"Hard" Brexit Is to Be Softened

On Monday, June 19, 2017, the schedule of negotiations on the UK's withdrawal from the EU was approved during the meeting between the European Commission member Michel Barnier and Brexit minister in the Theresa May government David Davies.

The European Union insisted that the negotiations must be conducted in stages: first, it is necessary to agree on exit conditions and only later on the future format of relations. In case of "significant progress" at the negotiations, as the EU likes to say, the realization of the second stage can begin before the signing of the first agreement.

Before the parliamentary elections Theresa May voiced the idea of the "hard" Brexit implementation:  withdrawal from the EU, the Single Internal Market and the EU Customs Union. Such a "divorce" from the political point of view is fully justified, but it is difficult to implement it from the point of view of economics, without solving of the Irish problem and respecting the rights of citizens.

After the election many analysts noted, that the position of Theresa May was weakened, she lost majority in parliament and had to form a coalition government with the Democratic Unionist Party from the Northern Ireland. This is the only party that unequivocally supports the UK's withdrawal from the EU.

Therefore, there is some hope that the "hard" Brexit will be slightly softened. However, now it is very difficult to talk about the format of relations. First, at the meeting on June 19 David Davies voiced proposals on the "hard" Brexit, which were published in the "White book". Second, there is still a sensitive Irish question, which most likely will make adjustments to the relations between the United Kingdom and the European Union.

How much will Brexit cost to the UK? The European Union announced an amount of 100 billion euros. In particular, this "compensation" will include the UK participation in the EU budget, the EU long-term investment projects, including various funds (for example, the refugee fund), payments to former British officials and so on.

Of course, the UK does not agree with this approach and wants to return the deposit that it made to the European Central Bank (ECB) and the contribution to the European Investment Bank (EIB). As for the ECB, this is quite realistic, but with the EIB the situation is more complicated, since this investment is a long-term one, and it is difficult to issue the British contribution.

In the Article 50 of the Lisbon Treaty on the process of a country's withdrawal from the EU, only the most general parameters are provided: the negotiations should last two years from the moment of filing an application for withdrawal. If the agreement is not reached within this period, then with the consent of all EU member states the time for negotiations can be extended.

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.