This week's Brexit round-up

12 Aug 2018



Inbetween quaffing champagne at Fort de Brégançon with President Macron and a growing row at home over just how Islamophobic the Conservative Party is willing to be, the unending saga of exiting the European Union stumbles on for the beleaguered British Prime Minister, Theresa May. 


As Parliament remains in recess, very little, it appears, is happening in Brexit world. As the clock slowly ticks away, it is increasingly difficult to see how Britain is going to achieve a comprehensive deal in time to have it voted through both the House of Commons and the House of Lords, as well as getting the thumbs-up from the European Parliament by March 2019. 



What did May and Macron achieve?


Mrs. May's meetings with Macron last week seemed a damp squib of an event. Apart from a few memeable photographs and a small dinner-come-press-conference meeting, the public and politicians were offered very little to savour from May's trip to the south of France.


However, to May's credit, this was likely the entire intention of her rendezvous with Macron. What she needs more than anything at this moment is 1) votes in the House of Commons, and 2) allies in Europe. Without presenting anything to the public, she has likely increased her second need whilst neutering the bombastic ideologues on her backbenches from spouting off to the media about the awfulness of her negotiations with the European Union. Failing to report anything to the press also means nothing for Jacob Rees Moog to sneer at.


The full fruits of her summer diplomacy will not be seen, if ever, for several months, and the typically cautious and tight lipped Prime Minister is unlikely to divulge such information anytime soon. But diplomacy over dinner with key influencers in the EU, whilst it may frustrate some due to the lack of transparency, is perhaps May's best shot at getting some forward movement in her Brexit negotiations, without troubling herself too greatly about how her negotiations will play out on the domestic stage. She must remember that you cannot satisfy everyone all the time. 


Her task over summer is to find a deal that can get past Europe and parliament. She may finally be taking the right course of action to achieve at least one of these aims. 



Will there be a People's Vote?


Whilst May conducts her summer diplomacy on the continent, back in Britain problems continue to mount around Brexit. YouGov published a poll showing that, for the first time, the amount of people in favour of a referendum on the final deal is greater than those who oppose it. 


With the margin of difference between the two opposing opinions as narrow as it currently is - 42% in favour of another referendum compared with 40% against - this is hardly groundbreaking data. What it does show, however, is a slow movement towards a second referendum, which could change the direction of travel in the coming months. 


If there is to be any chance of a second referendum - or a people's vote as market researchers have cleverly helped to rename it - then the number in favour would have to reach above 50%, ideally closer to 55-60% if it is to have any traction with the government. 


Whilst I wouldn't stake big money on a referendum on EU membership due to polling data, if May fails to get her deal through the Commons, then a referendum of the populace might be her only option, binding the house by a democratic mandate. This, and only this, would be why the stubborn and obdurate May might seek to go back to the people to vote on anything regarding Europe again. 



Slide of the Pound


What could influence May, instead of the opinions of the voting public, is the market. This week's reaction of the currency market to the increased prospect of a no-deal Brexit, which saw the pound continue to drop against the dollar, sliding down to $1.28, reaching its lowest valuation since August 2017, might just give May pause for thought. 


As a no-deal Brexit scenario is talked up amongst Tory Party figureheads, whilst key economic figures like Mark Carney, governor of the Bank of England, warn of 'big economic consequences' in such circumstances, the markets might be May's best guide to what she has to achieve out of her negotiations. The struggle for her is that any further downward movement in the markets for sterling depletes the EU's need to offer concessions or compromises.



May will now hope that her efforts with Macron reap her reward within the European Union.



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