Brexit Bulletin: Why May’s Manifesto Matters

  • May plans a ‘triple lock’ on her Brexit plan, reports say
  • Labour and Lib Dems offer contrasting approaches to Brexit

Why the U.K. is Heading to the Polls… Again

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Theresa May is polishing off her Conservative Party’s manifesto.

Recent reports say the prime minister will use the manifesto, scheduled for release on Thursday, to impose a “triple lock” on her Brexit plan by recommitting to ending membership of the single market, free movement of labor and the jurisdiction of the European Court of Justice.

All that implies a pretty hard Brexit, and April’s Tory rebellion over tax hikes will have reminded May of the importance of manifesto commitments.

Theresa May has been on the road campaigning in seats the Tories hope to win from Labour on June 8.
Photographer: Andy Rain/EPA

There are other benefits to her laying out her strategy before the June 8 election. For one thing, whether they voted “Remain” or “Leave,” all Tory lawmakers will have fought the election on the manifesto and likely feel bound by it.

That will limit the chances of a cross-party, anti-Brexit coalition forming in which some Conservatives align with other parties to reject May’s ultimate deal or try to dilute her plan. The House of Lords is more wary of Brexit than the House of Commons, but peers don’t traditionally vote down contents of a government manifesto.

At the same time, May needs to avoid going too hard on topics such as curbs on labor in case she makes commitments which jeopardize her ability to land a transitional deal with the EU later on.

Once talks begin—and assuming she’s re-elected—May could perhaps also hold up the manifesto to tell the EU that voters endorsed it and so she must deliver on it. Of course, the Europeans might not care.

How much more should May say? In a May 5 report, the Institute for Government said she should also outline what would happen if there was no Brexit deal and flesh out her plans for immigration and trade.

“All parties face a balancing act in deciding how much of their Brexit negotiating position to expose in a manifesto,” the report said. “Some calculations on trade-offs and compromises need to be kept under wraps. But parties should not expect to get away with demanding a blank cheque from voters.”

Many Manifestos

The opposition Labour Party released its manifesto on Tuesday, pledging to retain the benefits of the single market and the customs union.

It also said a Labour government would immediately guarantee existing rights for all EU nationals and yet end the free movement of more of them to Britain after the breakup.

Labour leader Jeremy Corbyn will seek to rally support behind an agenda of increased taxes for the wealthy and more spending on public services.
Photographer: Chris Ratcliffe/Bloomberg

Meanwhile, the Liberal Democrat manifesto will on Wednesday propose to give voters a final say on any ultimate Brexit deal.

Business groups are also listing demands for the next government. The Confederation of British Industry will on Wednesday call for May to establish a Brexit taskforce of business leaders, while Centre for London wants regional visas.

Dented Not Derailed

May’s ambitions for a sweeping and speedy post-Brexit trade deal with the European Union were dented yet not derailed on Tuesday by an ECJ ruling on an EU-Singapore free-trade pact. The court resisted handing full veto powers to national assemblies.

The court ruled that all 28 member parliaments must vote before the trade deal can become legal, erecting a potential obstacle to any future U.K.-EU agreement. But lawyers and academics said the overall ruling could have been much worse from Britain’s perspective.

The court said the EU maintains “exclusive competence” over areas including foreign investment, intellectual property rights, and environmental standards. That means national ratification may not be necessary for all the parts of any eventual commercial arrangement.

The ruling could make the need for national sign-off of a U.K.-EU trade deal “less likely” since the two sides “aren’t seeking an investment deal,” Steve Peers, a professor of EU law at the University of Essex, said on Twitter.

The ruling will ease Brexit negotiations but the final deal could be worse for Britain, Bloomberg View’s Leonid Bershidsky wrote.

Open Door Policy

The EU is refusing to allow Brexit talks to take place in secret.

With just over a month to go before negotiations are due to start, the bloc has produced a list of papers it will disclose throughout the negotiations. 

The policy, a rebuff to the U.K.’s appeal to keep positions confidential, is contained in a draft seven-page document entitled “Guiding principles for transparency,” obtained by Bloomberg News.

On the Markets

The pound still hasn’t been able to crack $1.30, partly because of signs that the Brexit talks will be tough and partly because investors suspect faster inflation won’t force the Bank of England to raise interest rates.

At the same time, equities continue to climb, perhaps on the assumption the election will deliver a larger Conservative majority in Parliament, reducing political uncertainty and granting May more room for manuever.

The FTSE 350 Index of U.K. stocks has climbed about 4.9 percent since May announced the election, and the Bloomberg Brexit Barometer fell the most in more than six months as inflation reached a three-year high in April.

Brexit Bullets

  • City of London Corporation says shifting clearing of euro-denominated derivatives from London would be “vastly damaging and potentially destabilizing”
  • London’s overall office vacancy rate climbed to 5.8 percent at the end of the first quarter from 3.9 percent a year earlier, according to data compiled by Deloitte LLP
  • The Institute for Government says the U.K. is not “close to being ready” to negotiate trade deals, and suggests focusing on a pact with the EU,  then like-minded Australia and New Zealand rather than prioritizing the U.S., China or India
  • Andrew Duff of the European Policy Centre warns May’s election rhetoric will be difficult for EU officials to forget when Brexit talks start
  • The negotiations just got “a little bit easier” for German Chancellor Angela Merkel with Emmanuel Macron as French president, according to a senior member of her party
  • Sterling’s slide following last summer’s Brexit vote wiped £82 million from EasyJet’s first-half earnings.

And Finally…

An economist who backed Brexit has won the 2017 Contrarian Prize.

Patrick Minford, founder of the Economists for Brexit group, scooped the prize that, according to its organizers,“recognises individuals in British public life that put their head above the parapet on grounds of principle and demonstrate independence, courage and sacrifice.”

The Contrarian Prize confirmed Patrick Minford as the winner on Twitter
Photographer: @ContrarianPrize/Twitter
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