Last night, James Forsyth of The Spectator magazine got a great scoop - a lengthy response from a Downing Street source to a simple question - how are the Brexit talks going?  It's sensational. 

It's printed in full on the Spectator website.  But we can't resist re-publishing some of the (many) juicy bits here.

Who wrote it?

The style has led to all fingers pointing in the same direction, and Amber Rudd - until a few weeks ago a member of Boris Johnson's cabinet (and Party) - told BBC Radio 4's Today programme that the memo was written by Dominic Cummings, Mr Johnson's key adviser.

Number 10 has not disavowed the memo or its central claim - that the British government expects the talks on the British proposals to change the Irish backstop to end this week:

The negotiations will probably end this week. Varadkar doesn’t want to negotiate. Varadkar was keen on talking before the Benn Act when he thought that the choice would be 'new deal or no deal'. Since the Benn Act passed he has gone very cold and in the last week the official channels and the backchannels have also gone cold.

Varadkar has also gone back on his commitments - he said if we moved on manufactured goods then he would also move but instead he just attacked us publicly. It's clear he wants to gamble on a second referendum and that he’s encouraging Barnier to stick to the line that the UK cannot leave the EU without leaving Northern Ireland behind.

There are quite a few people in Paris and Berlin who would like to discuss our offer but Merkel and Macron won’t push Barnier unless Ireland says it wants to negotiate. Those who think Merkel will help us are deluded.

As things stand, Dublin will do nothing, hoping we offer more, then at the end of this week they may say ‘OK, let’s do a Northern Ireland only backstop with a time limit’, which is what various players have been hinting at, then we’ll say No, and that will probably be the end.

The note makes clear the next step is getting to the UK general election:

If this deal dies in the next few days, then it won't be revived. To marginalise the Brexit Party, we will have to fight the election on the basis of 'no more delays, get Brexit done immediately’.
 
So, if talks go nowhere this week, the next phase will require us to set out our view on the Surrender Act. The Act imposes narrow duties. Our legal advice is clear that we can do all sorts of things to scupper delay which for obvious reasons we aren’t going into details about.

That’s a reference to the Benn-Burt Act, which requires the Prime Minister to seek a delay to Brexit if a deal cannot be secured (or if the Parliament does not vote for a No-Deal Brexit).

With a court case on this already under appeal in Scotland, expect more action in the UK Supreme Court on the duties and obligations of the Prime Minister - even though documents submitted to the court in Edinburgh state the Prime Minster will comply with the law, and request an extension, if that is required.

When they say 'so what is the point of delay?', we will say 'This is not our delay, the government is not asking for a delay - Parliament is sending you a letter and Parliament is asking for a delay but official government policy remains that delay is an atrocious idea that everyone should dismiss. Any delay will in effect be negotiated between you, Parliament, and the courts - we will wash our hands of it, we won’t engage in further talks, we obviously won’t given any undertakings about cooperative behaviour, everything to do with ‘duty of sincere cooperation’ will be in the toilet, we will focus on winning the election on a manifesto of immediately revoking the entire EU legal order without further talks, and then we will leave.

Those who supported delay will face the inevitable consequences of being seen to interfere in domestic politics in a deeply unpopular way by colluding with a Parliament that is as popular as the clap.
 
Those who pushed the Benn Act intended to sabotage a deal and they’ve probably succeeded. So the main effect of it will probably be to help us win an election by uniting the leave vote and then a no deal Brexit. History is full of such ironies and tragedies.

So the talks may end, despite a new technical paper being sent to Brussels this morning.

The question is exactly how do the talks end - with the EU rejecting the British plan outright and refusing more talks, or by parking the issue, saying there are some useful ideas in the British proposal, but there is not enough time to work them out fully before the EU summit next week?  In either case the EU will be trying to put the onus back on the British to ask for an extension of the Article 50 process.

So how will the UK government respond - and bring about its own demise?  Go all out for a hard core Brexit by Halloween, including a confrontation with the political and legal system and face a general election during what is likely to be the worst part of the post no-deal Brexit economic and social impact?

Or begin such a confrontation, and contrive to have a request sent to the EU anyway, and go for an election in which, as the memo author suggests the plan will be to present the Johnson led Conservatives as the party that is going down fighting against a system that is blocking the "will of the people"?.

That latter strategy may already be working. 

Today the Daily Telegraph published an opinion poll by COMRES about who voters would blame if the UK does not leave the EU on 31 October.

 It suggests Boris Johnson is coming out on the right side of a "people versus parliament" argument.  Asked who would they blame if Brexit doesn't happen by Halloween,  Leo Varadkar is blamed by 53% of all voters (but only 37% by those who voted leave in 2016, and 39% of Tory voters). 

Boris Johnson would be blamed by 56% of all voters (75% of Tory voters). But the most blame would attach to the parliament in Westminster - 85% of all voters would blame it, (94% of 2016 leave voters and 95% of Tory voters would blame Parliament).

Remain supporting MPs get blamed by 70% of the general public, the European Commission by 63%.

Although the Taoiseach is not top of the blame list for UK voters, the Spectator memo from Downing street makes clear we can expect some more Leo-lashing in the weeks ahead:

We will make clear privately and publicly that countries which oppose delay will go the front of the queue for future cooperation - cooperation on things both within and outside EU competences. Those who support  delay will go to the bottom of the queue.

No prizes for guessing who the author is referring to.


It's budget day in Ireland, with an emphasis on government readiness to spend to cope with the fallout from Brexit.  But the British government also faces a fiscal challenge from Brexit, particularly a no-deal Brexit.  

The independent economic think-tank - the Institute for Fiscal Studies - estimates the cost of propping up the UK economy in the event of a no-deal Brexit will push government debt to its highest level since the 1960s.

A fiscal stimulus package to offset the worst effects of a no-deal Brexit would cost £100 billion according to the IFS - and would result in net growth of zero!.

The IFS base scenario is that there will be a delay to Brexit - it won’t happen on 31 October. Given that the UK economy is performing poorly anyway (mainly due to lack of investment for the past three years, because of uncertainty), its assumes there will be some fiscal loosening anyway.

"In this scenario, we assume a further fiscal loosening of between 1 and 2% of GDP. There would be a chance of small rate cuts. Growth remains below 1% in 2020 and, while it then picks up, it remains very poor, below 1½% in 2021 and 2022".

The IFS says leaving the EU with a deal would be better for the economy than more delay - because the certainty would probably bring an investment boost and a rise in consumer sentiment.  But it would also need a fiscal stimulus.

"If this were to come with tax cuts and further spending increases together worth 1 to 1.5% of GDP (over and above the loosening at the September 2019 Spending Round), then growth should pick up to (a still poor) 1.5% a year in the short term".

The worst damage would happen under a no-deal Brexit, even a "relatively benign scenario: "We assume this would happen under a Conservative-led government, which would implement further fiscal loosening totalling 2% of GDP. Interest rates are cut to zero alongside £50 billion of quantitative easing. Private consumption and investment growth falls while net trade is also a drag on growth. Overall, the economy does not grow over the next two years, and grows by just 1.1% in 2022, leaving it 2.5% smaller in that year than under our base case".

The IFS thinks revoking Brexit would be the best economic outcome, which could see growth rise to 2% a year. This is most likely to happen under a Labour government - but the cost of implementing Labour's 2017 manifesto - such as the state buying back utilities and transport companies "would offset at least some of the benefits of remaining in the EU".

There is further bad news for business in the Financial Times, which leads with a Treasury report estimating the cost of filling in customs forms for UK companies post Brexit. The Treasury estimates that cost at £15bn a year - which the FT contrasts with Boris Johnson’s assertion that the UK will save £1bn a month by not making EU budget contributions.

The Treasury estimates filling in the paperwork for an average import consignment to the UK will take an hour and 45 minutes, and will cost £28 per consignment if done in house, or £56 per consignment if outsourced to a freight forwarding agent.

These costs are estimated to fall on the 245,000 UK businesses that trade with EU countries and so do not currently have to complete customs forms.  

The FT says the Treasury underestimates the customs cost of Brexit as it does not make any estimates for any impact on services companies - which make up the vast bulk of the UK economy - nor does the estimate look at the cost of preparing for the change to customs that will fall on businesses.

Finally, the UK is publishing a revised tariff list. Its substantially the same as the one published in March, but the notable changes are a cut in the tariff on the import of trucks - saving hauliers some £15,000 on the cost of a new HGV - and an increase in the tariff on imported bioethanol, to protect the UK industry.