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Edition June 16, 2017 - Crédit Agricole S.A.
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  • Edition June 16, 2017

    UK: Heightened political uncertainty versus hopes for a softer Brexit

    The 8 June snap election was a shock for Theresa May as it resulted in a loss of the Conservative party's absolute majority in Parliament. Even though she decided not to resign, she is vulnerable to challenges within her party at any time. This hung parliament heralds a period of political instability and significant uncertainty over the sequence of future events. It also opens up a wide range of outcomes for Brexit. Meanwhile, a minority government is unlikely to last its full five-year term, increasing the risk of another snap election.

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  • Contents:

    - The shocking outcome of a hung parliament
    - A period of heightened political instability is now open
    - The new government's stance on Brexit will be key to the medium term outlook

  • Extract:

    A key consequence of the election is that the government is now even more vulnerable to a rebellion from its own backbenchers, some of whom take a hard line on their Brexit desires. This means lower capacity to make compromises with the EU27 on key issues such as the Brexit bill and ECJ oversight. Theresa May is therefore obliged to win support beyond her party. All the left-wing parties – Labour, the LibDems, the SNP, the Greens and Plaid Cymru – are categorically opposed to her hard-Brexit plan. She therefore has to soften the stance on Brexit to some extent. As far as the Labour party is concerned, it is opposed to “Theresa May's reckless approach to Brexit” and the no-deal option. It wants to retain all the benefits of the single market and the customs union, but also wishes to end the free movement of people. However, this approach is difficult to scale with the EU firmness on the indivisibility of the four freedoms and makes continued single market membership after Brexit equally difficult.

  • Associative topics : Economics | Europe


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