Brexit – Will Britain’s Fate be in the Hands of the EU?

It’s all about Brexit today. The House of Lords will debate the Coopers Bill. Theresa May will be scampering and the EU will be frowning…
Bob Mason
Brexit - Flag of European Union

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Following extended talks between the Conservative and Opposition Party, there’s been little progress on finding a way forward.

The very fact that the 2-parties joined into talks to solve the Brexit puzzle left members of both sides at odds. Perhaps more significantly, the voting majority have been let down by the coalition government.

There had been hopes of Theresa May and Jeremy Corbyn bringing a deal to the table that MPs would be able to deliver a majority vote. While there may be hopes of an announcement at some point in the day, it’s now over the House of Lords.

Whatever happens, EU member states will ultimately need to vote on Britain’s final move at the 12th April EU-Summit.

News hit the wires on Sunday of French President Macron wanting to impose harsh conditions to any Brexit delay. This is assuming that member states unanimously vote in favor of any extension. Macron appears to be of the view that it’s better to move on and force Britain out, with or without a deal.

Macron’s views are in stark contrast to that of German Chancellor Merkel’s. Merkel is perhaps a little more mindful of the implications of a disorderly departure.

Whether Britain leaves the EU this week, in a year’s time or at some point in between, Macron’s attempt to stand out may come back to haunt him. As a net importer of goods and services, Britain may need to form individual trade agreements with each member state. The French president is in no position to put a teetering French economy in jeopardy. Could Macron be the dissenting vote at the EU Summit on Friday?

The Day Ahead

Theresa May will be desperately seeking a last-minute compromise to deliver an orderly Brexit. The 10th April deadline is now just 2-days away

A cabinet backlash could be on the cards, however. Not only has the British PM reached out to the opposition party and failed, but has also raised the prospects of a much lengthier extension.

To make matters worse, any compromise to agree on Britain remaining within the customs union would also add to the Tory party angst.

With the option of Britain leaving the EU without a deal now off the table, assuming the House of Lords agrees, only the EU can now send Britain crashing out. The prospects of Eurosceptic representation in next month’s European Parliamentary elections will be a cause of concern for some EU member states.

It’s going to be an interesting few days. Britain is ultimately at the mercy of EU member states.

That’s quite a predicament to be in. After more than 2-years of negotiations, the only outcome has been for the British government to hand the fate of the country into the hands of the very nations it has been looking to separate from.

The Pound

At the time of writing, the Pound was up by 0.28% to $1.30677. Early gains came off the back of a softer Dollar, rather than Brexit news. Brexit will overshadow any shifts in sentiment towards the Greenback later in the day.

Theresa May requested for a 2nd extension to 30th June late last week. Whether that is acceptable for the EU remains to be seen. Chatter from EU member states suggests that Brexit could even happen on Friday.

Either outcome, a lengthier extension or a crash out, would be a negative for the Pound. The longer the extension the worse it will likely be. Britain has been in limbo for more than a year. Another year of uncertainty doesn’t bode well…

Any hints of an imminent agreement between the Tories and Opposition party and expect the Pound to rally. The House of Lords debate on the Cooper Bill could have quite the opposite effect. The Pound would sink should it look likely to be voted out.

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