The UK faces another week of backstop doubts & big decisions

Where are we now?

Every week seems to bring with it a make or break it moment for Prime Minister Theresa May and the future of Brexit. Recently, she admitted that she is now more concerned that Parliament will paralyze the process than she is of a no-deal outcome.

Today marks the fifth day of debates, which will be followed by a vote on the deal, as well as possible amendments. If parliament rejects it, Theresa has three days to propose a new deal — which would then be voted on on January 21.

With the March 29 date looming, every day counts. In acts of desperation, MPs are banding together to come up with alternatives. Three have drafted a bill that would allow the Liaison Committee the chance to draft a deal should May fail.

On the other hand, non-supporters are proposing legislation that would trigger another referendum — this time asking the public to vote for or against Brexit given the deal they would be getting. In this case, it would be impossible for the UK to respect the March 29 deadline.

Stopped by the backstop?

Ireland remains the deal’s largest sticking point for MPs. Northern Ireland will exit with the rest of the UK, while Ireland will stay in the EU. Though it seems simple, the effect could be detrimental to the island. Everyone agrees that a hard border between the two Irelands should be avoided, but solving that conundrum is proving difficult.

Originally, the backstop, proposed leaving Northern Ireland in the customs EU, EU VAT system & large portions of the single market — allowing the loose border between the Irelands to continue.

Opponents claim that this “solution” only moves the customs border from there to the Irish Sea, putting all of Ireland and the rest of the UK in two different regulatory and customs frameworks.

Last month, both sides backed a draft deal in which Northern Ireland would follow certain aspects of the EU Single Market until the transition period ends in December 2020.

As you may remember, the acceptance of this backstop by May’s team and the EU triggered some high-profile resignations from the British government.

More recently, the EU legally committed that the backstop was only a last resort and would be implemented for the shortest-possible time period only. Today is another big voting day! Stay tuned.

Luxembourg’s response? 

The Luxembourg Ministry of Foreign and European Affairs has promised that it will take steps to ensure that UK citizens can stay in Luxembourg, regardless of the Brexit outcome.

On Bloomberg Markets this past Sunday, Luxembourg Minister of Finance Pierre Gramegna reminded audiences that no matter what, the two sides will continue doing business together. So, it is important that British companies can continue easily setting up subsidiaries within the EU Single Market.

Luxembourg, in particular, is taking steps to ensure that companies affected by Brexit can swiftly find an agreeable home in the Grand Duchy and continue their work uninterrupted.

Gramegna reiterated that Luxembourg has benefited in the short-term, with close to 50 companies relocating — asset managers, banks, etc. To conclude, he reminded audiences of the country’s support of financial technology, digitalization and innovation in general. Any steps taken in terms of taxation and regulation aim to preserve and feed those areas.

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