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Why hard Brexit is more likely now

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The result of the general election was probably the worst outcome for those wanting a soft Brexit.

I know this goes against the grain of the excepted thinking by political analysts today, but my reasons centre around the uncertain position of the current UK Government.
The Government called the election to bring about more certainty and authority during the Brexit negotiations and to enable outcomes to be agreed in Parliament. Now, given the Governments weakened voting position, it will struggle to gain sufficient support. It’s for this reason that analysts believe that the Brexit deal will be softened to appease the majority.

However, this may not work in practise as any proposals will be easily blocked by aggressive opposition. This opposition is not likely to just come about Brexit, but also on whatever other policies the government are trying to introduce. We will know more in the proposed Queens speech, but whatever is in it, getting the necessary approval in Parliament is not likely to be simple. The opposition, in concert, can easily hamstring the Government and force another election.

So, do we think the opposition will play ball with the Government during the Brexit negotiations until conclusion? With less than two years to go, any election within this period will delay negotiations, or at very least, hinder them. Indeed, those people charged with starting the negotiations by the UK may not be those that finish them?

What happens if time runs out?
Will the EU extend the timeframe? So far, they have not said, or given any indication that an extension will be acceptable. This is one reason why calling an election after Article 50 was submitted was loaded with risk. The correct process would have been to call an election before submission.

The EU negotiators must be rubbing their hands together with glee, at the confusion and turmoil on the UK side of the table. It’s a mess for sure!
I believe that any delay will not just hinder negotiations, but also a soft outcome and may lead to a hard Brexit! A hard Brexit is not what any party in Parliament is looking for, but with such a fragile position, one which is subject to the will of the opposition, this will make it hard for the Government to negotiate freely, as any deal, which is not approved by Parliament could create a hard Brexit result.

Rather than a hung Parliament making a soft Brexit more likely, to me this seems an overly optimistic view, as it assumes that everyone in Parliament will pull in the same direction and to date I have seen no evidence that this is likely.

What might help Brexit towards a soft landing, might be for Parliament to act as if the UK was on a War footing by making Brexit non-political, but focusing solely on what is in the Country’s best interest. The question is, do our elected Politicians have the UK’s interest uppermost in their minds, or are they focused on party politics and personal ambition?

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Gary Wright

Gary Wright

Gary Wright is a leader in financial market innovation based on in depth knowledge of financial markets processes and specialising in data.
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B.I.S.S. Research is an independent research company facilitating Academic Research for Financial Services.

ISITC Europe General Meeting Academic Forum - October 2017