Brexit Bulletin: May’s Hard Brexit Majority

  • Pro-Brexit Tory candidates are standing in many winnable seats
  • New generation of MPs could change the shape of May's majority

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U.K. Prime Minister Theresa May is packing her Conservative Party with an army of Euroskeptic candidates for next month’s election as she seeks reinforcements for her battle to deliver a hard Brexit.

With the vote now just weeks away, Bloomberg surveyed the views of the Tory candidates standing in 60 of the most winnable seats for May’s party: 12 seats where a sitting Conservative lawmaker had stood down and the 48 constituencies the party most narrowly lost to a rival in 2015.

We found that a clear majority of prospective candidates voted a year ago to pull Britain out of the European Union.

A voter marks the box to "Leave the European Union" on an EU referendum postal ballot slip in this arranged photograph in London, U.K., on Wednesday, June 1, 2016. U.K. Prime Minister David Cameron said he'll hold a long-pledged referendum on the U.K.'s membership of the European Union on June 23. Photographer: Simon Dawson/Bloomberg via Getty Images

Britain voted to leave the EU by 52 percent to 48 on June 23, 2016.

Photographer: Simon Dawson/Bloomberg

Of the 52 would-be MPs whose views could be verified by public statements or interviews:

  • 34 backed Brexit last June
  • 17 wanted to stay in the EU
  • One abstained.

Meanwhile, among the dozen candidates trying to replace MPs who have retired, seven sought to leave the EU.

The almost two-to-one margin in favor of quitting the EU shows how the June 8 election could herald a dramatic shift inside May’s parliamentary party, with more Brexit-supporting lawmakers in her team than ever.

This analysis suggests a re-elected May would enjoy greater power at home to pursue a divorce that is focused on reclaiming control of lawmaking and immigration, rather than fostering trade. It also counters speculation that she might soften her approach if she secures the crushing majority polls are predicting.

“I’m a supporter of Brexit and truly believe that although the road may have a few bumps ahead, the outcome will be beneficial,” said Peter Anthony, the Tory candidate in Blackpool South, which the opposition Labour Party won by just 2,585 votes in 2015. “Being in charge of your own borders, laws, and destiny is paramount in a democratic country.”

EU Turns Even Tougher

As May marshals her troops at home, EU governments are yet again tightening their Brexit negotiating position.

In the latest draft talks directives, obtained by Bloomberg, the bloc toughened its language on a transitional arrangement, specified demands on citizens’ rights, and clarified the role of European courts.

Any transitional phase—from the time the U.K. formally exits the EU to the start of a possible trade deal—must be “clearly defined, limited in time and subject to effective enforcement mechanisms,” the May 15 draft said.

The document entered the public domain as British officials argue the divorce and terms of future relationship should be debated at the same time.

“You would expect all of this to be done as a bundle,” Foreign Secretary Boris Johnson said on Monday. “You’ve got to look at the money, the whole thing, the free-trade arrangement; you have to look at that as a package.”

Cyberattack Warning

Days after Britain’s health service became the victim of a cyberattack, Bloomberg Intelligence analysts are warning U.K. banks could be more vulnerable to cross-border crimes after Brexit.

If leaving the EU forces Britain to relinquish membership of the European Police Office, or Europol, then its authorities may find it harder to track criminal networks, a BI report said.

That might leave it more exposed to an attack, potentially putting the financial system at risk, according to Europol CEO Rob Wainwright. The volume of U.K. casework processed via Europol rose 25 percent in 2014-15.

Brexit Bullets

  • Theresa May made her Facebook Live debut, interviewed by ITV political editor Robert Peston
  • Labour proposes a tax on companies paying staff more than £330,000 ($425,000) a year
  • JPMorgan is buying a $137 million Dublin office for 1,000 staff
  • NEX Group boss says it would be “ludicrous” to move euro-denominated clearing from London
  • A total of 23 per cent of voters—described as “Re-Leavers”—say that they voted to remain last year, but now believe the government has a duty to carry out the will of the British people, according to YouGov
  • Banks looking to move jobs from London are avoiding Amsterdam because of its bonus cap, FD reports
  • Turkish PM Binali Yildirim tells Evening Standard “people become exhausted” negotiating with the EU
  • Scottish First Minister Nicola Sturgeon wants a seat at the Brexit talks
  • Read more: Will Brexit trigger an exodus of banks from London?: Bloomberg QuickTake Q&A
  • Remember: The European Court of Justice rules today on an EU-Singapore trade deal that will also set an important precedent for Brexit.

On the Markets

Goldman Sachs economist Adrian Paul reckons the decline in the pound since the referendum can be split into two chapters. The initial fall reflected a shock to domestic confidence stemming from uncertainty, posing a threat to economic growth, warranting looser monetary policy and therefore leading to an even weaker currency.

But sterling’s slide since October is in response to concerns over the U.K.’s institutional strength. That means a greater chance of higher inflation and thus a need for higher interest rates, Paul wrote in a report to clients on Monday.

Inflation figures for April are released today, with economists surveyed by Bloomberg expecting a rise to 2.6 percent.

And Finally…

British businesses in Brussels are so concerned by Brexit that they are being offered insight into how to obtain Belgian citizenship. A conference organized for next Tuesday by the Brussels Chamber of Commerce includes a talk by officials and legal experts on just how to do that.

“The primary goal of the meeting will be to enable individuals rather than companies or organisations to obtain some guidance on the aspects arising out of Brexit that may be causing them some concern,” the chamber said.

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