Brexit Bulletin: EU Toughens Stance

EU gets tough on resident rights and what Britain owes.

Sign up to get the Brexit Bulletin in your inbox, and follow @Brexit on Twitter.

U.K. Prime Minister Theresa May might need to revise her thinking that an election victory will strengthen her hand in the Brexit talks.

It turns out European governments are already toughening up their negotiating plan. Diplomats revised EU President Donald Tusk’s draft guidelines to include harder language on safeguarding citizens’ rights, Britain’s potential financial dues, trade and security, Bloomberg’s Ian Wishart reports.

Reactions From The European Council As U.K. Triggers Article 50

EU President Donald Tusk holds the letter invoking Article 50 of the Lisbon Treaty from U.K.

Photographer: Jasper Juinen/Bloomberg

The tweaks all suggested that the other 27 members of the EU aren’t planning to dilute their approach, making life difficult for May no matter how big a parliamentary majority she secures in June. European Commission President Jean-Claude Juncker will meet with May on Wednesday before EU leaders convene in Brussels next weekend to sign off on their opening position.

A separate European Commission document reported by Politico suggested the U.K. should pay anything it owes in euros over many years and grant legally enforceable rights for the lifetime of EU nationals living in the U.K.

“This divorce, after 40 years of marriage, is inevitably going to be so painful that no one will want to feel it for themselves,” Finland’s Finance Minister Petteri Orpo said in an interview. “It’s going to be a precedent no one will want to follow.”

In another blow to the British, Bloomberg’s Brian Parkin, Birgit Jennen and Ian Wishart report on Friday that the U.K. has made little headway in Germany in making its case for a beneficial Brexit deal. Chancellor Angela Merkel’s government refused to enter into informal contacts, according to officials.

Still, one European official had some kind words for the U.K. European Parliament President Antonio Tajani told the Guardian that “everybody would be in favor” if U.K. voters decide they wanted to stay in the EU after all.

Round One

Before Britain votes, France will wrap up its presidential election, with the first round set for this Sunday.

Polls now show a four-way race between Emmanuel Macron, Marine Le Pen, François Fillon and Jean-Luc Melenchon. The two with the most support on Sunday enter a run-off next month.

For more, check out Bloomberg’s complete guide to the election and what to expect hour-by-hour here.

The vote has implications for Brexit.

Speaking at an event on Thursday organized by The U.K. in a Changing Europe network, Rainbow Murray of Queen Mary University in London said Macron is “hostile” to Brexit and would work to ensure the terms of it would deter other countries from trying to leave the EU.

Fillon might use the talks as a catalyst to reform Europe and win back more power over it for the region’s governments, she said.

If Le Pen does manage to prevail, then “it makes it harder to see how we get a deal as it would throw the EU into such chaos,” said Anand Menon of Kings College London.

The Candidates: Mélenchon, Hamon, Macron, Fillon, Le Pen. Source: Bloomberg
The Candidates: Mélenchon, Hamon, Macron, Fillon, Le Pen. Source: Bloomberg

However, Murray said Le Pen might seek a “favorable deal” for the British in the hope of securing one for the French.

For the EU, a Le Pen victory would be a bigger headache than Brexit, said Matthew Goodwin of the University of Kent. “If you vote for Le Pen you’re voting for the dissolution of the euro zone,” he said.

In the home stretch of the tight race, French Londoners are leaving nothing to chance, according to Bloomberg’s Thomas Seal.

Brexit Bullets

  • May vows to keep target of reducing net migration target to below 100,000 a year
  • Nigel Farage, former leader of the U.K. Independence Party, says he won’t stand in election
  • Nestlé says it increased prices on most of its U.K. goods to compensate for the weaker pound
  • The falling pound makes U.K. less attractive to foreign workers but makes studying in U.K. cheaper for overseas students, according to the Oxford Migration Observatory
  • Chancellor Philip Hammond told Fox Business News that May wanted to win an “unassailable” position in the election to get the best Brexit deal
  • Argentina believes Brexit might cost Britain the support of European allies for its control of the Falkland Islands, its foreign minister said, according to the Guardian

And Finally…

Just when the effects of Brexit are turning into reality, the U.K.’s global economic heft may already be on the wane.

By 2022, Britain will have dropped out of the world’s five largest economies, based on gross domestic product before inflation, according to new International Monetary Fund estimates published this week.

That’s because India is poised to leapfrog Germany in the rankings, pushing the U.K. to sixth just as it’s trying to redefine its trading relationship with the rest of the world.

For more on Brexit follow Bloomberg on Twitter, Facebook and Instagram, and see our full coverage at Bloomberg.com

    Before it's here, it's on the Bloomberg Terminal.
    LEARN MORE