"Brexit means Brexit", and now we know that it also means March 2017, according to a much anticipated Article 50 timetable revealed today by the UK's new prime minister.
After weeks of speculation on the UK's timetable for invoking Article 50, and eventually exiting the EU, Prime Minister Theresa May today announced she’ll begin the U.K.’s withdrawal from the European Union in the first quarter of 2017, ending speculation about the start of the 2-year Brexit process.
During the Conservative Party’s annual conference in Birmingham, May told delegates that she’ll invoke Article 50 of the EU’s Lisbon Treaty, the formal trigger for two years of talks, before the end of March. The premier also said she’ll introduce a bill next year to convert all existing EU laws into U.K. legislation on the day that Brexit is completed to provide certainty for business and investors, Bloomberg reported.
“We should not let things drag on too long; having voted to leave, I know that the public will soon expect to see, on the horizon, the point at which Britain does formally leave the European Union,” May said cited by the BBC. “There will be no unnecessary delays in invoking Article 50. We will invoke it when we are ready. And we will be ready soon. We will invoke Article 50 no later than the end of March next year."
May also told the Tory Party conference, her first as prime minister, the government would strike a deal with the EU as an "independent, sovereign" UK. Voters had given their verdict "with emphatic clarity", she said, and ministers had to "get on with the job". In a speech on the first day of the conference in Birmingham, she attacked those who "have still not accepted the result of the referendum" adding that "it is up to the government not to question, quibble or backslide on what we have been instructed to do, but to get on with the job."
She told delegates there would be no "blow-by-blow" account of the negotiations. "Every stray word and every hyped up media report is going to make it harder for us to get the right deal for Britain," she said.
Speaking on BBC One's The Andrew Marr Show earlier, Mrs May, who had previously only said she would not trigger Article 50 this year, ended speculation about the government's timetable. She said it would be done by "the first quarter of 2017", marking the start of a two-year exit process.
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Should Article 50 indeed be triggered in the first quarter of 2017, it means that the two years of Brexit negotiations should be completed in 2019, 46 years after the country joined the bloc, though Trade Secretary Liam Fox cast some doubt on that timetable.
“Everything we do as we leave the EU will be consistent with the law and our treaty obligations, and we must give as much certainty as possible to employers and investors,” said May. “I want to give British companies the maximum opportunity to trade in and operate in the single market.”
Going back to the core issue that sparked the Brexit wave in the first place, May pledged to control immigration in Britain’s best interests while retaining access for business to the European single market. However, it remained unclear what exactly the prime minister will seek in the talks and what her counterparts in Europe will agree to.
“I know some people ask about the ‘trade-off’ between controlling immigration and trading with Europe. But that is the wrong way of looking at things,” May said. “We have voted to leave the European Union and become a fully independent, sovereign country. We will do what independent, sovereign countries do. We will decide for ourselves how we control immigration. And wewill be free to pass our own laws.”
As well as commerce and immigration, the two sides must find common ground on rights for their citizens in each other’s territory, the border between the two Irelands and what if anything the U.K. contributes to the EU budget. There’s also a string of legal, regulatory, energy, agricultural and security issues to address.
European Union President Donald Tusk welcomed May’s announcement, saying it bring "welcome clarity on the start of Brexit talks" The remaining 27 member states of the EU will engage with the U.K. once Article 50 is invoked, he said.
Importantly, Bloomberg adds, the government’s planned “Great Repeal Bill” will abolish the 1972 European Communities Act that took Britain into what was then the European Economic Community, while converting all EU laws governed by it into domestic legislation on the day Britain eventually completes its pullout, May said. Subsequent governments will then be able to repeal or amend individual laws if needed.
The bill will be introduced in Parliament between May 2017 and May 2018, Transport Secretary Chris Grayling told ITV’s “Peston on Sunday” program. On the same show, former Business Minister Anna Soubry, who left her post when May became premier, said that the repeal act was a necessary step but not a “big deal.” She called for more detail on the “guiding principles” of the government’s Brexit plan and expressed concern at the timeline.
“We need to know what are our red lines as we go into this process,” Soubry said. “This idea that we hold the cards and that the EU is going to come to us and say, ‘Do you know what, we’ll give you pretty much what you want’ -- the idea that we’re going to get anything like we’ve got now is rubbish. We’re going to get something worse.”
However, uncertainly remains: asked if he could be 100 percent certain that the U.K. would be out of the EU by the time of the next general election, scheduled for 2020, trade secretary Fox declined to give a guarantee. “What we want is the best exit for the United Kingdom, not the quickest,” he said at an event in Birmingham before the start of the party conference. “I wouldn’t put a timescale on it. Again, I think that’s one of the cards we have in our negotiation. Why would we want to hand it over at the outset?”
The British premier also said she will not allow Brexit to be used by nationalists to break up the U.K. That drew the response from pro-EU Scottish First Minister Nicola Sturgeon, who has held out the prospect of a new Scottish independence referendum, that May “is going out of her way to say Scotland’s voice and interests don’t matter.”
While the politics of the process remain in flux, from a market standpoint, in the continued absence of any detail on the nature of the future relationship with the EU, Sunday’s announcement will likely exacerbate concerns among investors that the government will pursue what’s become known as a “hard Brexit.” That would see it willingly surrender membership of the EU’s single market for trade in return for more power over immigration, law-making and the country’s budget. As Bloomberg reminds us the pound just wrapped up its worst quarterly run against the dollar since 1984, driven down first by the result of the June 23 referendum and then kept weak by speculation of a swift, severe break. It found some support as the economy proved more resilient than most forecast.
“Sterling remains a very vulnerable currency given the scale of the work that needs to be done to take the U.K. from where it is now, with effectively unchanged trading relationships with Europe, to a completely new position,” said Jane Foley, a senior currency strategist at Rabobank International in London. “Over the next couple of months, the form of how complicated the talks are going to be on Brexit is going to become clearer.”
Businesses remain skeptical to the consequences of Brexit. Nissan CEO Carlos Ghosn said on Sept. 29 that he may not be able to make new investments in Britain without a government pledge for compensation in the event of adverse consequences stemming from Brexit. And Vodafone Group Plc has said it’ll consider moving its headquarters to mainland Europe if Britain doesn’t preserve access to the EU’s single market. For now however, the reality has been far less gloomy than predicted.
As we observed last night, qhile there’s been movement in the currency and equity markets, other economic indicators have been status quo or better for the UK so far. Retail sales beat in July and August, and unemployment remains at 11-year lows. Purchasing manager indices dropped temporarily, but jumped back up.
Still, one thing is almost certain: as Bank of England Deputy Governor Minouche Shafik said Wednesday , more easing will probably be needed after the “sizable economic shock” of the Brexit vote. “It seems likely to me that further monetary stimulus will be required at some point in order to help ensure that a slowdown in economic activity doesn’t turn into something more pernicious,” Shafik said in a speech at the Bloomberg Markets Most Influential Summit in London.
Said otherwise, while the US economy may keep humming along, the BOE will continue to preemptively interfere in the economy regardless of the underlying dynamics, just so the wealth effect, at least as far as the 1% are concerned, keeps humming along. Meanwhile, questions about how buying the bonds of such US companies as Verizon and Apple "help" the UK, remain unanswered.