REPORT
By Gökhan Kurtaran
London letter, week beginning Dec. 5

U.K. awaits final court decision on triggering Article 50

The gridlock in U.K. politics and the economy awaiting the process to trigger Article 50 to begin the break up between the U.K. and the EU could be resolved this week but nonetheless will leave major implications to continue for months. Last month U.K. Prime Minister Theresa May had opposed the decision of the High Court which ruled that a Parliament vote would be needed to trigger Article 50. May’s initial plan was to start the process of leaving the EU by March. However, the government appeal to the Supreme Court over the Brexit process will see 11 judges on Monday at the landmark court hearing start proceedings which are expected to last around four days. Eventually the court’s final verdict is expected to come in January.

All possible scenarios are now on the table for investors and markets alike. If the Supreme Court rules in favor of the High Court, it will start a new debate on how the Parliament will rule on the decision. Even though the Brexit camp still remains strong in Parliament, the implications of a ruling to oppose the Brexit could open up a Pandora’s Box for May and her cabinet by potentially leading the process to an early election. Even though she insistently said there would be no election before the end of this Parliament by 2020, the possible ramifications from the court’s decision and the Parliament’s might force the cabinet through public pressure to renew its mandate.

Last week, Secretary of State for Exiting the European Union, David Davis, told MPs that Britain could pay into the EU budget in exchange for access to the single market. The Brexit secretary said, in remarks that were endorsed by the prime minister’s spokeswoman and the chancellor that the government would not rule out making future payments indefinitely in order to secure favorable access to European markets. Following Davis’ statements, the pound rose above 1.26 against the U.S. dollar. On the other hand, Foreign Secretary Boris Johnson said the U.K. should not have to pay "large" sums to the EU to trade with it after Brexit. 

The foreign secretary told the BBC's Andrew Marr that the question of whether the U.K. would pay anything at all was "pure speculation", but if it did, any payments had to be "sensible".

Former Lib Dem leader Nick Clegg said that remaining in the single market of 500 million customers was the "least economically disruptive form of Brexit", and, in return for this, the U.K. should be granted powers for an "emergency brake" on migration from the EU.

One way or another, the Brexit camp in the cabinet is recognizing the “cost of leaving the single zone” on the U.K. economy and through the general media, have started de facto negotiations by sending open messages to 27 members of the EU. This was seen as a positive development by the markets and undoubtedly the court’s final verdict regarding to timing of triggering Article 50 will be decisive for future negotiations and the shape of U.K. politics.

05 Dec,2016

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