Union 27 countries have hardened the language of a proposed Brexit resolution, suggesting that May’s much anticipated talks on a future EU-UK trading relationship will not begin until March.
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The change in language, seen by the Financial Times, comes after the UK Brexit secretary David Davis said over the weekend that the first phase Brexit deal with the EU — which includes the so-called divorce bill, the issue of the Irish border, and citizen’s rights — was “more a statement of intent than a legally enforceable thing”.
It’s thought the EU now wants the agreement struck by May last week must be turned into a legally binding treaty if the UK wants to progress to trade talks.
A draft of the Thursday and Friday summit’s conclusions reported by The Times said:
Negotiations in the second phase can only progress as long as all commitments undertaken during the first phase are respected in full and translated faithfully in legal terms as quickly as possible.
The latest developments will take the wind out of May’s sails as she heads to Brussels after yesterday telling UK lawmakers the agreement to move on to the next phase of Brexit talks should reassure those who feared the UK would get “bogged down” in endless negotiations or “crash out” without a deal.
May is meanwhile facing challenges from the US, with an influential US think tank warning that almost all possible trading relationships between the EU and the UK after Brexit would be less favourable for the British economy than if it were to stay in the trading bloc.
The Rand Corporation — which is partially funded by the US government — said the worst option would be a so-called no deal scenario which would leave the UK economy 4.9 percent poorer by 2029.
The WTO outcome would likely move the UK further from EU standards and over time significantly increase non-tariff barriers, harming the ability of UK businesses to sell goods and services to EU countries. The services sector, which includes financial and banking, is particularly important as it dominates the UK economy, contributing to around 80 percent of GDP. The EU would also lose out under the WTO scenario, but the effect is relatively minor—a 0.7 percent drop in GDP 10 years after Brexit.
Charles Ries, vice president at Rand and lead author of the report, said:
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The analysis clearly shows that the UK will be economically worse-off outside of the EU under most trade scenarios. The key question for the UK is how much worse-off. It is in the best interests of the UK, and to a lesser extent the EU, to achieve some sort of open trading and investment relationship post-Brexit.
Causing further problems for May, the US ambassador to the UK today said he expects US president Donald Trump to go ahead with a working visit to the UK in the new year, despite a recent Twitter row with May over the terror threat posed by Muslims in the UK.
US ambassador Woody Johnson told the BBC’s Today programme Trump is expected to visit in early 2018, when he may formally open the new US embassy on London’s South Bank.
A formal state visit by Trump — which would include a meeting with the Queen and it’s thought what Trump wants — is still thought to be unlikely, partly because the Queen will busy with preparations for a Commonwealth summit next year.