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Brexit Update: Setting the Stage for a Showdown

October 4, 2016

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Prime Minister Theresa May spoke to UK Conservative Party members on Sunday, October 2, shedding some light on her vision for the country’s withdrawal from the European Union (so-called Brexit). Two keys aspects of this speech are highlighted below.

  1. Brexit timetable

The prime minister indicated that she intends to invoke Article 50 by the end of March 2017. By triggering Article 50 of the EU’s Lisbon Treaty, the UK formalizes its intent to break from the 28-member bloc. It also starts the clock on the mandatory 2-year deadline for completing the negotiations to unravel all of the legal frameworks, financial obligations and other knots binding the UK to the EU, and hammer out a new relationship. If May sets the Brexit timer in early 2017, the UK will be fully independent of the EU by 2019.

  1. Setting the stage for a showdown?

Theresa May also indicated that the UK could be setting the stage for a showdown with Europe, which could result in a ‘hard Brexit,’ thus denying the UK access to the EU’s single market. European Union leaders have long insisted that the free movement of workers (allowing all European Union citizens the freedom to live and work in the UK) is necessary for Great Britain to retain access to the EU’s common market.

In her address to party leaders, however, May suggested that controlling immigration was a higher priority than retaining full access to the country’s largest trading partner (EU countries account for 44% of UK exports). She stated that the UK voted to leave the European Union in order to become a “fully independent, sovereign country” and “we are not leaving the European Union today to give up control of immigration again.”

Leaving no question as to where she stands on the free movement of people, May further stated, “We will do what independent, sovereign countries do. We will decide for ourselves how we control immigration. And we will be free to pass our own laws.”

Response from EU

European Union response to May’s comments has been expectedly muted. Since the Brexit vote in June, the EU has refused to have informal discussions with the UK prior to Article 50 being triggered as not to give the UK any negotiating power once the 2-year deadline starts ticking.

Regarding May’s most recent comments, however, one senior EU diplomat may have tipped the EU hand by stating, “She seems to be saying that regaining sovereignty is so valuable, she is willing to pay a price in terms of economic disruption.”

It seems a hard Brexit may be in the cards.

Clark Schaefer Hackett’s International Business Services group will continue to follow the Brexit situation as it unfolds and provide regular updates to our clients. This team specializes in providing planning and consulting to companies that do business overseas, with solutions that are focused on the needs of middle-market organizations. If you have any questions or would like to discuss how Brexit might impact your business, please contact your CSH representative or Dan Fales, International Business Services Group chair, at [email protected].

All content provided in this article is for informational purposes only. Matters discussed in this article are subject to change. For up-to-date information on this subject please contact a Clark Schaefer Hackett professional. Clark Schaefer Hackett will not be held responsible for any claim, loss, damage or inconvenience caused as a result of any information within these pages or any information accessed through this site.

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