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Hard Brexit in doubt as UK voters reject May's strategy

Jun 09 2017 12:30
Simon Kennedy, Bloomberg

London - British voters rejected Prime Minister Theresa May’s vision of a hard Brexit, potentially paving the way for a less abrasive breakup with the European Union.

Seven weeks after she called a snap election to strengthen her hand for the looming divorce talks, May was poised to form a government with the backing of Northern Ireland’s Democratic Unionist Party after the Conservatives fell short of the seats needed to rule alone.

The shock result plunged the country into political chaos and casts a shadow on divorce talks with the EU due to start in 10 days.

READ: May fights for survival after Brexit ballot gamble backfires

European Commission’s chief Brexit negotiator Michel Barnier tweeted that “Brexit negotiations should start when UK is ready” while European Council President Donald Tusk quipped that “we don’t know when Brexit talks start. We know when they must end.” EU President Jean-Claude Juncker also said they were ready to start talking “tomorrow.”

The election threw into question the form of Brexit voters want. While May campaigned to remove the U.K. from the single market so she could regain control of immigration and law-making, she may now struggle to find majority support for that stance in the new House of Commons.

“Hard Brexit went in the rubbish bin tonight,” former Chancellor of the Exchequer George Osborne, who campaigned to stay in the EU, said on ITV.

The views of Northern Ireland’s DUP will have to be taken into account in exchange for their support of May’s government. The DUP wants a “comprehensive free trade and customs agreement,” and a “frictionless border” with the Irish Republic.

The pound slumped amid another bout of British political uncertainty almost a year since the narrow vote to leave the EU.

Any delay in the Brexit talks will reduce the time the UK has to strike an exit deal with German Chancellor Angela Merkel and other EU leaders as the March 2019 departure date nears. A second election this year is also now a possibility, applying a further squeeze and increasing the chance that the split will prove disorderly.

Corbyn’s star

That threat and the rejuvenation of Jeremy Corbyn’s opposition Labour Party will intensify pressure on the next government to do more to preserve access to Britain’s biggest market than May was willing to.

About 44% of British goods and services flow to the EU tariff-free, but that link comes at the price of allowing free movement of EU workers into the country and letting the continent’s courts have a say in British laws.

May balked at both.

“The prime minister called this election because she wanted to force through an extreme version of Brexit,” Labour’s shadow Brexit secretary Keir Starmer said. “It is clear already that she has failed in that endeavour."

Pro-Brexit politicians also sensed a shift. “The clean Brexit that everyone in UKIP hoped for is now in jeopardy,” said Patrick O’Flynn, who represents the U.K. Independence Party in the European Parliament. UKIP’s leader quit after failing to win any seats.

The prime minister will remain under pressure to stand down after calling an early election that ended up squandering a 10 seat majority in Parliament. If she clings on then she will make for a weakened negotiator given that she declared on the campaign that “every vote for the Conservatives will make me stronger” in Brussels.

The Negotiator: What the election tells us about May as Brexit nears

“Could be messy for the United Kingdom in the years ahead,” Carl Bildt, a former Swedish foreign minister, wrote on Twitter. “One mess risks following another. Price to be paid for lack of true leadership.”

May’s failure to secure a sizable majority will still disappoint some in the EU who banked on her winning by enough to prove a stable and familiar counterpart able to make compromises. The EU side has long said it doesn’t matter how Britain voted because it has set its own negotiation position although it may now need to prepare for a different approach.

A hung Parliament also runs the risk of another election midway through the talks, distracting whoever is prime minister and creating more uncertainty. One reason for May holding this week’s election was to delay another ballot until 2022 and provide leeway to cut deals over money and citizens’ rights without the threat of a voter backlash.

The EU is unlikely to extend the March 2019 deadline for fear of Brexit conflicting with regional elections later that year.

Tory dilemma

Another Tory government will still face calls from within to maintain May’s push towards a hard Brexit with about 60 of its lawmakers passionate about the split and unconcerned by the risks of a clean break. Their demands would leave May or her successor with less scope for horse-trading with the EU in return for a trade accord or post-Brexit transitional arrangement.

The election had been expected to effectively ratify the referendum with polls repeatedly showing that those who wanted to leave the EU still do so, and that many who voted to stay in it are now keen to get on with the withdrawal.

An early test of whether the anti-EU or pro-EU wings of the Tories will be in charge will be how the government addresses Europe’s demands to pay a financial settlement before leaving the bloc and how the talks are sequenced.

Mujtaba Rahman, managing director at Eurasia Group, said May could even stage a “a symbolic show of strength to show the EU and domestic doubters that she is still the self-styled “bloody difficult woman” standing up for the UK”

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eu  |  theresa may  |  uk  |  brexit  |  uk elections  |  economy
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