2018-03-02

MacroView: Hard Brexit or Else? When Will The EU and UK Face Reality?

UPDATE: Theresa May's Brexit speech March 2, 2018

UPDATE March 2, 2017: UK Prime Minister Theresa May delivers her Brexit speech on Friday, March 2, 2018. “We all need to face up to some hard facts ... Neither of us can have exactly what we want, so we need to strike a new balance. But we will not accept the rights of Canada and the obligations of Norway”--UK Prime Minister Theresa May. See May pitches mixture of concession and detail in Brexit vision | Reuters.com.

So Far, Brexit Negotiations Have Been Going Nowhere Fast:
Unclear Brexit vision from a divided cabinet

Financial Times (ft.com) video above published Feb 15, 2018: Political columnist Janan Ganesh and FT editor Lionel Barber discuss how Boris Johnson's call for national unity comes at a time when the Conservative cabinet remains divided on Brexit.

Boris Johnson’s Brexit Speech at Policy Exchange (video)

Jacob Rees-Mogg on Boris's speech and the transition period (video)

At best, the UK may not be able to strike anything other than an ordinary trade deal with the EU in its Brexit negotiations. Late last year, the EU produced a graphic which warned that the UK is heading for a hard Brexit. The  infographic below is based on that, and shows how Theresa May's demands may be incompatible with the current relationship Norway (a non-EU nation) enjoys with the EU, or  Iceland and Liechtenstein. Included in UK's previous demands were to be free of European courts, trade rules, migration, regulation and financial contributions, which would mean it could not use Switzerland as a future template, or the Ukraine and Turkey deals with the EU. So the UK-EU deal may reflect the same type of relationship as that agreed upon by the EU with Canada and South Korea, or if there is no deal, the UK and EU would be left with the WTO rules to govern trade with each other. Why the UK hasn't already opened up trade negotiations with the U.S., Canada, and others, is shortsighted, if it is serious about Brexit. Unfortunately, the EU is also being shortsighted as a "hard Brexit" will actually hurt the EU countries, particularly Germany, harder--the UK imports more than it exports to the EU.

The current trajectory of Brexit negotiations, in the short term, with the delay and uncertainty, is hurting the UK economy, and in the long term, the EU is "cutting off the nose to spite the face."

Infographic: Why Hard Brexit Could Be Inevitable  | Statista Statista.com

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