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With Prime Minister Theresa May not planning to trigger formal Brexit talks before the turn of the year, European lawmakers have begun to float what they call “the nuclear option” to bring her to the negotiating table: suspending Britain’s voting rights in EU institutions.
Several member states have started looking at whether that would be feasible by invoking Article 7 of the Lisbon Treaty, according to two European officials who spoke on condition of anonymity to Bloomberg’s John Follain, Eleni Chrepa and Patrick Donahue.
That would mean arguing that the U.K. is no longer cooperating in good faith. It’s the EU’s harshest sanctioning procedure, and it has never been deployed before. Three other officials in Brussels said it was too heavy-handed to even be considered.
Meanwhile, in London May will use her first speech in Parliament since becoming PM to make the case for renewing the Trident nuclear weapons system and arguing that Britain’s must still play a major role in global affairs.
The pro-Brexit politicians handed the task of withdrawing from the EU and creating a new trade system for the U.K. began to flesh out their thinking over the weekend. While they took an upbeat approach, citing the chances of a bilateral deal with Canada, its International Trade Minister Chrystia Freeland said her priority was to get an EU-Canada trade deal ratified during 2017.
Ireland Fears ‘Mind-Boggling’ Crisis
The intertwining of trade and finance means no other country is feeling the fallout from the U.K.’s vote to leave the European Union more than Ireland, as Dara Doyle and Marc Champion report.
In the year the Irish marked the centenary of their uprising against British rule, the country remains at the mercy of the unfolding drama in its closest neighbor.
“It’s the most serious, difficult issue facing the country for 50 years,” said John Bruton, who was Irish prime minister between 1994 and 1997 and later served as the EU’s ambassador to the U.S.
Exporters have warned the plummeting pound will erode earnings and economic growth, just as a recovery had taken hold. Irish shares have declined, not least because the U.K. is the top destination for the country’s exports after the U.S. and the biggest for its services. Then there’s the future of the U.K.’s only land border with the EU.
On the Markets
Update, 12.30 p.m London: European stocks showed a bit of resilience on Monday as concerns shifted from Brexit to Turkey’s reaction to a failed weekend coup.
The Turkish lira recovered about half of its loss against the dollar, though the Borsa Istanbul 100 Index dropped as much as 5.2 percent, the most in three years.
Brexit risks haven’t disappeared, though. Despite a rally last week, strategists are telling Bloomberg's Justin Yang that sterling will slump almost 4 percent by year-end to $1.27, according to the median estimate of its 10 most-accurate forecasters (all of whom have revised their predictions since the referendum.)