Brexit Bulletin: Extreme Divisions
Brexit Bulletin: Extreme Divisions
(Bloomberg) -- Today in Brexit: No-dealers will be emboldened after the EU election, but so will those who want Brexit called off.
What’s Happening?
If the European elections were seen by many as a proxy for a second referendum, the results show just how tight any re-run would be.
Pro-Brexit groups, led by Nigel Farage’s debutant Brexit Party and including the governing Conservatives, took 44% of the vote. Anti-Brexit forces, spearheaded by a Liberal Democrat revival, won 40%. Those numbers exclude the Labour party — which continues to play to both sides of the debate and took home just 14% as a result.
The results mean that pro-Brexit candidates in the Tory leadership race now under way will be able to argue that there’s clear support for a hard exit in October. Boris Johnson, Esther McVey and Dominic Raab are already making the case for October as a final deadline — a position that’s rattling markets.
Even Conservative moderates like Foreign Secretary Jeremy Hunt say the defeat at the hands of Nigel Farage means his party faces an “existential risk” unless it can get Brexit done. Asking for another extension probably doesn’t qualify.
But as the no-dealers battle to out-do each other, those seeking to reverse Brexit will also be emboldened by the results. Parties that back a second referendum did better than those wanting no-deal, by 40% to 35%.
And that's the other main takeaway from the night: Parties backing the most extreme — and apparently — Brexit positions did well, while the two main parties tried to square the circle, make compromises, and failed.
How Labour responds is now key. The party says it will “reflect on these results” over the coming days. Those reflections are already playing out in public: Shadow Foreign Secretary Emily Thornberry concluded that the results meant the party should fight for a second referendum in which it would back remain. Those comments were quickly disputed by Caroline Flint, whose northern constituency backs Brexit.
And what about the chances of a new Tory leader going back to win concession from the European Union? Ian Wishart in Brussels reckons the EU-wide result makes that unlikely. While mainstream center-right and center-left parties have suffered, their votes have largely transferred to other pro-EU groups. That makes it unlikely the new regime will be much different to the last when it comes to dealing with its slowly departing neighbor.
Today’s Must-Reads
- Britain needs a dose of honesty from its next prime minister, writes the Bloomberg Opinion editorial board.
- The EU and the City of London have become too codependent in financial services and Brexit is an opportunity, writes Bloomberg Opinion’s Lionel Laurent.
- ICYMI: Relive the downfall of Theresa May. Tim Ross and Alex Morales’ inside-the-room account of how the Cabinet turned against May one by one as she tried one last move to get Brexit done.
Brexit in Brief
Hammond’s Warning | Chancellor of the Exchequer Philip Hammond refused to rule out backing a no-confidence motion against the government if the next prime minister tries to force a no-deal Brexit. Parliament has voted “very strongly” against leaving the EU without a deal, Hammond said, and a prime minister who ignores lawmakers “is not going to survive very long.”
And McDonnell Agrees | Shadow Chancellor John McDonnell told Sky that Labour would “work with anyone” to prevent a no-deal Brexit. “We’ve got to block a no-deal; if necessary let’s go back to the people,” McDonnell said.
The Leadership List | Environment Secretary Michael Gove, a Brexiteer who was part of the referendum campaign but is still in May’s Cabinet, was the biggest name to throw his hat in the ring over the weekend. Health Secretary Matt Hancock, a remainer and would-be modernizer, also joined the race. Andrea Leadsom, a Brexiteer who resigned last week, launched her bid, and Dominic Raab also confirmed his long-obvious candidacy.
Raab’s Plan | Raab, a former Brexit secretary, told the BBC there shouldn’t be another extension beyond Oct. 31, and said it would be hard for Parliament to stop it. No-deal has to be on the table in order to get a good deal, he said. Brussels may well feel it’s heard all this before.
What About the BOE? | May’s exit also throws wide open the race for the next governor of the Bank of England. A new prime minister — and the new chancellor of the exchequer that might accompany them — could have very different priorities to May and Hammond, opening the door for a different slate of candidates for the top BOE job.
On the Markets | The pound has seen a record-long losing streak against the euro this month, weighed down by fears that a Brexit hardliner could pull Britain out of the bloc without a deal. Early this morning, it traded at $1.2744
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To contact the editor responsible for this story: Adam Blenford at ablenford@bloomberg.net, Leila Taha
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