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Brexit Bulletin: The Shape of Things to Come

The contours of Brexit’s next six months are taking shape.
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Theresa May won and lost in the House of Commons on Wednesday evening.

Parliamentarians endorsed the prime minister’s plan to trigger Brexit talks by the end of March, while securing the right to scrutinize her negotiating plan first.

Six hours of debate in the House of Commons were followed by a vote of 448 to 75, setting up what Brexit Secretary David Davis called “the most important and complex negotiations in modern times.”

The vote is not legally binding, but is politically significant given that May has been unwilling to reveal her intentions and opposition parties would rather not have signed off on her timetable. A Supreme Court hearing that enters its fourth day on Thursday may still end with May’s plan being subjected to a more formal vote.

THERESA_MAY

Theresa May has been in the Gulf states while Brexit has been in the headlines back home

Photographer: Carl Court/Getty Images

One bit of insight came from Davis, who said the U.K. could seek to model its long-term trading relationship with the bloc on the rules used bySwitzerland or Norway. May has previously called for a “bespoke” deal, something European Commission negotiator Michel Barnier this week signaled is unlikely to be allowed.

Norway is a member of the European Economic Area so has access to the single market, for which it chips into the EU budget and agrees to its rules. The Swiss access the markets of certain sectors via bilateral agreements for which they pay.

The pro-Brexit camp may get a lift on Thursday as a parliamentary by-election is held in Sleaford, where 62 percent of voters backed leaving the EU.

Meet Michel Barnier

Speaking of Barnier, the roots of the Frenchman’s negotiating nous can perhaps be traced back to a long-ago exchange in a Brussels bar.

Taking a deeper look at Barnier, Bloomberg’s Ian Wishart reports how Olivier Guersent, a fellow Frenchman who was working on EU merger policy, ended up on Barnier’s team at the European Commission in the 1990s and is now the commission’s financial-services director general.

Michel Barnier, the incoming chief Brexit negotiator for the European Commission, pauses during a panel discussion in Brussels, Belgium, on Wednesday, Sept. 7, 2016.
Michel Barnier
Photographer: Marlene Awaad/Bloomberg

“He took me out for a beer and we had a one-hour chat after which he said, ‘Fine, you’re joining my cabinet,’ ” Guersent said in an interview. “I requested the night to think it over but he said ‘No, if I give you time you may change your mind. The offer is in front of you, it’s yes or it’s no.’ So I said yes.”

Seventeen years on and Barnier is again setting tight time-frames for decision making. He estimates there will only be 18 months to strike a Brexit deal. The question is whether his powers of leverage are still intact.

Inside Downing Street

In an interview with the Financial Times published on Thursday, May gives a sense that she realizes there is an appetite for progress. 

“It’s important that we don’t leave it for too long, otherwise people will lose faith in their politicians, they’ll think that we’re trying to pull the wool over their eyes,” the prime minister told the FT.

 “Of course, it’s going to be complex because there’s a lot to deal with. You’re not a member of something for 40-odd years and then it’s easy.”

She admitted that the eventual talks could become tense. “Things will be said. I think it’s important for us to build up the relationship with the people we’re negotiating with.”

Supreme Court Changes Focus

At the Supreme Court, judges trying to decide if May or Parliament should have the trigger finger for Brexit turned their sights on those arguing in favor of the lawmakers, after two days of probing the government’s position.

The Supreme Court in London.
The Supreme Court in London.
Photographer: Dan Kitwood/Getty Images

One point made was to say it’s possible that politicians granted the ultimate decision on leaving the EU to the voters by holding a referendum.

“It seems to me there may be some force in the argument that when Parliament comes to face up to this issue they say: ‘We’ll let the British people vote,’” David Neuberger, the president of the Supreme Court, said Wednesday morning. “One could say it is Parliament ceding power to the people.”

David Pannick, a lawyer representing one of the challengers, financial entrepreneur Gina Miller, responded that it was unlikely lawmakers had intended important constitutional principles to be overturned.

Brexit Bullets

  • Big Mac Brexit: McDonald’s to move non-US tax operations to the U.K. 
  • Speed matters’ in Brexit talks, British business lobby says
  • Wednesday’s weak U.K. manufacturing data may mean more disappointments to come, analysts say
  • Julius Baer’s Collardi questions if London can maintain finance role post-Brexit
  • Hammond says he’d like to grow trade with South Africa
  • Ireland’s central bank faces ‘serious questions’ about whether it can regulate banks fleeing Brexit, says lawmaker
  • Brexit migration cuts will hurt U.K. economic growth, Niesr Says
  • Swedish government will try to lure European Medicines Agency from London

On the Markets

The pound’s recovery may be getting ahead of itself, according to the median estimate of economists in a Bloomberg survey, who see sterling dropping about 4 percent to $1.21 by the second quarter of 2017. The pound, which has been buffeted by Britain’s vote to leave the European Union, is currently exceeding forecasters’ estimates for that period by close to the most in three months.

There are concerns ahead about bigger swings for sterling, which remains 2016’s worst-performing major currency.

Screen Shot 2016-12-08 at 13.30.17

And Finally…

It’s not all talk and tension in Brussels. There’s a new “Space Egg” to enjoy.

That’s what some observers have dubbed the EU’s  new Europa building, set to house the European Commission and Council of Ministers from next year. The Telegraph reports that the building cost 321 million euros and symbolizes “joy,” even in an era when populism is testing the EU’s institutions as never before.

Window washers clean the windows on the Europa building in Brussels on Monday, Nov. 14, 2016. The building is still under construction and will eventually be the office of the European Council President Donald Tusk and a meeting place for EU summits. (AP Photo/Virginia Mayo)

Window washers clean the windows on the Europa building in Brussels on Monday, Nov. 14, 2016.

Photographer: AP Photo/Virginia Mayo

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