REPORT
By Gökhan Kurtaran
London letter, March 27

-U.K. heading towards hard negotiations

The U.K. this week is preparing to trigger Article 50, which will officially start the leaving process from the European Union in two years time. As previously announced by U.K. Prime Minister Theresa May, the government will trigger the article on Wednesday, March 29. However,  no date has been announced for the start of the round of negotiations between the U.K. and the 27 members of the union. Nonetheless, ideas on how negotiations will evolve and what positions the parties will take are debatable.

According to a BBC interview last Friday, the U.K. will not be punished for its actions but will be made pay about £50 billion (US$62 billion) while leaving the union. European Commission President Jean-Claude Juncker said, “it will be a bill reflecting former commitments by the British government and by the British parliament. There will be no sanctions, no punishment, nothing of that kind.”

On the other hand, when May was laying down the red lines for her negotiations,  she commented that “no deal for Britain is better than a bad deal” suggesting that if the U.K. does not get a “fair deal”, May could leave the negotiating table possibly triggering greater uncertainty not just for the U.K. but for the remaining members of the union.

As populist Eurosceptic views gain more ground in Europe, in the near future the possibility of other member countries following in the U.K. footsteps is becoming real.

According to a Financial Times story, Britain is set to remain subject to EU regulations even after Brexit. Moreover, the U.K. Chancellor Philip Hammond had already said the process of leaving the EU with a complete deal could take longer than two years. In this case, the U.K. is likely to look for an extension to negotiations with Brussels to clinch a deal which works for all.

Furthermore, for U.K. consumers, inflationary pressures are strengthening. According to Office for National Statistics data last week, inflation jumped to 2.3 percent in February - up from 1.8 percent in January. This was the highest since 2013 and above the Central Bank of England’s 2 percent target.

27 Mar,2017

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