Photographer: Oli Scarff/Getty Images

Brexit Bulletin: How to Solve a Problem Called France?

A year since David Cameron called the EU referendum, Britain’s trickiest opponent may lie across the Channel.

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“French likely to be most difficult,” was one of the messages visible on a scribbled page of notes photographed in the arms of a Conservative Party aide leaving Downing Street in November.

Now, as the prospect of “Frexit” increasingly keeps investors awake at night, the visit of a French presidential candidate to London this week is likely to largely confirm that the Entente Cordiale won’t extend into Brexit negotiations.

Indeed, when Emmanuel Macron arrives on Tuesday he is likely to bring a negotiating stance widely shared by his country’s governing class. That is, that the U.K. cannot expect special favors as it seeks to extract itself from the European Union.

“I will be pretty tough on it because we have to preserve the rest of the European Union,” Macron told Channel 4 News on Feb. 13.  “You don’t get a passport and you don’t get access to the single market when you decide to leave.”

Rival François Fillon is, if anything, more hardline. “You can’t have one foot in and one foot out,” Bruno Le Maire, the former minister who is handling foreign affairs for Fillon, said in an interview last week.

The exception among the three front-runners is the anti-euro Marine Le Pen. The National Front leader, who has promised a referendum on France’s own relationship with the EU within six months of taking office, said in January that “Brexit has not been a disaster,” and regularly cites failed predictions of economic doom before the vote as a precedent to encourage the French down a similar path.

Lords Debate

Peers in the House of Lords are scheduled to begin debating Theresa May’s bill to trigger Article 50 on Monday, before a proposed final vote on March 7. One member of the House, former Labour cabinet minister and EU Trade Commissioner Peter Mandelson, used an article in the Independent to argue that the British people should be given the right to “pass judgement” on May’s final deal.

While the Lords are unlikely to block Brexit, Labour has tabled a series of amendments to the bill. As the Conservatives don’t have a majority in the Lords these may have a greater chance of passing, leading to the possibility of  “ping-pong” between the two houses. 

The debate is beginning amid more reports of the difficulties May’s government may face in securing an agreement with the EU. The bloc’s negotiators want to settle the terms of Britain’s exit bill before starting trade talks, the Financial Times reports, a process which could last until Christmas and delay any fast-track a deal. Meanwhile the Guardian cites warnings from European lawmakers that any British attempts to “blackmail and divide” EU countries in the run-up to negotiations will lead to a crash-landing out of the bloc.

One Year On...

Today marks exactly one year since David Cameron officially announced that Britain would vote on its EU membership on June 23, 2016. Speaking in front of Downing Street, the then Prime Minister named the date of the referendum, and gave a “clear” recommendation that Britain would be “safer, stronger, and better off in a reformed European Union.”

In an early indication of the pound’s vulnerability to Brexit, sterling tumbled when markets opened on Feb. 22 as Boris Johnson joined other cabinet members in signaling he would campaign for a Leave vote.

That kicked off a decline that has pushed the currency to about $1.24, 14 percent lower than the $1.44 level a year ago. That drop makes sterling the second-worst performer among 32 major currencies tracked by Bloomberg in the past year, beaten only by Turkey’s lira.

Brexit Bullets

  • An ICM poll for the pro-Brexit Change Britain group found 68 percent of voters agree the government should start implementing the result of referendum, compared with 54 percent in December. 
  • London house prices posted their largest annual drop in almost six years in February as high values deterred buyers, according to property website Rightmove
  • Oxford University is considering opening a French campus amid concerns over research funding after the U.K.’s exit, the Daily Telegraph reports
  • Confirming that U.K. regulatory rules are as tough as the EU’s own will mean asset managers won’t have to relocate from Britain, according to the New City Initiative. 
  • A lack of clarity on the future status of U.K.-based clearinghouses risks disruption and cost increases for clients, the International Regulatory Strategy Group says
  • Germany’s defense chief says she’s forging a post-Brexit security “road map” with the U.K. 
  • Online travel booking company Expedia is doubling its headcount in London, while Amazon is also adding jobs
  • EU citizens living in the U.K. will face a “legal no-man’s land” after Brexit, according to a document obtained by the Observer newspaper.
  • Swiss private banks including Pictet and Lombard Odier are considering an expanded presence in London to serve wealthy clients after Brexit, Le Temps reports.

And Finally...

U.K. Foreign Secretary Boris Johnson’s disagreements with the EU seem to be linguistic, as well as political.

After Johnson spoke at the Munich Security Conference on Friday, an EU lawmaker told him that he shouldn’t have used the term “liberation” to describe Britain’s exit from the bloc, saying it has too much of a loaded meaning in a continent that’s not forgotten its experience of war and occupation.

Photographer: Luke MacGregor/Bloomberg
Photographer: Luke MacGregor/Bloomberg

“Come on,” replied Johnson, who was participating in a debate entitled “The future of the West.”

“I have to say, I hesitate to accuse you of pomposity, but the word liberation clearly means... it’s etymologically equivalent to being freed, and it’s an undeniable fact that we, the U.K., has been unable to do, to run its own trade policy for 44 years.”

“I want to reclaim the English language, if I may,” Johnson added.

Simon Kennedy is away.

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