EU Fears Brexit Delay, Uncertainty After Shock UK Vote
EDITOR'S CHOICE | 10.06.2017

EU Fears Brexit Delay, Uncertainty After Shock UK Vote

Result means Teresa May can no longer command a majority in parliament – which is likely to alter Britain's negotiating position in talks with Brussels

Alastair MACDONALD

European Union leaders fear British Prime Minister Theresa May’s shock loss of her majority in the snap election she called will delay Brexit talks due to start this month and raise the risk of negotiations failing.

Guenther Oettinger, Germany’s European Commissioner, said it was unclear negotiations could be launched on Monday, June 19, as planned. The talks, which the EU hopes will deliver a legally smooth British departure, or ‘Brexit’, in March 2019, are likely to be more uncertain without a strong British negotiating partner, he added.

Another EU official in Brussels said it was too early to speculate on how the bloc would react to a change in Britain’s demands for its withdrawal.
 
“Let’s see if the next government changes its position on Brexit,” the official said as results confirmed May could no longer command a majority in parliament.

May faced calls to quit on Friday after her election gamble to win a stronger mandate backfired, leaving no single party with a clear claim to power. Readers can view a graphic on the poll here.

Having campaigned against Brexit last year May took over the Conservative party after David Cameron lost last June’s Brexit referendum and delivered her terms for withdrawal in March.

These include a clean break from the EU’s single market and customs union. May then called a snap election hoping for a bigger majority to strengthen her hand in negotiations.

That was also the broadly desired outcome in Brussels, where leaders believed a stronger May would be better able to cut compromise deals with the EU and resist pressure from hardline pro-Brexit factions in her party which have called for Britain to reject EU terms and walk out without a deal if UK demands are not met.

European leaders have largely given up entertaining the possibility that Britain might change its mind and ask to stay. Most now appear to prefer that the bloc’s second-biggest economy leave smoothly and quickly. To halt the Brexit process now would require the consent of all the other member states.

Fear of collapse

The other 27 governments are particularly concerned that a breakdown in negotiations could lead to Britain ceasing to be a member on March 30, 2019, without having negotiated the kind divorce terms that would avoid a chaotic legal limbo for people and businesses. That would also make it improbable that Britain could secure the rapid free trade agreement it wants with the EU after it leaves.

In a note to clients, UBS wrote that the relative strength of hardline pro-Brexit groups in a weak Conservative government could make a breakdown in talks more likely and make it harder to reach a trade deal: “A tighter political balance could make it easier for Eurosceptics … to prevent the government from offering the compromises needed to secure a trade deal.

“The prospect of another election raises the risk of a delay, potentially leaving the UK without a negotiated exit settlement.”

Talk in Britain that a different ruling coalition could seek a “softer” Brexit than May has proposed, possibly one that see Britain remain in the single market, is also problematic for the EU.

While the 27 would might be willing to extend to Britain the same kind of access to EU markets that is offered to Norway and Switzerland, they have made it clear that would mean Britain continuing to pay into the EU budget and obeying EU rules, including on free migration across the bloc, while no longer having any say in how the Union’s policies are set.

EU leaders question how any British government could persuade voters to accept such an outcome and so would be wary of starting down the path of negotiating on it for fear of ending up without a deal that both sides are able to ratify.

Pound pummeled

The pound fell sharply on Friday after it became clear the Conservatives had lost their parliamentary majority.

Sterling was down 1.6 percent at US$1.2761 after sliding to as low as US$1.2693, down about 2% and the weakest since April 18. However reactions in other major currencies such as the dollar, euro and yen were limited.

atimes.com

Tags: European Union  UK 

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