Early Brexit talks good for UK’s economic health

British parliamentarians voted 448 to 75 to endorse Prime Minister Theresa May’s plan to trigger Brexit talks by the end of March. The MPs also secured the right to scrutinize her negotiating plan first. The debate in the House of Commons continued for six hours before the voting.
The vote is not legally binding. But it is politically significant given that May has been unwilling to reveal her intentions and opposition parties would rather not have signed off on her timetable.
UK could seek to model its long-term trading relationship with the bloc on the rules used by Switzerland or Norway. May has previously called for a ‘bespoke’ deal. But European Commission negotiator Michel Barnier this week signalled that it is unlikely to be allowed.
Norway is a member of the European Economic Area, and so has access to the single market, for which it chips into the EU budget and agrees to its rules. The Swiss access the markets of certain sectors via bilateral agreements for which they pay.
After the vote May gave a sense that she realized there was an appetite for progress.
“It’s important that we don’t leave it for too long, otherwise people will lose faith in their politicians, they’ll think that we’re trying to pull the wool over their eyes,” the prime minister told the Financial Times.
“Of course, it’s going to be complex because there’s a lot to deal with. You’re not a member of something for 40-odd years and then it’s easy.”
She admitted that the eventual talks could become tense. “Things will be said. I think it’s important for us to build up the relationship with the people we’re negotiating with.”
On the other hand, at the Supreme Court, judges trying to decide if May or Parliament should have the trigger finger for Brexit turned their sights on those arguing in favour of the lawmakers, after two days of probing the government’s position.
One point made was to say it’s possible that politicians granted the ultimate decision on leaving the EU to the voters by holding a referendum.
“It seems to me there may be some force in the argument that when Parliament comes to face up to this issue they say: ‘We’ll let the British people vote,’” David Neuberger, the president of the Supreme Court, said. “One could say it is Parliament ceding power to the people.”
Keeping in the mind the global oil slump and sluggish growth, it is imperative to expedite the Brexit talks. Businesses are not going to wait till eternity. Weak UK manufacturing data is already indicating more disappointments ahead.
The pound’s rally to a two-month high is masking a jump in the volatility anticipated over the next three and four months, when the Brexit talks are set to be launched.
There are concerns ahead about bigger swings for sterling, which remains 2016’s worst-performing major currency.
International banks have assessed the future scenario if they have to switch operations from London to Paris after the UK Brexit vote. UK’s powerful banking lobby has warned that international lenders with operations in the UK are ready to transfer some of their activities out of the country from early 2017.
Big banks have publically voiced their fears about the impact of Brexit, including potential loss of access to the European single market. And it will spawn a fierce competition between countries and between regulators.
PM Theresa May has announced that she will formally trigger the two-year EU divorce process by the end of March 2017. Brussels and London face the daunting prospect of gruelling negotiations on future trade deals with the European Union and countries outside of the bloc.
And it is something worth waiting to see how the Brexit saga plays out. Only the time will tell who the winner for this deal is.