So today’s the day when Mrs May formally announces the withdrawal of the United Kingdom from the EU. It seems the time is right then to make a few predictions about the way things will go over the next few weeks and months as the negotiations commence and unfold:
Value of sterling (£)
The markets and money men seem to react most when there are nasty surprises. Given that article 50 has been a long time coming, I doubt whether today will see much of a change in the value of the pound. Indeed, it may even strengthen against the Dollar and Euro as teenage hedge-fund algorithm writers are most likely focussed on the political uncertainty of the coming European elections in France, Germany and Italy. However, the outlook for both Germany and France is positive for the pro-European parties so I’d expect the Euro to strengthen in May and then again in October. It is only the Italian elections in 2018 that are likely to provide any volatility – and even then the populists are unlikely to win an outright majority. As we approach the end of negotiations the pound will come under fire if the deal on the table starts to look like what it inevitably will be – a bad one.
For all the talk of cutting a deal with the EU. The likely reality is that ‘a deal’ will not even be on offer from the 27 nations. Rather, they will be focussed on a divorce settlement – which essentially resolves any foreseen problems arising the fallout from the severing of ties. There will not be time to humour the British with a new trade agreement. The main thrust of the negotiations will surround whether the UK is allowed to have a transition period. Chances are it will get this in exchange for paying the 60Bn EUR bill. So – no cliff edge – just a very steep slope.
Freedom of movement
The UK is unlikely to threaten EU citizens with eviction primarily because it has no way of tracking its populous. (In all other EU nations there is an identity card system in place.) The cost of introducing a new visa system would be a costly and lengthy process, so while they may be able to require working visas in the longer term the immediate post-Brexit scenario is unlikely to have any affect on EU citizens in the UK. It may however make life very difficult for them should they want to leave the country and then re-enter. A visa waiver system is already being planned in the EU – so British travellers will also find it more difficult to cross the channel. The idea of a ‘European Passport’ for British citizens in the EU will most likely not get off the ground due to security concerns. Each nation will take it’s own position on what to do with British citizens residing abroad. People who have retired abroad will face hefty health bills as their European health cover expires and many may choose to sell up and return to Blighty.
Northern Ireland & Scotland
May and company have done their utmost to ignore the implications of uncertainty in Ulster as well as the fall out from Brexit there. Given the significant shift in the balance of power in the province the nationalists have started to fancy their chances in a unification referendum, and should a hard border be the outcome of Brexit – there is a strong chance that former Unionists will quite happily vote to cede from the UK. In Scotland, the second referendum will most likely hang on the economic fallout from Brexit. If the pound has dropped below a Euro and unemployment has risen significantly then Scotland will see no disadvantage in leaving the UK. With the recent discovery of a new massive oilfield off the Scottish coast they may also revive the idea that Oil may yet prove to be the source of financial independence from England. The end of the United Kingdom therefore looks entirely possible within the next five years.
Brexit means Brexit
There’s also the question of whether Brexit will even actually happen – but given that Parliament has voted to give itself no say in proceedings – stopping the process now looks improbable. Only a second referendum on the proposed settlement would nullify the whole thing. However, May’s power would need to have significantly weakened by the time negotiations conclude for this to happen. Brexit is now in all likelihood unstoppable unless general strikes and civil disobedience bring the nation to a standstill – given that all political opposition has now been swept aside.
In short – there are no positives to take from today other than than this: The sheissstormen that is about to unfold in the UK is something that other EU nations, with simmering sympathies for populism, will quickly realise they do not to inflict upon themselves. Populism therefore will soon wane and die and out of the ashes a more proactive and stronger European Union will rise, in all likelihood a Union that England and Wales will soon wish they were part of.