UK seeks Brexit benefits as promised ‘freedoms’ fall away

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(Bloomberg) — Rishi Sunak faces another delicate Brexit decision after being asked by senior officials to postpone a planned “bonfire” of legislation that predates Britain’s membership of the European Union.

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Officials’ request for the current 2023 TSTIME to remove some 4,000 EU laws from UK law books by three years is giving headaches to the Prime Minister, who said over the summer the legislation could be withdrawn or revised within 100 days .

If the Prime Minister gives in to the demands of his officials – who say the job simply cannot be done on such short notice – he risks alienating the Brexiteers into ruling Conservatives like Jacob Rees-Mogg, for whom the shredding of the legislation is a question that has reached totem status.

For the Prime Minister, a Brexiteer who has an uneasy relationship with his party’s Leave-voting right-wing, the argument that most Tories are unwilling to concede may weigh more heavily: that the discernible benefits of Brexit seem hard to come by.

Data this week shows immigration has hit a record high in the first year of Britain’s post-Brexit regime, despite referendum promises that EU separation would allow Britain to take back control of its borders and reduce numbers. The US trade deal once touted by former Prime Minister Boris Johnson as a major prize of Brexit is nowhere in sight, and Sunak didn’t even bother to bring it up during a meeting with President Joe Biden at the G-20 last week summit in Indonesia.

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And Britain continues to disagree with the EU over the implementation of the deal negotiated by Johnson because of the additional burdens it places on trade between Northern Ireland and the rest of the UK.

With Brexit resulting in an increase in bureaucracy for companies trading with the bloc, the Sunday Times reported that the government was seeking closer trade ties with the EU, similar to the bloc’s relationship with Switzerland.

Both Sunak and Treasury Secretary Jeremy Hunt had to deny that, despite several senior government officials confirming to Bloomberg that Hunt had spoken in that direction privately.

There is little chance of the UK government renegotiating Johnson’s Brexit deal before the next election two years from now as it remains such a politically toxic issue. Rejoining the EU is out of the question in the near future, and even a Switzerland-style relationship crosses several red lines for the Brexiteers, including contributions to the EU budget, the need to follow some of its rules, and acceptance of free movement of workers.

Migration wave

The evidence in recent days casts doubt on whether Sunak’s government truly believes it can secure some of the alleged “freedoms” Brexiteers said would be possible by leaving the EU.

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Migration is an example of this. As Home Secretary Suella Braverman speaks out against people crossing the English Channel in small boats, the country’s new border controls pushed net migration in the year to June to reach 504,000, the highest figure on record, according to data from the Office for National Statistics on Thursday.

Sunak spokesman Max Blain stressed that the prime minister is “fully committed to reducing the overall numbers”, although given the current labor shortage, it is unclear how and when the government intends to do so.

Controlling migration was one of the key factors behind the Brexit vote, but Blain said the UK still doesn’t “really control” its borders as illegal migration across the English Channel continues, comments suggesting the promise of the Leave campaign has failed six years after the referendum.

The Brexiteer vision of a UK with low taxes and a deregulated City of London has also been challenged by the Sunak government.

Financial services

On Wednesday, the Ministry of Finance scrapped a plan to give politicians powers of intervention at financial regulators. The plan to add so-called “call-in” powers to legislation on Britain’s post-Brexit framework for banks, insurers and asset managers had sparked controversy.

Proponents argued that it would give British lawmakers more democratic oversight of regulators now that the UK has left the EU. But critics, including the bosses of prudential and consumer regulators, said it threatened to undermine their independence and damage the UK’s reputation.

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Hunt also said he asked the Treasury to see how much money the government could raise by taxing wealthy foreigners who enjoy so-called non-dom status.

Meanwhile, the EU continued to chisel away the superiority of UK financial markets by requiring derivatives traders to use accounts at clearinghouses in the bloc for some transactions. The proposed shake-up – first reported by the TSTIME – aims to reduce the EU’s dependence on the UK financial services industry post-Brexit. The requirements would apply to derivatives, which may include credit swaps and futures.

Asked about the benefits of Brexit this week, government spokesmen have responded by stating that the UK has the potential to innovate in areas such as gene editing and life sciences.

Speaking in the House of Commons on Thursday, veteran Brexiteer and Conservative backbencher Peter Bone emphasized that he was pleased that free movement of people had ended and that the UK had sovereignty over its own laws. He called for a debate in the House of Representatives entitled: “Brexit: a resounding success. No way back.”

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