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Where the Brexit inner Cabinet is heading

10 February 2018

10:34 AM

10 February 2018

10:34 AM

There have been two meetings of the Brexit inner Cabinet this week. But as I say in The Sun this week, the government is still making its way towards a detailed, negotiating position. Indeed, in one of the meetings this week, Theresa May emphasised that the ministers didn’t need to come to a decision that day.

That may have led to a more constructive conversation. But as Jeremy Heywood delicately pointed out, taking these decisions won’t get easier with time. With the crunch EU council meeting next month, the UK doesn’t have much more time either. The longer the UK waits, the harder it will be to build diplomatic support for its preferred solutions.

The Brexit inner Cabinet remains divided on the best way ahead. Philip Hammond and Boris Johnson are the heavy artillery of the two camps. Neither of them seems inclined to compromise, with Hammond pushing for harmonisation and Boris for divergence from EU rules. One member of the inner Cabinet predicts that ‘Boris and Philip will never be satisfied. Even if it leans their way, they still won’t be happy’.

I understand that the centre of gravity within the inner Cabinet is leading toward the UK accepting high alignment for manufactured goods such as cars. In meetings, Boris has warned that this would mean that the UK would have to accept not only all current EU rules but new ones that the UK would have had no real say over. Boris has complained that this could stifle innovation and would mean that the UK couldn’t take full advantage of the opportunities of Brexit.

But others in the room seem to accept this as a price worth paying to keeps these goods flowing freely and supply chains intact. The UK would stay less aligned for other goods such as food and drink. The UK would then push for full freedom on services, particularly financial services. The priority for the government is for the UK to be free to regulate the new industries of the future–such as artificial intelligence and fintech—in its own way.

This compromise might just be able to make it out of the Cabinet. But it would only be the UK’s opening position in the negotiation. What the UK would be prepared to barter away is a subject that will require a whole another set of Cabinet discussions.

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