Brex-o-meter update: Irish border issue softens UK position

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Intriguingly, the UK Government has agreed that in the ‘absence of agreed solutions in a future UK/EU deal, the United Kingdom will maintain ‘full alignment with those rules of the Internal Market and the Customs Union’ insofar as they protect North/South relations’. We see this as a pragmatic softening in position, as it envisages close alignment as a backstop past even a transitional period. The UK’s precise approach to a future relationship has not yet been agreed by Cabinet but may be set out in a speech by the PM in February.

A rebel amendment to the Withdrawal Bill means MPs will be able to send ministers back to the negotiating table if they don’t approve the final deal. The Bill shortly moves to the Lords where it is expected to be amended further. Our Brexit Momentum indicator moves towards a softening also, as the Government’s thin majority means it may have to compromise on future pieces of legislation, especially where Parliament believes the Government is trying use executive powers to side-step it.

An embrace of Single Market Membership by Jeremy Corbyn would be potentially game-changing in the debate. For now, Labour’s position remains pro- and anti-Brexit, and pro- and anti-Single Market membership, with no sense that Mr Corbyn is getting off the fence. 

Discussions now move to Phase 2. The Government is about to enter a six-week long discussion/scrap about what model it is seeking for a future relationship. So expect to see new terms such as 'top down' and 'bottom up' approach and 'opt-in' and 'opt-out' model enter the Brexicon. One of the major discussions will be whether the UK is wedded to an independent trade policy or not - remaining in some form of customs union with the EU would solve a lot of practical issues (including on the Irish border). However, in doing so, the UK also loses the autonomy to strike new deals - a major selling point of Brexit.