Brexit: May takes a risky shot at goal

Dharshini David

Thursday 28th June marked a long-awaited showdown between key players from Belgium and England – both on and off the pitch. As their national football teams faced each other in Kaliningrad in the final game of the opening round of the World Cup, the countries’ political leaders were engaged in a face off at the European Council summit in Brussels. Belgian PM Charles Michel took an early advantage by manoeuvring Theresa May into holding a Belgian football shirt in front of the cameras, to the amusement of all those present. But behind the smiles, tensions are running high. Ireland’s leader Leo Varadkar, admitted to “cheering” for Belgium’s football team – and they were ultimately victorious on the field. Back in the game of politics, it was also the UK, as May had shown up with little new to offer, that failed to impress. The resentment at the UK’s foot-dragging was made explicit in the statement at the end of the meeting: 

"The European Council expresses its concern that no substantial progress has yet been achieved on agreeing a backstop solution for Ireland/Northern Ireland.

“It recalls the commitments undertaken by the UK in this respect in December 2017 and March 2018, and insists on the need for intensified efforts so that the withdrawal agreement, including its provisions on transition, can be concluded as soon as possible."

And May has little grounds for calling “foul”. For the Brexit process is substantially behind schedule. Certainly, not much has happened recently in the formal negotiations between the UK and EU. So far this year, David Davis, May’s Cabinet minister responsible for leading those talks, has spent only four hours negotiating with his EU opposite number.

By this stage, it had been intended that discussions would have moved on to the broad shape of the UK’s future relationship with the EU. Instead, about 25% of the Withdrawal Agreement remains undecided – with the issue of the border between Northern Ireland and the Republic no further to being solved than at the time of the broad initial agreement outlined in December. In addition, while May has avoided a parliamentary defeat, fewer than half of the Bills that provide the legal underpinning to Brexit have been passed – with fewer than three weeks to go until MPs start their six-week long summer holiday.

Crucially, the ongoing – and increasingly bitter– disagreements between her most senior ministers and among Conservative Party MPs have been instrumental in preventing the government from laying out a clear strategy. Yet, more than two years since the EU referendum, there is only six weeks of negotiating time in Brussels ahead of the next EU summit in October, and about the same for parliamentary debate. It had initially been hoped that a broad deal would have been agreed upon by that summit for MPs to vote on; that now looks impossible. 

It’s not just European officials and politicians who are frustrated. In a highly unusual move, the UK’s biggest business lobby group, the CBI and the TUC, the national trade union body, issued a joint statement urging for clarity and progress. This, as major companies – from banks to carmakers and retailers – warn of the risks Brexit uncertainty is already posing to investment and production, and called for frictionless trade. 

So the ball is firmly in May’s court. She’s due – finally – to set out her game plan, the shape of the future relationship she envisages with the EU, in the form of a government White Paper early next week – that is if the contents can be agreed. That means gathering together her senior team – the Cabinet of ministers – for a daylong meeting at her official residence in Buckinghamshire on Friday. The England football team may have only just scraped through to the quarter-finals but it may have more chance of reaching the World Cup Final than May has of brokering a solution that satisfies her openly warring colleagues. But she may not care. The very fact she has summoned the whole Cabinet and not just a subgroup backs up claims she is  pitching for “the softest  of Brexits” (or what her Brexiteering Foreign Minister, Boris Johnson, borrowing from The Economist, called a “bog-roll Brexit”). And the tutting over delays from the EU and business may actually strengthen her hand.

She is expected to seek a single market in manufactured and agricultural goods, meaning regulatory alignment on product standards. It’d be a deal, in that sense, not dissimilar to Norway’s with the EU. That would be popular with British manufacturers, and help with the issue of the Irish border, but ideologically will encounter vehement opposition from her Brexiteer colleagues.

It’s an idea she’s already suggested to EU leaders, hoping that it would act as a sweetener, given that the EU exports far more goods to the UK than go the other way. But it’s already encountered their opposition. Key differences between May’s idea and the Norway model are that the latter means accepting EU rules, EFTA Court jurisprudence (which as a rule follows ECJ case law), free movement, and payments to the EU. Michel Barnier, the EU's chief negotiator, has repeatedly said that the UK must sign up to a whole Norway-style deal, or plump for a Canada-type arrangement (little more than a free trade agreement, which provides for tariff-free trade in goods but covers only a few services.) The latest indications are that May might, at least, accept EFTA’s court as the ultimate body of appeal. 

Overall, however, May’s proposal is somewhere between a Norway and a Canada – an unprecedented arrangement sited, ideologically at least, somewhere in the Atlantic Ocean, and just as murky. She’d prefer to think of it as more akin to Switzerland’s arrangement with the EU – but that bespoke deal has been highly unpopular with Brussels due to its complexity. Instead, the EU sees this as yet another attempt to cherry-pick, to have some  of the four freedoms that underpin the EU (freedom of movement of goods, services, capital and labour) and discard elements of the rest. They’re particularly unwilling to entertain this idea while May continues to shy away from discussing the free movement of people.

But of course, based on what is known so far, May’s proposal would neglect the largest sector of the UK economy. The UK would aim to diverge from the EU in other areas such as services. Almost 40% of the UK’s exports are made up of services – from banking to advertising and engineering – and a similar proportion of those exports goes to the EU. As such, a single market in goods alone raises questions about both the desirability (for both the UK and EU) and feasibility of such an arrangement, not least given the inextricable link between goods and services exports.

Also on the agenda will be the form of customs agreement the UK government envisages. May has wanted a customs partnership, the likes of Johnson a technology-reliant maximum facilitation model (max-fac). The EU has dismissed both as unworkable fantasies: “unicorns”. There have been mutterings of a “third way” proposal, which may amount to no more than a hybrid, effectively a re-packaging of a customs partnership, consistent with a soft Brexit.                                                                                                                  

There are likely to be more tantrums and bust-ups between the key UK politicians on Friday. Mrs May has so far refrained from showing any of her ministers a Yellow Card, even a warning for bad behaviour. But she may be willing to risk pro-Brexit ministers like Boris Johnson or David Davis storming off the pitch, resigning in protest. It may actually be part of her strategy, to rid her of her troublemakers-in-chief. However, she would then run the risk of a full mutiny by backbenchers, with only 48 of the Conservatives’ 316 MPs (more than 60 of whom are known hard-core Brexiteers) required to kick off a formal leadership challenge.

Agreeing a new strategy on all this is a lot to accomplish in the space of a day: ministers have not been instructed to pack an overnight bag. (And indeed, the issue of migration will be kept for another day.) So a rematch, another summit, may be needed. If so, that could delay the publication of the White Paper further – or make it even vaguer in content.

So Friday’s summit may not deliver the long-awaited details that Brussels and business have been holding out for. Last week’s statement from EU leaders also contained a warning to prepare for a no-deal. Their mounting anxiety and the ticking clock may work in several ways. A clash of ministers on Friday could precipitate a leadership battle, threatening to end May’s reign at the top of Team UK. (And getting agreement on the White Paper doesn’t mark the end of her woes; the week of the 16th July will see the trade bills returning to Parliament, when pro-Remain MPs might attempt to enforce membership of a customs union on the government once more). And the dithering could allow Brussels to more effectively force the UK to choose between a Norway and a Canada style deal, rather than no deal at all.

Or, the pressure of the fast-approaching final whistle may be May’s best weapon for convincing her team to get behind her goal of a softish Brexit – and overcoming Brussels' defences. Ministers and negotiators in Brussels may find themselves pushed into considering ideas that they might have otherwise dismissed outright. If this indeed is part of her strategy, it’s a risky game plan and that could equally promise penalties as well as prizes. Either way, this month is likely to be career-defining for May, and Brexit as a whole.

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