Brexit talks kick off in Brussels as May urged to soften stance

Bloomberg

Brexit talks finally began on Monday, almost a year since Britons voted to leave the European Union and amid confusion over what exactly the UK government wants from the divorce.
What UK Brexit Secretary David Davis describes as the “most complicated negotiation of all time” began at 11 a.m. in Brussels with Prime Minister Theresa May’s government already on the backfoot. An attempt to strengthen her hand by calling an election backfired and she’s run into further domestic strife since, while the 27 other EU members started out with more leverage anyway.
“We are starting this negotiation in a positive and constructive tone,” Davis said in comments to reporters from the European Commission’s Berlaymont building headquarters. “There is more that unites us than divides us.”
The electoral debacle has put May’s own position in doubt, fueling a new battle within her Conservative Party over the kind of Brexit the UK should seek. Some of her ministers want to refashion her strategy towards protecting trade with Britain’s biggest market rather than continue to aim for her original goal of winning control of immigration and law-making.
May has yet to change tack formally and doing so would risk infuriating euroskeptics in her Tory party who might still prove strong enough to scupper a deal or to topple her as leader if they believe she’s backsliding.
“The election result increased the probability of extreme outcomes,” said Phillip Souta, head of UK public policy at Clifford Chance LLP. “If there is going to be a deal, it makes it more likely to be softer than before the election, but on the other hand the probability of no deal at all has increased.”
The negotiations start against the backdrop of a mounting domestic crisis in the UK. May’s weakened post-election standing deteriorated further last week after she was slammed for misjudging the national mood following a deadly tower block inferno in West London. The public mood has also been shaken by a wave of terror attacks in recent weeks. Early this morning, a van hit pedestrians near a mosque in North London. Police said one person died, eight were injured and the 48-year-old driver has been arrested.
In Brussels, Davis and the EU’s chief negotiator, Michel Barnier, meet with the UK keen to win back sovereignty without hurting its economy, while the EU’s aim is to maintain regional stability and stop inadvertently rewarding Britain’s decision to leave for fear of encouraging others to break away. Barnier plans to hold face-to-face meetings every four weeks and he and Davis will hold a press conference after Monday’s discussions.
“The most important thing now is for us to look to the horizon, raise our eyes to the horizon, think about the future, think about the new partnership, the deep and special partnership that we want to build with our friends,” Foreign Secretary Boris Johnson told reporters in Luxembourg on Monday before a meeting of his EU counterparts. “In the long run this would be good for the U.K. and good for the rest of Europe.”
How the negotiations progress will be monitored closely by investors and business leaders. Banks including Goldman Sachs Group Inc. say they will shift jobs from London to the EU if they fear their access to the bloc is jeopardized, while manufacturers in the U.K. such as carmaker Nissan Motor Co. warn against trade being hurt. The pound has fallen about 14 percent against the dollar since the June 23 referendum, pushing up inflation even as the economy shows signs of slowing.
Davis struck a conciliatory tone in a statement released overnight, emphasizing Britain and the EU’s “shared European values.”
“I want to reiterate at the outset of these talks that the U.K. will remain a committed partner and ally of our friends across the continent,” Davis said. Brexit will deliver “a deal like no other in history,” he added. Up for debate in London now is whether to safeguard trade, perhaps by staying in the bloc’s tariff-free customs union temporarily or trying to win concessions on commerce by giving ground on immigration or the power of the European Court of Justice.