25 June 2016

The UK wants to take its time

During his resignation speech on Friday Prime Minister David Cameron made it clear that Article 50, the process for leaving the EU (see here for a longer explanation), will not be triggered until there is a new leader of the Conservative Party and new Prime Minister in place. This is not expected until after the party’s October conference. Even then, the new PM will probably want some time to figure out exactly what his negotiation strategy will be and to assemble a team and organise a framework for handling the lengthy process. There is also still the outside chance of a general election being called to give any new government a fresh mandate and legitimacy.

Finally, the issue of Scotland looms large. Scottish First Minister Nicola Sturgeon has made it clear the fact that Scotland voted to stay in the EU cannot be ignored in this process and will push for a second independence referendum if she thinks it necessary. As such it will be at least three or months until the leaving process begins and in reality, it may be quite a few more.

During their press conference following the referendum the leaders of the leave campaign made it clear they agreed with this approach and suggested that they would look for informal talks before the formal negotiations start by triggering Article 50.

EU institutions applying pressure for a quicker process

However, the EU has already applied pressure for the process to begin more quickly. Part of the motivation might be that European stock markets were hit hard by the news (even harder than the UK), thereby applying pressure to politicians to end the uncertainty as quickly as possible. In a statement released on Friday, the EU’s four presidents – European Commission President Jean-Claude Juncker, European Council President Donald Tusk, European Parliament President Martin Schulz and holder of the rotating EU Presidency Mark Rutte, the Dutch Prime Minister – said:

We now expect the United Kingdom government to give effect to this decision of the British people as soon as possible, however painful that process may be. Any delay would unnecessarily prolong uncertainty.

They went on to add, “There will be no renegotiation,” dismissing the idea that they could offer more to try to keep the UK inside. This was supported by strong statements following a meeting of the foreign ministers of Germany, France, Belgium, Luxembourg, Italy and the Netherlands today. German Foreign Minister Frank-Walter Steinmeier said, “This process has to begin as soon as possible, so that we’re not left hanging.” French Foreign Minister Jean-Marc Ayrault added, “We will begin this process immediately, this has to be clear — the British people have spoken…And the 27 other EU members states have to be respected, as well.”

Italian Prime Minister Matteo Renzi told public broadcaster Rai, “The game is up. Now we turn the page. We can’t spend another year discussing Britain’s exit from the EU.” A number of EU officials have also been briefing the press that there will be no serious informal talks, a position reiterated this morning by Steffen Seibert, Chancellor Merkel’s spokesperson.

So the suggestion is that the talking should begin immediately and that it won’t until Article 50 is triggered – putting some clear distance between the UK and EU already on the approach to the negotiations. Whether this public stance is maintained once the UK is in a position to begin talking is impossible to know at this stage.

EU is not united in its approach

All that said, there are also reports that, despite signing up to the statement, Tusk and Rutte are less keen to force the issue and are willing to give the UK time to figure out what it wants to do. But even more importantly, German Chancellor Angela Merkel is taking a cautious approach. She said that there was “no need to be particularly nasty [to the UK] in any way in the negotiations. They must be conducted properly.” She added that the exit process “shouldn’t take forever, but I would not fight for a short timeframe.” This is supported by reports in the Daily Telegraph cites senior EU sources as saying they can wait “until Christmas” for the UK to trigger Article 50 of the EU Treaties and begin exit talks. It should also be remembered that the UK cannot be forced to trigger Article 50.

What does this tell us and what happens next?

We are already seeing dividing lines being drawn. Despite some initial push back there seems to be a willingness from the key players to give the UK until December to trigger Article 50. Going much beyond that may sour the climate of talks somewhat to start with. However, we are seeing a split between the EU institutions, along with France and Italy, and the likes of Germany, Netherlands and Ireland. The former want to take a much more aggressive approach to the negotiations with the UK and are pushing for a swift exit, with hints of a desire to punish the UK. However, the latter are, as expected, taking a much more pragmatic approach and are more understanding on the amount of political overhaul currently underway in the UK.

However, exactly how far and deep this divide runs is unclear. Merkel and French President François Hollande have stressed that they are “in full agreement” on how to handle the fallout from the UK referendum. The leaked document on the issue from the German Finance Ministry was vague but suggested the UK could not expect a significantly better deal than has been offered to other countries.

It remains incredibly early days of course. This week’s European Council summit will see Cameron explaining the result to EU leaders. He would do well to issue a warning that they should not ignore the result of the referendum in terms of the EU more broadly. Beyond that, the other 27 members will hold informal talks at the summit to begin discussing their approach to the negotiations. There are unlikely to be any big decisions taken. For now, all those involved are feeling each other out.