“Brexit means Brexit”

The quote “Brexit means Brexit” is attributable to the UK Prime Minister, Theresa May, and was made at a time when there were hopes amongst the ‘remain camp’ that the results of the historic referendum, to leave the European Union (EU), could be challenged, amended, or even overturned.

It was intended to show that, regardless of her personal views on the subject (for the record, she was very much a ‘remainer’), the result of the referendum was a clear majority vote, dubbed “the will of the people”, which mandated that the UK was to leave the EU.

Since that time, the ongoing debate around Brexit has shown that there are still many facets to this divisive issue. There are those disgruntled ‘remainers’ who, even today, cling to the hope that there will be some form of about turn; while other ‘remainers’ have decided to accept the reality of the situation and engage in making the process as favourable as can be for the UK. For the Brexit supporters, much of the rhetoric has vanished – where is that “£50m per day to the EU” bus now?

Unlike the general pragmatism of the two camps within the UK, who now wish to get on with discussing matters, the European politicians and technocrats still seem to be mired in the dogma and rhetoric of making sure that the UK is seen to be punished for daring to wave goodbye, as a warning to other EU members maybe?

Just this week we saw the EU raise the bar, claiming that part of the “divorce settlement” cost for the UK will be £100bn, further promulgating the view that all of the remaining 27 EU nations are united in the view that the UK will be made to pay financially, politically and economically.
The reality is that the European project is under enormous pressure to reform from within. Much of that same reform, previously demanded by David Cameron, was initially refused ahead of the decision to hold a UK referendum in the first place.

Both remaining candidates in the French elections, due to be concluded on 7th May, want to see significant European reform on immigration, and Le Pen wants to go one step further and pursue a Frexit referendum if elected.
Angela Merkel is facing a backlash from the German electorate over similar issues, and the unrest in Italian politics suggests that their EU membership is under scrutiny too.

In light of political turmoil throughout the EU, the UK Prime Minister’s decision to call a snap general election in June looks like a smart move right now. The Labour Party, the official opposition party, is seemingly in disarray; the Scottish Nationalist Party were forced to postpone their “once twice in a generation three years” independence referendum demands and there looks to be a reasonable chance that the Tory party’s slim 17-seat parliamentary majority will be significantly increased.

This will go towards answering the critics who claim that the UK Prime Minister has no mandate (given her ascension to the position came about as a result of the former Prime Minister resigning) and strengthens her position of authority, to negotiate the terms of Brexit – as a self-styled “bloody difficult woman” – on behalf of the UK.

It also means that, barring some other seismic political event, the next UK General Election will be in 2022 (instead of 2020), when not only will the terms of Brexit have been hammered out, they will have had three years, post-implementation, to settle down.

In summary, whilst the mood of the UK people has generally moved towards acceptance that Brexit is going to happen, albeit, with much-heated debate about the details, the politicians are still drawing their battle lines. Assuming that Theresa May prevails in the General Election, her position for the upcoming negotiations looks assured, whilst the European political machine looks to be fighting a campaign on a number of fronts.

The present reality is that we still do not fully understand what Brexit will mean for the UK and, in all likelihood, neither will we begin to know until well after the two-year negotiation period has passed, and the UK is in a post-EU world.

 

Alan Blythe is managing director of MitonOptimal Portfolio Management (IOM) Limited

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