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May: Hard Brexit It Is

British Prime Minister Theresa May delivered an uncompromising “hard Brexit” speech today, vowing to leave the EU without hesitation if a good deal is not looming. Rejecting a “half-in, half-out” agreement, she said she would seek to leave the EU’s common market, and instead to negotiate an as-yet unspecified “customs agreement” with the rest of the bloc. The free movement of people will definitively end (though not with Ireland), and Britain will reject the jurisdiction of the European Court of Justice. “Leaving the European Union will mean that our laws will be made in Westminster, Edinburgh, Cardiff and Belfast,” May said. “And those laws will be interpreted by judges not in Luxembourg but in courts across this country.”

May’s speech, coming on the heels of an interview President-elect Donald Trump gave to the German Bild and the Times of London in which he promised that the United States would give the UK a trade deal “very quickly”, sent the  pound soaring.

At time of writing, there hasn’t yet been much reaction to May’s speech around Europe. Trump’s interview, on the other hand, has ruffled feathers. Several European leaders swore that Trump’s intervention would help strengthen ties in the bloc. Others were in denial. “Having an [U.S.] administration that hopes for the dismantling of Europe is simply not possible,” Pierre Moscovici, European commissioner for economic and financial affairs, taxation and customs, said. “I don’t accept this vision of things.”

Acceptance, unfortunately, has nothing to do with it, and Trump’s intervention may not be the glue European leaders are looking for. Hungary’s foreign minister sees things quite differently:

“We are interested in a fair Brexit, we are interested in a solution which will ensure a strong and tight mutually beneficial economic cooperation,” Péter Szijjártó told reporters during a break in a meeting of EU foreign ministers in Brussels.

However, he warned that without cooperation with Britain the rest of the Continent could find itself “in a very, very unfavorable position” particularly given the likelihood of the U.S. and the U.K. agreeing some kind of economic cooperation. […]

Szijjártó’s concern does not only involve a potential bilateral deal with the U.S.

“I have seen the announcement, after the last visit of [British Foreign Secretary] Boris Johnson to Turkey, that their intention is to sign a jumbo-type free trade agreement with Turkey,” Szijjártó said. “So if the U.K. will be able to sign economic and trade agreements with many serious actors of the world economy, and [at the same time] if the EU is not able to build this kind of cooperation with the U.K., then is going to be a very unfavorable position for us.”

Since the election, Trump transition officials had asked EU leaders which country would be next to leave the bloc, and President Trump is unlikely to stop his anti-EU cheerleading once in office later this week. If Brexit works well for Britain, look to some other wavering countries to start looking at their options. Once that happens, all bets really are off.

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  • Aviezer Tucker

    The reason for the soaring markets is that May conceded that Parliament will have to ratify the final deal. Parliament and the House of Lords may not, especially if (and I concede it is IF) public sentiment changes over the next few years and the deal is particularly radical and unpalatable.

    • Y.K.

      Yea, Parliament will have to ratify the final deal. But it will have no real alternative. If Parliament does not ratify, UK still gets hard Brexit – just without agreement with EU.

      [Edit: and the reason markets soared is because these markets like to delude themselves – see their behaviour pre-referendum for an example.]

      • Aviezer Tucker

        It depends on the circumstances in 2-3 years. Did anybody think 2-3 years ago that we would be where we are today in the world?! Public sentiment may shift for many different reasons. A common enemy may unite Europeans for example. The success or lack thereof of populism in other countries may change opinions. An inevitable generation change happens slowly but surely. Since Brexit was emotional it is subject to swings. Under the right circumstances, they may decide to forget the whole thing and go with a conservative mood of keeping things as they are imperfect though they may be (it does happen to middle age couples when they actually come to divorce courts…).

        • Y.K.

          Article 50 has a two year deadline. After that, Britain is outside EU, regardless of whether parliament approves the deal or not. Only way afterwards is to Reapply to the EU, but EU laws (and EU public opinion) won’t allow many of the opt-outs for ‘new’ members that Britain has had until now. This won’t be ‘keeping things as they are/were’ – this would mean adopting the Euro etc., getting the approval of all members, and will take time. That’s very unlikely to happen or have any public support on either side. OTOH, Hard Brexit doesn’t necessarily require any agreement with EU.

          • Aviezer Tucker

            The world of March 2019 may be as different from ours as we are from the world of October 2014. They may also decide by mutual agreement to have a longer negotiation period. With a 4% gap between remainers and leavers, it would not take much for the majority of public opinion to shift one way or the other. Obviously, remainers were younger than leavers and there is generational change. You may be right and hard Brexit may happen, but it is far from a done deal.

          • Y.K.

            Having a longer negotiation period would be a real problem for both sides. For EU, it means Britain would still elect MEPs in the 2019 elections which would be awkward. For UK, it means having a de facto second referendum in the next GE. In theory everything is possible. In practice, I doubt it.

            P.S. The 2015 referendum was in fact promised by Cameron before Oct. 2014, and predicted in advance by more than a few fiction books….

          • Aviezer Tucker

            Indeed, Cameron’s ill-fated decision was based on assuming the world of 2014 will remain :). Obviously, he would not have made the same decision in today’s world. I seriously doubt any mainstream European politician will advocate plebiscites for the foreseeable future… The point about international relations is that there is nobody to enforce rules, so politicians can write the rules as they go along. No doubt some politicians on both sides want this thing to go away and they will try to delay forestall slow down and so on the process exactly until after the next election or a new plebiscite or what have you. They may be a minority or they may be a majority and may be Maybe is one of them. Markets can of course be over-optimistic and over react, and not just of one side of the Atlantic….

          • Andrew Allison

            Give it up. There will be no extension of the two-year deadline, which would require the unanimous consent of all the members and, as Y.K. has repeatedly pointed out, exit occurs in two years with or without an agreement. Furthermore, a veto by the House of Lords would cause what little remaining power it wields to be eviscerated.

  • FriendlyGoat

    “All bets really are off” means nobody has any idea what they’re doing to the point that bettors cannot predict rational outcomes to bet on, no?

  • Disappeared4x

    PM May has a spine, and a strategy, what with UK’s veto in Paris on Jan. 15, ChancExch Philip Hammond’s threatpromise to turn London into a tax-haven, and signs of the Commonwealth of Nations growing importance, as a foreign policy and trade counter to EU.

    Here is insight from Melanie Philips:

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