No Brexit anniversary party
As we mark the first anniversary of the Brexit vote in the UK, we weigh up the cost of Theresa May’s ill-fated ‘vanity’ strategy to call a snap general election in June. This instantly weakened the Tory base, wiping out its working majority and left May’s premiership in tatters. Brexit factions within her government are already emerging and Britain has been left in a parlous Brexit negotiation position.
Election post-mortem
May scored a massive own-goal with her decision to call an election – single-handedly hemorrhaging a sizeable Conservative majority and galvanising Labour’s electoral campaign, providing real hope to Labour’s long-term aspirations, as it ratcheted up 40% of the vote. Limping on for the time being with a weakened minority government, May can only discharge a caretaker function while her party regroups and plans succession quietly – or not – on the sidelines (the Conservatives have always brutally drawn rank when required).
It’s early days for the new administration, now propped up by a deal with the Democratic Unionist Party (DUP) to bridge the nine-seat shortfall in the house. It’s come at a high price. The deal – or bribe – struck is worth some £1bn in infrastructure, health and education spend to Northern Ireland and has left both Scotland and Wales seething. Scotland’s first minister Nicola Sturgeon described it as “the worse kind of pork barrel politics” and Wales first minister Carywn Jones called it “a straight bung”. It has caused much disquiet among Tory rank too.
By all accounts, May was persuaded to stay. Supposedly, it’s the start of another five-year fixed term government. But, as former business secretary and now standing to replace Tim Farron as Liberal Democrat leader at the ripe old age of 74, Sir Vince Cable intimated, right now “five years is almost geological”. It seems clear, that this government will have a short reign. The question is how long can a general election be deferred. Can the Conservatives hold out until next year? The parallels with the demise of Edward Heath’s Conservative government in 1974 after a second successive swift election when Labour gained power are only to plain to see.
The Queen’s Speech
As the thermometer rose steadily on court to over 40c at Queens Club last week, the Queen’s Speech was delivered in Parliament, where the focus was on eight – of the announced 24 – bills that will deliver the raft of measures required to take us out of Europe. These were the Repeal Bill, Customs Bill, Trade Bill, Immigration Bill, Agriculture Bill, Fisheries Bill, International Sanctions Bill and Nuclear Safeguards Bill.
Duty briskly done, the Queen left promptly – no doubt with some relief! – to host a lunch before departing for Ascot where the temperate was also sizzling. Back in Parliament, only temperaments were simmering, with the raw disappointment among the Tory rank still plain to see. Labour, of course, had a field day ridiculing the backtracking on Theresa May’s flawed manifesto promises – delighted, in equal turn, that the infamous social care bill was removed and no action was to be taken on the triple lock on pensions.
“United Kingdom, nil points!”
There is understandable trepidation on Brexit. What an inauspicious start for Britain’s Brexit negotiations with our EU partners where the response is emphatically ‘no, non, nein..’ in every language to the UK’s opening gambit. Britain has lost its support among its former allies.
Brexit will be effected by 29 March 2019, two years to the date of triggering Article 50. Is this sufficient breathing space? There has been much talk of avoiding ‘hard’ Brexit and a ‘cliff-edge’ and speculation that the now weakened May would be forced into a ‘softer’ approach. However, there is no easy or smooth transitional path here. Whatever limited credibility May had in Europe is now shredded and early courting of the new French President Emmanuel Macron of limited avail.
What we can guarantee is a nice fat EU ‘divorce’ bill – some £80bn and rising fast. Certainly, not a ‘no blame’ divorce. Indeed, from the outset, it was clear that the EU – albeit ruefully pragmatic at times – was intent on being seen to make Britain pay for its referendum vote folly, highlighting it as a dangerous destabilising precedent for the European Project.
And as the UK counts these costs, the just published 2017 Social Progress Index makes for sobering reading. It shows Britain flatlining compared to other European countries in the provision of social care, health, housing and a range of other measures.
Kicking off with ‘residency’ rights
Unfortunately, May drew immediate EU hostility and division – where wider factions are developing anyway with squabbling over the split of UK spoils – with her opening gambit and offer to confer “settled status” on the 3.2 million EU nationals resident in the UK.
EU nationals that had been resident for five years by March 2019 would qualify for ‘settled status’. May described as “fair and serious” education, pensions, health, social care and wider welfare rights. But, it still begs as many questions as it answers, with immediate bickering within the EU and uncertainty about the legal jurisdiction of the European Court of Justice (ECJ), what it would mean for the self-employed etc.
Many resident EU nationals already qualify for these benefits anyhow, so some of this is window dressing, if not plain bluster. Ever diplomatic, German Chancellor Angela Merkel and new friend Emmanuel Macron both said it was a “good start”. But EU Commission President Jean-Claude Juncker immediately waded in, declaring it was “not sufficient”, with Donald Tusk, President of the EC Commission, claiming it did “not meet expectations”. Belgium Prime Minister Charles Michel added his two pennies’ worth by describing it as a “cat in the bag”. Even the Dutch – traditional allies of Britain – indicated there were many questions. Much emotion, less cool heads.
The City’s fintech sector, recently bolstered by an influx of creative talent from EU nationals, watches with interest. Confidence remains that the UK will continue to consolidate its position as the premier global fintech centre. In any case economic and political disruption is good for fintech – a small ray of hope in the morass of our exit path.
Melanie Worthy, Head of Public Affairs, MRM