Week Ahead (6 March)
Monday, 6 March – House of Lords to continue debate on Retained EU Bill, following EU-UK agreement on Northern Ireland
Today, the House of Lords will continue its debate on the Retained EU (Revocation and Reform) Bill. The Bill is expected to end the special status of Retained EU Law in the UK, in particular those laws that were kept in place at the time of Brexit, enabling the UK government to amend, repeal, or replace them more quickly and easily.
The debate will take place only a week after the EU-UK agreement on Northern Ireland, unveiled last Monday. The deal, also known as ‘’Windsor Framework’’, fundamentally changes how the protocol and its post-Brexit trade rules for Northern Ireland works Overall, it aims to strike a balance between flexibility for the movement of goods for end use in Northern Ireland and effective safeguards guaranteeing the protection of the EU’s single market, by drawing a clear distinction between goods at risk and goods not at risk of entering the EU’s Single Market. It eases customs red tape, by creating a new green lane for traders, and equalises some tax rules across the UK, and hands Stormont more of a say over the agreement’s future.
The deal was welcomed by the main UK opposition parties, however, one of Prime Minister Sunak’s main concerns was securing the support of the European Research Group (ERG), who have indicated that they will take their line from the DUP. DUP leader Jeffrey Donaldson has indicated that his party will study the text closely before deciding whether to back it, consulting its legal team. It remains uncertain whether the DUP will support this deal since it does not pass all of the DUP’s “7 tests”.
Meanwhile, today the British-Irish Parliamentary Assembly will hold an extraordinary plenary ahead of the 25th anniversary of the signing of the Good Friday Agreement (GFA) in Belfast. British and Irish lawmakers.
Wednesday, 8 March – Commission President von der Leyen to travel to discuss the U.S green subsidies plan with President Biden
On Wednesday, European Commission’s President von der Leyen will visit the U.S, as part of her broader North America trip this week. Von der Leyen is expected to hold talks with U.S President Joe Biden about the U.S Inflation Reduction Act of 2022 (IRA), a protectionist €360 billion scheme adopted last year, including a mix of tax credits and subsidies. Although Washington suggests that these subsidies are essential to kickstart its green economy, in Brussels, they are largely viewed as discriminatory, unfairly protectionist, and a threat to European industry.
In their meeting, the Commission’s President is expected to push for a high-level bilateral agreement to allow its electric vehicles to be eligible for most of the tax exemptions and subsidies under the IRA, in order to prevent EU companies from uprooting their production. Under the current eligibility requirements, electric vehicles must be assembled in North America in order to be eligible for these tax credits. Thus, Canada and Mexico are eligible for these tax credits due to their free-trade agreement with the U.S. In other words, the EU’s goal will be to secure concessions equivalent to the status of an American trade partner.
Last month, the EU unveiled its own response to the U.S IRA, with the introduction of the Commission’s Green Industrial Plan
Friday, 10 March – UK Office of National Statistics to release GDP monthly estimate for January
On Friday, the Office of National Statistics (ONS) will release its GDP monthly estimate for January, indicating whether the UK economy will contract for a second consecutive month. Last month’s release for December demonstrated a contraction of 0.5%, following an unrevised growth of 0.1% in November. Economists suggest that this is largely due to disruption caused by widespread industrial action and strikes in December.
The UK narrowly avoided a technical recession in Q4 2022, following a contraction of 0.2% in Q3 2023. Nevertheless, the UK is the only G7 country yet to fully recover its lost output during the pandemic, with its level of GDP in Q4 2022 being 0.8% below its pre-Covid level at the end of 2019. Furthermore, the economy is expected to shrink in the first half of 2023, according to both forecasts of the Bank of England (BoE) and the Office for Budget Responsibility.
Despite growing fears of a recession, the BoE announced last month its tenth consecutive rate hike, by raising interest rates by 50 basis points to 4% in an attempt to curb inflation which is still nearly five times higher than the bank’s declared target rate of 2%.