Hartland Capital

2017 UK General Election Will Not Have a Great Impact on Negotiations with the EU

Considering last June’s election centred largely on the ongoing negotiations with Europe over Britain’s departure from

it, it would be normal to think, the balance of power in the House having been changed, that similarly negotiations

with Brussels would assume a different shape as a consequence. In fact, though this election might have a marginal

impact, the talks with Mr. Barnier’s team will not be as affected as one might think.

What does Brussels think?

When the Prime Minister announced she would turn to the voters a year after she was appointed by the party, she

claimed it would help with her negotiations as she summed up in her infamous “strong and stable” creed. What is

interesting is the reaction it got from senior figures in Brussels. For instance, the leading European federalist Guy

Verhofstadt explained that she was mistaken in believing the size of her majority would have any bearing on their

talks.

Indeed, the EU is negotiating with her as the representative of the United-Kingdom. By what method or with what

legitimacy she got to this position is irrelevant; what matters is the bargaining position of the country she represents.

This is a sensible position and now the election has produced the opposite outcome to what she had hoped, common

sense indicates that if victory would have presented no advantage, then defeat must present no handicap either.

Looking at the specifics of British politics before and after the vote, what difference, if any, could the result still

make?

What are the changes in Parliament?

As everyone knows, the Parliamentary landscape has changed so that Conservatives and SNP lost seats for a hung

Parliament where Tories have only achieved an absolute majority through an alliance with the DUP. Yet, as it concerns

negotiations for leaving the EU, what matters is that, like previously, most current Conservative MPs are among those

who supported Remain before the referendum (176 out of 317). The presence of the very pro-Brexit DUP could have

made a difference but their conditions for supporting the government were mainly contained in the financial benefit

Stormont received.

What does the result say about British public opinion?

On the issue of independence from the EU itself, this election does not signal a great change in public opinion. The

only major party that proposed an opportunity to reverse 2016’s referendum, the Liberal Democrats, did not receive a

massive backing from potential remorseful Leave voters and increased their presence on the House by a total of four

seats. Another way of looking at it is every constituency where that party won a seat had already voted remain last

year.

It is therefore safe to say that the main issues raised by proponents of independence, i.e. immigration and national

sovereignty, are still very much present in the mind of those who voted to leave, who in turn are mostly either

Conservative voters or potential ones.

This result is also eloquent regarding Britain’s future trade policy. All the major parties in the election – i.e. the

Conservatives, Labour and the SNP are in favour of tariff-free trade with EU countries with or without the single

market and, combined, they trusted 85% of British votes. This election has shown that the British public is

overwhelmingly supportive of free trade and on the political scene from May to Corbyn, the benefits of free trade with

Europe are virtually uncontroversial.

Therein lies the major difficulty for squaring the Brexit circle: in the eyes of Brussels, controlling immigration from

the EU and trading freely are incompatible. Even national sovereignty is in question when trading with a major

regulatory block, as many EU norms would have to be copied by Britain to fully trade with Europe.

This dilemma already existed before the election however and this election result only confirms the existing

difficulties for the government to know what to aim for in their discussions with EU negotiators.

What changes are there to talk about?

June’s election is not completely devoid of effects. Specifically, the campaign has shown May’s rhetorical limits. When

she did agree to appear on television, she showed the difficulties she had in convincing an audience. Joining that with

the fact that the party’s majority has been reduced already, Tory MPs are now understandably worried about their

seats as long as May is their leader, which in turn makes her removal from office by them more looming. This electoral

urgency means May, while still walking the tightrope of the dilemma mentioned earlier, will likely lean towards the

“immigration and sovereignty” side to secure Conservative seats and her own, since that is the main area of concern

for a lot of their key electorates, as discussed before.

This might be why she told free-trade advocates not to get their hopes up in an interview earlier this month.

Conclusion

This election was not a turning point in negotiations and Britain overall remains as it was before from the perspective

of Brussels’ diplomats. It does, nonetheless, make it somewhat more likely that the government will opt for nationalist

priorities over liberal economics if forced to choose.

The importance of this must not be exaggerated since this often called “Hard Brexit” had already been announced by

Donald Tusk as the only possible Brexit anyway long before the election.

Clement Julhia Political Analyst +44 (0)7 392 322 476 cljulhia@hartlandcapital.com Clement Julhia | July 2017