Brexit Bulletin: Theresa May Tiptoes Into Trumpworld

Unfamiliar times, unfamiliar challenges.

Gramegna: Don't Put Cart in Front of Horse on Brexit

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U.K Prime Minister Theresa May must decide if Donald Trump’s election as U.S. president presents a problem or an opportunity for her plan to leave the European Union.

Theresa May will give her first major speech on foreign policy on Monday evening

Theresa May will give her first major speech on foreign policy on Monday evening

Photographer: Chris Ratcliffe/Bloomberg

It could help her in some ways, for example if Trump signs up to a free trade deal with the U.K. or if security concerns on the continent allow the U.K. to win some concessions because of its military might. But EU governments seeking to quell populist forces at home may also seek to punish Britain in Brexit talks. Trump-skeptics in Europe may also cool on May if they detect too much warmth toward the new U.S. administration.

The PM also needs to decide how far to lean given that Trump views the North Atlantic Treaty Organization less positively, and Russia more warmly, than the U.K. or EU. There are also differences on topics such as Iran and climate change.

The prime minister will today start feeling her way in public with a speech in which she will ease some of her past anti-business rhetoric and tell those who favor economic liberalization and free trade that they have to listen to those who worry about such forces. Post-Brexit Britain will lead the way in showing how to address voter anger without rejecting open commerce, she will say.

“We can be the strongest global advocate for free markets and free trade because we believe they are the best way to lift people out of poverty. ... We can also do much more to ensure the prosperity they provide is shared by all.”

The Challenge

May’s dilemma was highlighted by the weekend press.

German lawmaker Axel Schaefer said Trump is likely to be inward-looking, leaving the U.K. less likely to get a free trade deal. He also warned that on security and foreign policy it’s in Britain’s “own interest to seek close-cooperation with its EU partners.”

The Sunday Times also reported that a survey of European ambassadors to the EU by a group called British Influence had found May had alienated allies with her tough rhetoric on Brexit, and that the U.K. was wrong to think the EU’s united stance would fracture.

Still, Foreign Secretary Boris Johnson refused to attend emergency EU talks on Sunday evening called to discuss Trump’s win, days after he told them to cease their “whingeorama” about the American election. Those who did attend promised to cooperate with Trump while vowing to stand by international agreements.

London’s Ambassador to the U.S., Sir Kim Darroch,  also suggested that Trump might be “open to outside influence if pitched right,” according to the Sunday Times. He said that because his embassy had “built better relationships with his team than have the rest of the Washington diplomatic corps,” it should be well placed to do this.

If the newspapers are to be believed today, May’s biggest headache is what to do with Nigel Farage, the interim leader of the U.K. Independence Party, who has already snagged a one-on-one meeting with Trump.

 

The Times and Daily Telegraph report today that the PM is being criticized by senior members of her Conservative party for refusing to use Farage to build links with Trump.

Budget Blues

The EU may this week get a preview of the impact Brexit will have on its bottom line when governments tackle the bloc’s budget.

The U.K. is a net contributor to the budget, averaging an annual payment of 7.6 billion euros ($8.3 billion) over the past five years, which may allow it to exert some leverage in the Brexit negotiations, according to Bloomberg’s Jonathan Stearns.

Germany, Sweden and Denmark are said to have warned in recent closed-door deliberations about the extra constraints that the U.K.’s planned departure from the EU will place on the budget.

Brexit Bullets

  • CME Group is examining options in Dublin to ensure clearinghouse keeps access to EU
  • 83,000 jobs at risk if London loses euro clearing, says E&Y
  • RBS Chairman Davies warns against EU exit without transitional deal
  • Firms have delayed or canceled £65.5 billion of investments since Brexit vote, says survey
  • Peter Mandelson warns "Hard Brexit" to cost businesses £1.2 billion
  •  Marks and Spencer faces a revolt from small suppliers over price promise, says Sunday Times
  • Citigroup denies Sunday Times report it is preparing to move 900 jobs to Dublin
  • U.K.’s largest electrical retailers discussing double-digit price rises after Christmas
  • Societe Generale CEO says markets see Brexit as bigger economic risk than Trump
  • Bulgarian fighter pilot’s presidential victory topples Cabinet
  • France’s Le Pen says EU should replaced by a “Europe of free nations.”

On the Markets:

The pound was the only currency to rise versus the dollar following Trump's election, but the rally is petering out.

Meanwhile, Bank of England Governor Mark Carney this week faces lawmakers as the pound’s previous decline pushes inflation higher.

 

And Finally...

Boris Johnson has emerged as the victor of one Brexit battle, according to the Mail on Sunday. Having initially been told he would have to share the foreign secretary’s country home with Brexit Secretary David Davis and Trade Secretary Liam Fox, Johnson has now been given control of the keys, the newspaper said.

The trustees of the property, called Chevening, had told May that allowing three Cabinet ministers to access it was a breach of convention. Johnson has agreed that Davis and Fox can use the house, the Mail on Sunday said.

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