Brexit: A Poisoned Chalice

September 24, 2018

On Friday 21st September the Prime Minister, Theresa May, gave a short statement as an update on the negotiations between the UK and the European Union (EU) regarding Brexit. The statement itself has caused frustration amongst the general public, regardless of whether they voted to remain in or leave the EU. The speech ran for a mere 7 minutes and made for painful viewing as the PM failed to give any insight beyond abstract or vague points. The PM has essentially hinted that the UK ought to be preparing for a “no deal” situation

 

 

Mrs May indicated in her statement that the EU and UK are at an impasse.  However, none of the sticking points that the PM outlined are new. The issues were known from the very start of the fallout from the referendum and were entirely predictable. It appears that Mrs May will not be overturning the referendum on the basis that she “would not want to break up the country.” Whilst one can feel some sympathy for the colossal task that the PM currently faces, there is a certain level of irony about such a statement as Brexit is already fundamentally divisive. It has been proven that members of the leave campaign knowingly made factually incorrect statements. One such example is the infamous promise of pumping £350 million into the NHS, as opposed to contributing to the EU. However, Nigel Farage (as per The Independent) has backtracked on this promise and the head of the UK Statistics Authority, Sir David Norgrove, has indicated that the figure was a complete misuse of official statistics. This was followed by a damning result that proved electoral law had been breached by the leave campaign. This information, despite transpiring after the result, also runs the risk of breaking up and dividing the country. 

 

The PM did explain the two options given by the EU. The first was an agreement between the UK and EU. This would be similar to the relationship that the EU has with Norway. The deal would see the UK enter into a similar trade deal whereby we would be a member of the European Economic Area (EEA). Mrs May dismissed this option on the basis that it would make a “mockery” of the referendum result. The basis of this argument is that the UK would still be required to comply with EU law, arguably the main reason many voted to leave the EU. The alternative from the EU was to essentially create a border in the Irish Sea; this would see Northern Ireland remain in the customs union. This option was published by the EU earlier this year and suggests that Northern Ireland would stay aligned with the EU in key areas. The PM considered this unacceptable, as it would split Northern Ireland from the rest of the UK, and the proposal has been unanimously rejected by the UK Parliament. 

 

The statement earlier this week was Mrs May’s attempt to provide an update on how the government are planning to proceed with negotiations. The EU also responded this week to Mrs May’s proposed Chequers Deal (summarised here). The proposal was shot down by the EU via a statement given by Donald Tusk (the President of the European Council). The reason for the rejection is that it would "undermine the single market". One can sympathise with the views from Mr Tusk and the need for the EU to protect its single market. On top of this, Mr Tusk appears to have suggested that the UK cannot simply “cherry pick” its obligations from within the EU rulebook. There has also been opposition to this proposal by members of the Conservative party. Further, the proposal recently received an icy reception at an EU summit in Austria.

 

Within her statement, the PM stated that the EU ought to have “respect” for the UK in the Brexit negotiations. It would appear that May and her supporters are not happy that the EU have rejected the PM’s proposal and provided no alternative or counter-proposal at this "late stage of negotiations.” Two things are clear in this instance. Firstly, the two sides are nowhere near any form of agreement on the post-Brexit economic relationship. Secondly, it suggests that the EU, as predicted, holds all of the power in the negotiations. This puts the UK in a difficult position, particularly as it has been conceded by Brexit Secretary Dominic Raab that there are no "credible alternative" on the table from the EU. To further complicate the matter, it is unclear whether the PM does have the ability to rescind Article 50 should she change her opinion on whether to continue with the UK’s withdrawal from the EU. The Court of Justice of the European Union (CJEU) will be ruling on the matter under the expedited procedure. This is because the UK is set to leave the EU on 29th March 2019.

 

During Theresa May’s speech the Pound reached new session lows, indicating just how poisonous of a subject Brexit is. In addition, her statement that “no deal is better than a bad deal” is concerning news. Further, May did not indicate what exactly she means by a “bad deal”. Whilst the reactions of the global market is purely speculative at this moment in time, the UK could suffer substantial losses if Brexit were to be completed without a deal in place.  

 

Whether the parties are able to come to an agreement remains to be seen. The recent turn of events would suggest a “no deal” situation is the most likely outcome. If this were to be the case, the consequences for the UK would be dire. The repercussions would be felt in many industries and also the political sphere. 

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