Brexit: Monday Afternoon Update

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Posted on July 5, 2016

Story of the Day: Departure of Nigel Farage

The UK is getting used to surprises. Today, Nigel Farage has quit as UKIP leader. His decision will have been taken with a combination of having accomplished the job the party was set up to deliver, knowing he carries a lot of baggage and out of some personal exhaustion. He will also duck the difficult decision of what to do with the one UKIP MP, Douglas Cardwell, with whom he has always had a difficult relationship, as they have very different views about Europe and UKIP.
Farage has without a doubt been the charismatic, yet divisive face of UKIP. His legacy will be that he led the UK out of Europe. History will decide whether this was a good or bad decision for the country, for Europe and globally. Will he come back? This is of course not the first time he has resigned. He did so last year having failed to pick up a riding during the general election, so never say never may be the watchwords.

The bigger question is what will happen to UKIP once he has gone. They could go down the road of relative obscurity having fulfilled their mandate. As equally possible, UKIP could grow its base and become the party of core Labour voters who voted out, both in the midlands and north of England. That would lead to the rise of UKIP in Parliament.

There was another story today, no less important, and it concerns the law firm Mishcon Del Reya taking legal action, with the backing of business and academics, to ensure that the formal process of the UK leaving the EU cannot be commenced without sign off from Parliament; they believe it would be unlawful to do so. They do not doubt the outcome of the Referendum but they want to ensure due process is followed.

Conservative Party

All of the main candidates have now launched their campaigns. And there is no doubt that the women are ahead with both Theresa May, with the backing of the majority of her Parliamentary colleagues, and Andrea Leadsom as a Brexiter, are leading the pack.
At the moment, life has taught us to expect the unexpected, Theresa May is the most likely candidate to replace Cameron. Her Ministerial experience, mainly as Home Secretary stand her in good stead. She is smart, steely and although she was a Remainer during the Referendum, she was seen as at best a lukewarm Remainer. In her statements, she has not made many promises other than getting the right and best deal for the UK. She knows that she cannot guarantee anything until an agreed framework has been reached with the EU. Andrea Leadsom is an impressive former City financier. She has positioned herself as the next Lady Thatcher and, as a main Brexiter, she feels she can effectively lead negotiations. However, she lacks government experience and there are already concerns about possible offshore accounts she may hold. She is under pressure to release her tax returns as the other candidates have done.

Other candidates include Dr Liam Fox, who reportedly has the fewest backers, Michael Gove, who is learning that trust and humility are values that matter, and Stephen Crabb, a credible Work and Pensions Minister candidate who appears too inexperienced to secure the leadership.

Labour Party

The Labour farce continues. No challenger has formally come forward, not least as Jeremy Corbyn has remained firm in his desire, at least publicly, to remain as leader of the Labour Party. Angela Eagle has threatened to put her name forward unless Corbyn resigns. There is a lack of clarity on whether he actually wants to stay. There have been stories over the weekend that he has had enough – knowing he has lost 80 per cent of the Parliamentary Labour Party, does not have enough MPs for a shadow Ministerial team, and the Labour Party is on the road to splitsville. He is however being pressured to remain knowing that he carries the Labour membership and that, if he runs again, he may well in all likelihood win.

Global Markets

Evidence now is emerging that four per cent of the value of the world’s top 100 companies has been wiped off their value since Brexit. The UK is still focusing on what this means for the country and for its relationship with Europe so there is no critical thinking of what this means globally and how the UK’s friends and allies view Brexit both in economic and security terms. There is almost too much crisis going on internally within the UK for the UK to think about what this means from a global perspective.

Europe

The EU failed in its initial bid to force Cameron to trigger Article 50, but there will be continued pressure, particularly once the new UK PM is in place. But the knives are out. Merkel is livid with Juncker for having failed to see the potential loss of the UK during his watch. Spain, France and Italy are the main member states with the most gripes against the UK and are therefore likely to be the least helpful. Germany and others are more likely to be pragmatic as the current assessment is that, while the UK will be leaving the EU, it will want to remain part of Europe in some economic partnership yet to be determined.

The UK

The country still feels both uneasy and divided. The new PM knows that she or he will have a large task of uniting the country and reaching out to Europe with the eye on a new relationship. There was a large demonstration in central London over the weekend, mainly young, mainly European protesters who are concerned about the Brexit referendum. They had disparate wants from a re-run to security of tenure for EU nationals in the UK. There has been a marked rise in racial hate crimes spilling over into anti-Muslim sentiment as some people feel they have been given permission to tell people to leave the country. Whomever becomes PM will need to try and put a stop to that otherwise the UK risks moving from Cool to Cruel Britannia.

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To speak to someone on the ground in London, connect directly with our London lead Ashley Prime at aprime@navltd.com.

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