After more than 2 months Britons voted to leave European Union for real, there’re still tons of people who couldn’t accept the reality. Those who had initially prepared to scream “I told you so” in anticipation of a global economy meltdown due to Brexit are still waiting for the sky to fall. Clearly, they have over-estimated the size of Britain’s economy.

 

Since British voters cast their “Brexit” ballots on June 23, some silly economists are still predicting a recession although they’ve been proven wrong for forecasting recession would begin almost immediately. Now, they say the doomsday would still happen, just not now. And when the recession finally happens, you can bet they would be fast to take credit.

Reasons being thrown on the table to convince everybody that UK will never leave EU despite the referendum are equally jaw-dropping. A top European diplomat says triggering Article 50 of the EU’s Lisbon Treaty – starts a 2-year clock ticking on a formal exit arrangement – for Britain to exit the EU is like turning off the engines on an airplane.

 

Eurosceptics do not only infect lawmakers and economists but have its tentacles spread to the civil service of the United Kingdom. Gus O’Donnell, the former Cabinet Secretary, who said that despite the clear referendum result the country could end up remaining in a “broader, more loosely aligned” European Union, has forced PM Theresa May to order civil servants to embrace Brexit.

There’s little doubt that there’re dozens of MPs within Theresa May administration who actually believe the British prime minister isn’t serious about her “Brexit means Brexit” assurance. They took it that May’s refusal to trigger the exit procedure this year as a sign that the country’s second woman prime minister is merely dragging her feet.

 

Professor Thom Brooks, the head of Durham University Law School, is the latest intellectual who believes Britain will never actually leave the EU. His reason is pretty simple – Philip Hammond, Boris Johnson, David Davis, Liam Fox and other Brexiteers will realise the massive complication related to leaving the EU that they would eventually give up.

Because the process is too difficult to be executed, Professor Thom Brooks is betting those entrusted by PM Theresa May would make a humiliating U-turn about leaving the European Union. Therefore, he dismissed May’s “Brexit means Brexit” as merely an empty rhetoric, with the Article 50 unlikely to ever be invoked.

 

As a result, Professor Brooks predicted the Brexit ministers would go back to Theresa, tail between legs, and recommend a second referendum. Ultimately, this second referendum will either see Britain changing its mind on Brexit or voting for something other than a full withdrawal from the EU.

Even if May government decides to invoke Article 50 eventually, it’s hard to see how the vengeful EU ministers could help the situation. After Chancellor Philip Hammond said access to the (EU) single market is essential for Britain’s financial services sector, Economy Minister Sigmar Gabriel said Brussels must not give Britain too good a deal.

 

Mr. Gabriel, German economy minister, has openly admitted that Britain must not be allowed to “keep the nice things” that come with EU membership without taking responsibility for the fallout from Brexit. Essentially, he warned if the British is not punished and other member countries followed Britain’s lead, Europe would go “down the drain”.

For now, Theresa May can huff and puff about her grand plan for Britain post-Brexit which would retain access to the single market and at the same time curb migration. That is her ideal proposal, of course. But it’s highly unlikely she will get everything on a silver platter without any trade-off.

 

Unless May government is ready to welcome unlimited migration without filtering, which is tantamount to political suicide and back to the square one, Britain may have to accept access to EU single market based on “sector-by-sector” basis only. We know for a fact that Angela Merkel is really anxious about German’s automotive industry access into UK market.

Still, other European leaders may not like the idea of Britain enjoying a special status. They do not want Britain to hold the bloc hostage by horse trading on the terms of an exit before it commits to leave. Merkel may be the EU supreme dictator but even she needs to compromise if the rest of the EU elite want to punish Britain more than talking sense.

 

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August 30th, 2016 by financetwitter

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