Brexit: Monday Afternoon Update

Managing Director
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Posted on June 27, 2016

The Brexit referendum fallout is changing by the hour. Navigator’s UK Managing Director Ashley Prime takes us through the latest takeaways:
1. Brexiters — the leaders of the Brexit campaign — are already rolling back on two key referendum issues.

Brexiters ultimately won on a platform of promising that the decision to leave the European Union (EU) would a) enable the UK to control immigration and b) allow savings from the alleged UK contribution of ᆪ350M per week to the EU to go instead to the National Health Service (NHS). Neither appears to be true.

This immediate about-face is in part due to the lack of a post-Brexit plan. The reality is that Brexit leaders MPs Boris Johnson and Michael Gove were as stunned as the rest of the UK with this result. With no strategy, they are now behind closed doors simultaneously juggling a Tory leadership bid and developing a negotiating strategy with the EU. In fact, neither Brexit leaders were in Parliament this afternoon to watch the Prime Minister give his Brexit statement to a packed House of Commons.

As part of this statement Prime Minister Cameron ruled out both a second EU Referendum or a second Scottish referendum; however, the extent to which he is in a position to make such commitments is unclear. Johnson is currently the most likely next Prime Minister (PM) along with Home Secretary Teresa May, a strong rival. Chancellor of the Exchequer George Osborne, once a likely successor, is now seen as too closely linked to the disastrous “Project Fear” campaign run by the PM.

There are signs the Tories are trying to fudge fully exiting Europe. This includes remaining in the single market. How that will happen, if at all, is uncertain, while also trying to deliver what was promised to the Vote Leave electorate.

2. Floundering UK political leadership

Cameron is treading water. He is insisting with the EU that only the UK can pull the Article 50 trigger, though his visit to Brussels on Tuesday, June 28 for a Council of Ministers meeting may change that. The mood in the EU and within member states is not one of compromise.

Cameron initially wanted his successor to be appointed by October but early pressure has already brought that forward to September 1, further calling into question his ability to maintain control through the summer.

Labour leadership is in total turmoil and total denial. Jeremy Corbyn has limited support in the Parliamentary Labour Party (PLP) and has already lost 34 members of his shadow cabinet. He has vowed to remain in his position even with suggestions that he himself voted for Leave and as long as he has the backing of Labour rank and file, there is no mechanism to remove him.

3. Pressure from Europe and the market.

Cameron will be under huge pressure this week from Europe. He heads to Brussels tomorrow but does so knowing he has been excluded from the second day of the Ministerial meeting on Wednesday.
The initial EU reaction, tempered by the Germans, is that Article 50 should be triggered now. The EU will be aware of the need to show to other potential exiting countries what will happen to them should they choose to go down a similar path.

4. Calming the markets and reassuring people.

George Osborne has made a statement on the state of the UK economy in an effort to calm the markets. Johnson has also made comments to allay concerns about the UK remaining part of the EU single market and the ability of EU nationals resident in the UK to remain. These comments, however, have been dismissed by senior EU diplomats. The markets are playing a waiting game and volatility, especially with the banks, remains a huge concern. Both Barclays and Royal Bank of Scotland (RBS) shares were suspended in London trading today.

Sadly, while Sadiq Khan, London’s Mayor, has told EU nationals they are welcome and safe in London, there has been an unsettling rise in racially-motivated hate crimes against EU nationals and visible minorities across the UK.

5. This is global.

Global fallout of Brexit is far reaching. UK almost certainly has fewer friends today than this time last week. One of the pillars of post-war stability in Europe is the UK’s membership in the EU, coupled with its “special” relationship with the U.S. A foot in both camps, and a bridge between them.

At the moment, UK foreign policy is at best unclear. The fallout will dominate foreign policy for years to come.

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

Navigator’s Brexit Response Team

Navigator's Brexit Response Team

If you have any questions on the implications of Brexit and its implications for your organization, please reach out to Navigator's Brexit Response Team.

If you require immediate assistance, call our crisis response hotline at:

Press 3 for the on-call crisis manager

1 (877) 431-9721

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