EU-UK Brexit talks will gain urgency

Significance The summit represented an opportunity for UK Prime Minister Theresa May to discuss her Brexit plans directly with other heads of state and government rather than doing so via the European Commission’s Article 50 task force. Impacts The negative mood music from the Salzburg summit is weakening May’s position in her Conservative Party. The poor personal relationship between May and her Irish counterpart Leo Varadkar is complicating discussions on the Irish border. The unity of the EU27 could crumble once trade negotiations bring their divergent interests to the fore. The EU is maintaining its insistence that there can be no ‘hybrid model’ between Norway and Canada.

Subject Brexit outlook. Significance If Prime Minister Theresa May can get the Withdrawal Agreement (WA) and Political Declaration on future relations approved in Parliament this week, the United Kingdom should leave the EU on May 22. However, it remains unlikely that her deal will gain a parliamentary majority, setting up a different deadline. The United Kingdom must come up with an alternative plan by April 12 or face the prospect of crashing out of the EU with no deal. Impacts The United Kingdom could have a new prime minister within weeks; a general election cannot be ruled out. The EU will remain distracted by Brexit as it heads into a season of political change beginning with European Parliament elections in May. As a final option, May could commit to resigning to get support for the WA from Conservative Party MPs.


Significance Prime Minister Theresa May has committed herself to triggering Article 50 by the end of March 2017. No member state has made use of Article 50 and there is thus much uncertainty about what leaving and, more specifically, triggering Article 50 might involve. Impacts May's timetable could be derailed if the Supreme Court decides that the government cannot invoke Article 50 without parliamentary approval. The EU is likely to maintain its firm stance and refuse to engage in any negotiations before Article 50 is triggered. The continued uncertainty over the terms of Brexit is likely to hit business confidence and could deter investments.


Significance As many as a dozen lockdown parties are now alleged to have been held at Downing Street, significantly damaging Johnson’s support among the public and his Conservative Party. His position as party leader and prime minister is gravely threatened. Impacts Johnson’s domestic troubles, coupled with rising economic concerns, increase the chance of an agreement with the EU over Northern Ireland. Disillusionment with Johnson, opposition to net-zero and culture wars open the door for Nigel Farage’s Reform Party to revive its appeal. Rising inflation threatens to undermine consumer confidence and slow the economic recovery over the coming year.


Subject The government's preferred timetable for the UK referendum on EU membership. Significance The EU membership referendum will be a major event in both EU and UK political and commercial life. Prime Minister David Cameron's official position is that the poll could take place any time before end-2017. He is less concerned about the likely outcome of the referendum, which he is confident will produce an 'in' result, than about achieving a margin in favour of membership that decisively settles the question and minimises the damage to the Conservative Party arising from the process. Impacts The most likely referendum date is September 15, 2016. This timetable would make the key renegotiation period the first half of 2016, when the sympathetic Dutch government chairs the EU Council. The German government would also prefer the UK referendum to be dealt with relatively quickly.


Significance The statement is tougher than expected, and the EU also recalled its Moscow ambassador for consultations. The EU's shift is a win for UK Prime Minister Theresa May as she attempts to build a multilateral consensus rather than relying solely on unilateral retaliation. Impacts EU sectoral and individual sanctions on Russia will be extended in July and September despite reluctance among some members. Talk of blocking Russian natural gas imports is impracticable. The US Congress will pressure the White House to target individuals identified in January 2018 'oligarch list'.


Significance This comes as US foreign policy, especially towards China and Iran, is forcing some political tightrope-walking for US partners. It also comes as UK Prime Minister Theresa May prepares to resign as Conservative Party leader on June 7; her party will from June 11 pick a successor who will become prime minister. Impacts A ‘no-deal’ Brexit would allow London to strike independent trade deals; Trump’s team is ready for talks. The next Conservative leader may well be pro-Brexit, potentially making a no-deal exit more likely. Both countries will emphasise security and defence ties to counter claims of diminished UK utility to Washington post-Brexit. London will likely seek a middle course in UK-China ties since it also eyes a UK-China trade deal. London may try to discourage Trump from using tariffs, but is unlikely to persuade him.


Significance This follows the defeat of the Brexit Withdrawal Agreement (WA) for a second time on March 12. Despite parliamentary support, an extension poses risks to all parties and positions on Brexit. Prime Minister Theresa May will look for newfound momentum for the WA, which will encourage others to support the deal and get it over the line. Impacts If MPs reject the WA and EU leaders demand national concessions in return for extending Article 50, a no-deal Brexit could happen. Businesses are running out of resources to prepare for worst-case scenarios; an extension to Article 50 could force some to close. Given a long extension, there may be more willingness in the next European Parliament to reopen the WA.


Subject New UK government agenda. Significance Prime Minister Boris Johnson’s Conservative Party won a substantial majority in the December 12 election by winning dozens of seats that traditionally had been Labour Party strongholds. While Brexit played a crucial role in appealing to first-time Conservative voters, Johnson plans significant investment beyond south-east England to boost the Conservatives’ credentials in the ‘left-behind’ regions of the United Kingdom. Impacts There will be little opposition within the Conservative Party to public-sector reforms designed to improve delivery. The legally binding pledge to leave the EU by December 2020 would increase the chances of a limited EU-UK free trade deal, at best. Poor election results for the DUP and Sinn Fein increase pressure on both parties to revive Northern Ireland's devolved government.


Significance The next challenge for UK Prime Minister Theresa May is to reconcile the requirements laid down by the EU and domestic political pressures in progressing the Brexit talks still further. Impacts The EU’s proposals would not allow the United Kingdom to sign trade deals before the end of transition. A Canada-style trade agreement would damage the United Kingdom’s services sector. Failure to negotiate a transition period within the next few months could lead to some companies beginning to relocate.


Significance The result is a stunning setback for Prime Minister Theresa May. The Conservative Party secured a notably larger share of the vote, but it was outpaced by the Labour Party, which achieved a much larger increase. The Scottish National Party (SNP) suffered substantial losses to both the Conservatives (which had been expected) and to Labour (which had not). The Liberal Democrats managed only a modest increase in their representation. Impacts If Sinn Fein once more refuses to take its seats at Westminster, a Conservative-DUP accord would command a slim but not unstable majority. If May survives she will be much less dominant and have to adopt a more collegial style. In different circumstances, the obvious solution might be a second general election in relatively short order. With the UK economy showing signs of slowing, however, the Conservative Party may be reluctant to risk that option.


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