REPORT
By Gökhan Kurtaran
London letter week beginning July 25

Theresa May to put house in order following Brexit shocks

Following the historic EU referendum on June 23, the new Prime Minister Theresa May rolled her sleeves up to tackle increasing uncertainties. The first task of the U.K.’s second female prime minister after Margaret Thatcher was to reshuffle the cabinet and usher in a new era by ending Cameron’s legacy. She put the most controversial Brexit campaigners into significant positions, including assigning the position of foreign secretary to Boris Johnson and Brexit secretary to David Davis.

Last week, May’s first challenge was in her meeting with German Chancellor Angela Merkel who previously urged May to have a clear plan about the exit. To the surprise of many, Merkel “was happy to give the U.K. a bit of time” before it enacts article 50 in which the U.K. is obliged to leave the EU. She even stressed that she “understood” May. Now May will need to prepare for what is arguably the hardest plan ever and get ready for thorough negotiations with 27 members of the EU. Although Merkel was willing to allow May some more time, she may not be as understanding in allowing the same privileges to the U.K. in retaining access to the single market if the U.K. does not allow the free movement of people and goods.

From Merkel’s wording in speeches in which she refers to the German term “Rosinenpickerei” – a slightly stronger equivalent of cherry-picking, she has been adamant that Britain will not get access to the single market without accepting free movement of people and without paying into the budget. Whatever leeway she is willing to give will depend on what is in Germany’s economic interest.

However, May has already said many times that “Brexit means Brexit.” She said that she will work to leave the union regardless of the cost and reiterated that the main point of the Brexit campaign was to “stop free movement of EU citizens to the U.K.”

If May eventually steps back from this, it would be a huge compromise which would not be welcomed by Brexit supporters, including leave campaigner and now Foreign Secretary Johnson. 

Both parties to the possibly lengthy negotiations are weighing their positions and trying to understand the compromises that need to be made.  Merkel who said she was “curious to hear Mrs May’s position”, was simply gathering facts, weighing up the options and preparing the ground, according to the Guardian.

On the other hand, Johnson is also trying to mend ties with the world as his reckless speeches when he was the mayor of London continue to haunt him. He has not clearly apologized to the world leaders he has insulted.

"I’m afraid there is such a rich thesaurus now of things that I have said, that have been, one way or another, through what alchemy I do not know, somehow misconstrued, that it would really take me too long to engage in a full global itinerary of apology to all concerned.” he said.

There is no doubt that eyes will be focusing on preparations of May’s Brexit plan. Boris and May might be old rivals and now new allies, but it is clear that their political future will be closely connected in achieving a sustainable deal with the EU.

What to watch this week?

On Tuesday July 26, Deutsche Borse shareholders have until midnight Tuesday to tender shares to receive stocks in the new company formed from the proposed merger with the London Stock Exchange. The deadline was extended by two weeks on July 12. The proposed €20bn merger is expected to be complete in 2017.

On Wednesday July 27, preliminary estimations of the U.K.’s gross domestic product and the U.K. Index of Services will be released.

25 Jul,2016

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