The dangerous fallout from a “hard” Brexit
The uncertainty over Britain’s future ties with Europe, a renewed call for Scottish independence and the possibility of a good result for the far-right party in France are a matter of concern for the whole world
In London, Prime Minister Theresa May has served notice that she will brook no internal dissent, even from an octogenarian party elder. Michael Heseltine nearly succeeded Margaret Thatcher as prime minister. His sacking by May as a government adviser over his support for a change to her Brexit legislation is seen as signalling to followers that they are either with her or against her, and to the European Union that she is not going to be pushed around in the hard negotiations ahead on the terms of withdrawal.
Both events underline the divisive uncertainty over Brexit, amid fears that May’s plan for a “hard” exit will hurt the British economy. They do nothing to lift hopes for a smooth process and minimum disruption, amid protectionist sentiment in the US. Uncertainty is neither good for Europe, nor for markets. Having become prime minister in the wake of the unexpected vote to leave, May’s hard line may reflect a sense of historic responsibility to carry out the people’s will. Her speech to parliament spelling out her plans established some broad principles of how she sees the way forward.
For the global economy, especially the financial order, the sooner the uncertainty is sorted out the better for everyone, including China, which has used London as a springboard into Europe. That said, there will be opportunities for China to consolidate its emerging role as the leader of global free trade. It remains to be seen whether Britain can salvage access to the European market for financial services, and reconcile its people’s dislike of open immigration with the need for foreign talent. The realities of disentanglement from Europe reflect on the populist remedies for discontent which prevailed in the referendum and the complacency of those aghast at the outcome.