Written by Virginia Favaro
Nearly ten months have passed since citizens of the United Kingdom voted on June 23rd to leave the European Union. In the months since, Britain’s economy has performed much better than originally expected, closing the year with strong consumer spending, low unemployment rates, and growth in the services industry.
However, experts are worried about 2017, as the pound continues to weaken and the threat of inflation looms. The Office for Budget Responsibility has decreased its growth estimates for 2017 from 2.2% pre-vote to just 1.4%. Furthermore, as Brexit negotiations draw closer, uncertainty grows about the kind of deal Britain is going to negotiate with the EU and what its implications will be for the British economy.
On March 29th, Britain triggered Article 50, which will start negotiations between the United Kingdom and the European Union. Once this occurs, the United Kingdom will have two years to negotiate the terms of its exit.
Theresa May, Britain’s Prime Minister, has made it clear that she is striving for more of a ‘hard’ Brexit. During a speech given this January, May stated that she does not want “partial membership, associate membership or anything that leaves us [Britain] half-in half-out”.
In other words, Theresa May does not want Britain to be like Norway, a country who is not in the EU but remains part of the single market. Instead, she wants a clean break from the institution.
However, she is also pushing for “freest possible trade”, which would placate the worries of British companies who largely export to other European countries.
The Labour Party, which had largely campaigned for the UK to remain in the European Union, is now scrambled as Labour Members of Parliament (MPs) appear to hold contrasting opinions as to how Brexit should progress. Jeremy Corbyn, Labour Party Leader, stated that the Party would fight against a ‘hard’ Brexit as he believes it would hurt the UK’s manufacturing industry. At the same time, he said he would not fight for the UK’s continued membership in the single market.
Discussions of a ‘hard’ Brexit are typically interpreted to mean a departure from the single market. However, Corbyn’s stance against both the single market and a ‘hard’ Brexit, demonstrate contradictory positions. The Labour party appears confused and in need of a strategy.
However, there are many Labour party MP’s who are much more pro-EU and do not see the EU as a flawed neoliberal project. Instead, these MPs feel that the Labour party simply is not doing enough to stop May’s ‘clean’ Brexit.
Across the negotiating table is the European Union, with Angela Merkel as their likely leader. According to Ian Bremmer, a Global Research Professor at NYU and President of Eurasia Group, Merkel will have to “bear two things in mind ‒ many within her party fear that tough terms for Britain will hurt German business, but if she offers major concessions, she will empower anti-EU forces.”
Given the complexity of the issue, it is impossible to predict with certainty the direction that Britain will take with its Brexit. Only time will tell.