Brexit Bulletin: What Macron Means for May

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Theresa May’s first electoral test came on Sunday in France.

Even as she heads for a general election at home, the U.K. prime minister will have been looking across the English Channel at the weekend in the knowledge that whoever wins the French presidency will have a key influence on Brexit negotiations.

Brexit Bulletin: What Macron Means for May
Photographer: Christophe Morin/Bloomberg

Emmanuel Macron celebrates on April 23.

Emmanuel Macron, the favorite to win next month’s run-off after the first round of votes, pledged on the campaign trail to be “pretty tough” on the British “because we have to preserve the rest of the European Union.” He also promised to coax “banks, talent, researchers, academics” to relocate to France.

“Macron won’t diverge from the EU’s position,” said Anand Menon, director of the U.K. in a Changing Europe. “He doesn’t share some of the U.K. critique of the EU as some others do. You’ll get none of that from Macron.”

The amount of support for Marine Le Pen in Sunday’s voting gives Macron an added incentive to play hardball, said Carsten Nickel of Teneo Intelligence. The strength of euro-skepticism means the next president “can’t let the U.K. get away with a benign deal” in case French voters start to eye the door too, he said.

Matthew Elliott, a senior fellow at the Legatum Institute and one of the leaders of the campaign for the U.K. to leave the EU, said a Macron win would still be a better result for May than the alternative. It would create “greater political stability, making the Brexit negotiations less complex,” he said. A victory for Le Pen “would be a bigger crisis for the EU than Brexit,” he said.

While Le Pen might seek a favorable Brexit deal in the hope of winning a similar one for France, Menon said a win for her would increase the risk of Britain leaving without any exit deal at all, as the EU would suddenly be forced to focus on a bigger threat to its future.

“The U.K. would be less of a priority,” he said. “It would be even more necessary for the EU to prevent a situation in which Brexit looked like a good model for Frexit.”

For more on the French elections, check out Bloomberg’s latest story and rolling coverage.

Sherpas Meet

Elsewhere in Europe, EU government sherpas meet for a second time on Monday to revise their draft guidelines for the Brexit talks.

German Chancellor Angela Merkel said on Sunday that the talks should be conducted “positively,” but that the EU should preserve “the advantages of the single market for ourselves.” The European Parliament’s Guy Verhofstadt wrote in the Observer that it’s “nonsensical” for May to think a big election victory would allow the U.K. to land a better deal.

On the Home Front

Less than a week since calling an election few expected, May and her Conservative Party are riding high in the polls.

One for ComRes gave the Tories 50 percent support for the first time since 1991. Such surveys suggest May is on course for a majority of more than 100 seats in the 650-member House of Commons.

That outlook is encouraging her to seek votes beyond her traditional base, as seen with her plan to cap energy prices, something Labour pitched at the last election and which the industry isn’t happy about. Her refusal to rule out increasing taxes also suggested she feels confident in her position.

Brexit Bulletin: What Macron Means for May

Labour leader Jeremy Corbyn will on Monday argue only he would “negotiate a Brexit deal which protects the interests of working people,” while Scottish First Minister Nicola Sturgeon will say she alone has the strength to take on May in Scotland.

Liberal Democrat leader Tim Farron pledged a second referendum on the terms of the split. U.K. Independence Party leader Paul Nuttall said UKIP may not run against pro-Brexit Conservative and Labour candidates in some districts.

Former Prime Minister Tony Blair warned against giving May a “blank check for Brexit at any cost.

Still Hard

JPMorgan Chase, Bank of America and Berenberg are among the banks still advising clients to brace for a “hard Brexit” if May strengthens her hold on power.

While greater standing at home might allow May more room to discuss a transition, she is still likely to try to pull Britain from Europe’s single market and to regain control over immigration, budget payments, lawmaking and trade deals.

“We do not anticipate PM May dropping her previous red lines,” BofA economists Robert Wood and Gilles Moec said in a report. 

The election could even make a hard Brexit more likely, said Kallum Pickering, an economist at Berenberg.

“We expect Conservative MPs to be more pro-Brexit, on average, after the vote,” said Pickering. “May’s hard-line views on EU migration suggest that she harbors hard-Brexit tendencies.”

Brexit Bullets

  • A Dublin court will hold its first hearing on Monday to set out a schedule for studying whether Article 50 can be revoked
  • Banks want the U.K. to accept the oversight of EU courts to facilitate a trade deal, reports the Times
  • Denmark, Ireland and The Netherlands say haggling over the Brexit bill shouldn’t be allowed to delay trade talks for too long
  • May has indicated to the EU that she doesn’t want to leave the bloc without a deal, says European Commissioner Valdis Dombrovskis
  • Hard Brexit could cost Germany 6 billion euros by 2020, says Bild newspaper
  • U.S. President Donald Trump has put Britain behind the EU in the queue for a free-trade deal, the Times reports
  • The Bank of England doesn’t need to delay interest rate hikes because of Brexit, says policy maker Michael Saunders as central bank goes quiet for the election
  • Germany government coalition parties want the fight against international terrorism excluded from Brexit, Rheinische Post reports, citing a draft for a Bundestag resolution.
  • Pharmaceutical industry calls on European nations to quickly decide on relocating the London-based European Medicines Agency to ensure Brexit doesn’t hinder drug safety regulation

And Finally…

It was the April Fool’s joke that backfired in a good way.

Online tailor Spoke sent an email to British clients on April 1 promoting shorts the color of the EU flag, with stars on one leg. It called them “Merkels.”

But rather than just laugh, customers placed real orders. The result is a limited run of the shorts costing £69 each. Unlike those initially advertised, they will not be “scented with Camembert.”

“It’s the will of the people,” the company declared in an email.

Brexit Bulletin: What Macron Means for May
Source: Spoke London

'Merkels' for sale on the Spoke London website.

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To contact the author of this story: Simon Kennedy in London at