Brexit: May takes her stand

In a speech many had been eagerly awaiting, British Prime Minister Theresa May outlined what her approach would be going forward as regards Great Britain’s pending exit from the European Union. She was expected to deliver a firm plan and negotiating strategy, not more, not less. In fact, May presented 12 points to which the British government will give priority. Special status is accorded to the usual suspects, namely regaining control over legislation and immigration. On security issues, Great Britain wishes to continue to cooperate with the EU, just as it wants to in the fields of science and research. Things get far more complex when it comes to the future trade relations with its European neighbours. May wants to leave the single market with no ifs or buts and will therefore seek a free trade agreement. Moreover, the government will seek to secure a transition phase after the two-year negotiations.

Theresa May not only used the press conference today to set out her point of view on certain issues more clearly. She evidently also wished to counter criticism that she has been lacking in transparency. She therefore said she wanted to provide “security” wherever possible in the course of the talks with the EU. Moreover, both the smaller members of the United Kingdom and Parliament will be included more strongly in the decision-making. Indeed, the results of the negotiations will be put to both Houses of Parliament for them to vote on. Prime Minister May evidently also wanted to spread a sense of confidence. It is not just that she assumes the negotiations with the EU will be concluded successfully. She identifies a “bright future” outside the EU. (In passing she indicated that in her opinion it was above all the lack of flexibility within the European community that has to date obstructed her country’s rosy prospects.)

Sterling responded very positively to May’s statements and gained substantial ground against the Euro. The main reason driving the pound up will no doubt have been less the optimism that May sought to exude, and more the prospect of future close trade links with the European Union and thus precisely no “hard Brexit”.

The problem is that after the press conference we are not really that much better informed than we were last week. Great Britain wants to be independent and yet retain trade with the EU as far as possible. Brussels, by contrast, needs to make certain it does not accommodate the Brits too much in order to keep the other members of the EU in line. What makes things harder is that there is actually not enough time to formulate a free trade agreement between the two regions. Under such conditions, negotiations are bound to be exciting, and over the next few months Sterling is likely to continue to be very volatile in its response as events unfold.

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