Europeans Have No UK Partner To Negotiate Brexit As Tories Are In Disarray

We are already one-sixth of the way through the two year period allotted for Britain to reach a deal to exit the European Union. In these past four months, virtually nothing has been accomplished and very little has even begun. Nor does it seem like the current Conservative government is anywhere near a consensus on how it wants to move forward.

The views among Conservatives themselves about how to implement are as varied as can be. As one European commentator said, “[W]e have heard everything and the opposite: hard Brexit, soft Brexit, quick Brexit, long Brexit. When you follow what is coming out of Theresa May’s cabinet, it is not clear what vision Britain is opting for.”

Britain’s chief negotiator, David Davis, apparently showed up for negotiations with his European counterparts with no notes or documents in contrast to his the Europeans who were, as always, loaded with position papers. Those meetings broke up with the Europeans still unclear of what exactly the British negotiating position really is.

Theresa May is at least still publicly committed to a hard Brexit, giving the UK control over immigration and judicial considerations. That approach, however, is coming up against the economic realities facing the country. Not only is immigration critical to keeping the UK economy growing but the financial sector, which makes up somewhere between 6% and 8% of the UK economy is preparing to abandon London en masse in order to be able to serve Europe effectively after Brexit. Both Citigroup and Morgan Stanley have announced big moves to Frankfurt while other banks are looking at Paris, Dublin, and other cities on the continent.

While May still talks up the hard Brexit, the Chancellor of the Exchequer, Philip Hammond, apparently prefers the long Brexit, with a long transition period after the agreement is finally reached. His views reflect the general consensus among the business community which fears a “cliff-edge” agreement which will cause enormous disruption and probable recession.

While all this is happening, Theresa May is a dead woman walking. A recent article in the Conservative mouthpiece and rag, the Daily Mail, quotes a source as describing May as “shrivelled and struggled to engage. It was upsetting.” The details are, of course, probably wildly overstated but the important point is that this story ran in the Mail, indicating that a powerful faction within the party obviously want May out.

Her potential successors, Hammond, Davis, and Foreign Secretary Boris Johnson, are all circling like vultures. Right now, it looks like May will not be challenged until the Conservative party congress later this fall and any change in leadership will probably result in yet another election. This could mean this entire year of 2017 was essentially wasted as the UK tried to figure out its negotiating position, and that assumes the election actually provides a decisive result.

For Britons, as the Times article states, there is a “growing, if belated, realization that there are few good options”. The Europeans hold all the cards in the negotiations. This has caused some commentators to propose either backing out of the agreement entirely or not completing an agreement in the two year window and letting WTO rules take effect. In addition, the chaos within the Conservative party caused one UK commentator to say, “I am not sure that anybody is in control at the moment”.

We all know that negotiations always wait to the last minute to finally get done. But this deal is so complicated that at some point detailed negotiations have to take place. The problem is that, right now, the Europeans really don’t have a UK partner to negotiate with.