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Looking Ahead (7 May)


w/c Monday, 6 May – Cross-party Brexit negotiations to enter make or break phase, as local elections up pressure on two main parties


As we noted in our 2 May report, the focus of the UK government is on ensuring that a Brexit deal is passed by 30 June. While this would not save the Conservative Party the humiliation of needing to contest the European Elections, it would at least render the process moot, as 30 June is the last possible date before new MEPs take their seats.


Given the likelihood of an extensive parliamentary back and forth over the bill, around 7 weeks will be required if it is realistically to be in place by 30 June. This means that there is a ‘soft deadline’ for its introduction of Friday 10 May. For this deadline to be met, talks between the Labour Party and the Conservatives – which have achieved little in the weeks since they began – will need to quickly arrive at a conclusion – most likely on some form of Customs Arrangement.


Both parties, but particularly Labour, will have been given pause for thought by the results of the 2 May local elections in England. While the Conservative Party suffered its anticipated losses of more than 1000 seats, it was the Liberal Democrats, independents, and Greens who benefited. Labour, who had been expected to make seat gains in the triple figures, performed adequately in some areas but recorded a net loss of tens of sets cross the country. A BBC extrapolation of the results into national level support puts the Conservatives and Labour at 28% each, with the Liberal Democrats surging to 19%, and ‘others’ on 25%.


The temptation for Labour will be, though, to try and lance the Brexit boil now by taking a deal with the Conservatives that they can present as a win for their positions on workers rights and customs. It is unclear – however – if Theresa May and the Conservatives will be willing to make sufficient concessions, with the Labour leadership concerned that the Prime Minister will offer conditions that are too ill defined.


The parties are only likely to publicly commit to a deal if they think that it can get through the House of Commons. If a deal is not reached this week, or almost reached, then the cross party talks approach to Brexit is likely to break down.


w/c Monday 6 May – EU-US trade negotiators sit down in Washington


EU-US officials will meet in Washington this week to prepare the ground for a meeting between EU Trade Commissioner Cecilia Malmström and U.S. Trade Representative Robert Lighthizer which is expected to take place at an OECD meeting in Paris on 22-23 May.


The EU has adopted uncontroversial negotiating mandates on industrial goods and non-tariff barriers. However, the French government voted against opening negotiations, while Belgium abstained. This serves to demonstrate how difficult it will be for Europe to agree to have agricultural products included in trade talks.


The EU’s hope is that car tariffs can be avoided through a commitment to negotiate a new trade dispensation with the EU. Without a concession on agriculture from the European side and considering that EU Member States cannot even agree on the appropriateness of the negotiations, we see a heightened risk of Trump either imposing car tariffs, or imposing them with conditionality. Trump has until 18 May to decide.


w/c Monday, 6 May – Sanchez to sit down with opposition leaders, but no movement on coalition options likely soon


Pedro Sanchez will this week meet individually with the leaders of the three major Spanish opposition parties – the centre-right PP, the centrist Liberal Ciudadanos, and the left wing Podemos – to discuss the Spanish general election results and the likely way forward for the governance of the country.


A period of re-ordering can therefore be expected, and no coalition arrangement is likely to emerge soon. The newly elected Cortes General does not need to meet until 21 May and, the weekend following that local, regional and European level elections will all be held. No party, but particularly the PSOE, is likely to want to commit to a governing arrangement before those elections. The compromises that may be asked of Sanchez, including dealing with Catalan separatists, could serve to undermine the PSOE vote if they take place before the late May elections.

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