Morning briefing: Italy won't help Brexit - paying EU's budget - HMRC not ready
Brexiters are cock-a-hoop about the full-blown political crisis in Italy. They think it means the end of the euro and rams home how right the UK was to vote to quit the bloc. Whether or not the Brexiters are right on the first point - and the death of the euro has been falsely predicted many times before, especially during the Greek crisis - they are certainly wrong on the second one.
In watching this unfolding crisis, Brits need to remember one vital fact: the UK is not a member of the euro. When the single currency was set up, we secured an opt-out. Any arguments used against the euro are therefore irrelevant to our membership of the EU, including membership of its single market, trade policy and cooperation in fighting terrorism and standing up to Vladimir Putin.
Italy’s populist leaders are calling for street protests and preparing for new elections after the president rejected their choice of a eurosceptic as economy minister. The president argued that if the populist 5-Star Movement and the far-right League wanted Italy to quit the euro, they should debate it seriously. The two parties didn’t openly call for leaving the single currency during March’s inconclusive elections.
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A technocratic government has now been appointed and the country is likely to head back to the polls as soon as September. Meanwhile, investors have sold Italian bonds and shares.
In the most extreme scenario, the 5-Star Movement/League could win new elections, take Italy out of the euro and provoke a financial crisis that eventually brings the whole single currency tumbling down. This is what hardline Brexiters want.
But would that really be in our interest? Such chaos would damage our economy too, as the euro zone is our most important trading partner. The ensuing maelstrom would also damage us geopolitically, as we struggled to make common cause with our European neighbours on matters of mutual interest.
What’s more, we would be impotent bystanders. If the Italian crisis spins out of control, it would be far better to be at the table helping to manage the fallout and to reinforce those parts of the EU that work well, in particular the single market.
No end to ‘vast contributions’ into EU budget
€3-€5 billion (£2.6-4.4 billion): that’s the figure the UK could pay every year for the “greatest possible access” to EU programmes after Brexit, reports The Times. So much for Theresa May’s insistence that “the days of Britain making vast contributions to the European Union every year will end”. In the latest evidence that the Brexiters’ “Brexit dividend” from halting its budget payments never existed, the 27 other EU countries have agreed UK officials can take part in EU budget negotiations up to 2027.
To put that £4.4 billion into context, that’s more than half our current net contribution to the EU’s budget, according to European Commission’s calculations. But now, of course, we get a say on how that budget is spent - and full access to its single market and all its programmes.
Video of the day
Brexit breakdown between Treasury and Bank
Relations over Brexit between Philip Hammond’s Treasury and the Bank of England are “very, very bad”, according to the FT. The chancellor wants to keep Britain close to the EU rule book to ensure maximum access for City institutions to the European market. The Bank is opposed to any compromise that would leave it as “a rule taker”.
The situation has been exacerbated by the EU’s rejection of the government’s original idea of a “mutual recognition” plan, giving the Bank the autonomy it needs. One Bank official told the FT: “The fear is that the Treasury is going to give it all away.”
If the UK can’t set the rules for its world-leading financial services sector, how is this taking back control?
Tweet of the day
HMRC has lost 2,000 staff since referendum
The government department responsible for customs has lost 2,000 staff since the EU referendum. Getting a new UK customs regime in place before the transition period elapses in 2020 is looking increasingly unlikely. The snag is that the prime minister’s plan to keep us in the customs union for further years of limbo after that has already been rejected by the EU.
Quote of the day
“It is very, very bad. The bank wants to have as much control as possible and doesn’t want to be a rule taker.”
Bank of England official on the rift with Philip Hammond over Brexit plans - via the FT.
More Brexit news…
80 UK tech leaders want an option to remain in the EU (London Loves Business)
Top Brexit comment
Peter Kellner: New polling analysis reveals that a second referendum would swing to Remain (Prospect)
John Neill: We're on the road to Car-mageddon (Mail on Sunday)
Janan Ganesh: The real cost of Brexit is in missed opportunities (FT £)
Video of the day 2
WATCH: Our Future Our Choice (OFOC!) went to Brussels - to see if what the Brexiters said was true. They didn't find many bureaucrats, but they did find some very friendly MEPs and young people.
Today, Tuesday 29 May
|-||Parliament in recess|
|-||OECD: International trade statistics published|
|11:00||Tom Tugendhat MP speech on post-Brexit foreign policy at RUSI think tank|
Today, Wednesday 30 May
|-||Parliament in recess|
|09:30||ONS: Working and workless households (Jan-Mar)|