House of Lords Finally Backs Brexit Bill
Despite threats to derail the Brexit process, earlier today the House of Lords voted to approve Prime Minister Theresa May’s EU Withdrawal Bill as written. Once the bill receives a largely ceremonial Royal Assent, it could be ratified as early as today. This clears the path for May to trigger the Article 50 clause notifying the EU that the U.K. plans to leave. Expectations are that the process should be completed before the March 31st deadline imposed by the Prime Minister. Meanwhile, as London prepares for independence, Scottish Bremain advocates are lobbying to separate from England, Wales, and Northern Ireland in an attempt to maintain close relations with mainland Europe.
House of Lords Backs Down in Brexit Showdown
A potential crisis was averted when the House of Commons overwhelmingly voted to support the original bill proposed by Theresa after two amendments were inserted by the House of Lords last week. Several Conservative Lords and Ladies broke ranks and voted for the amendments. This led to fears that the upper chamber might continue to fight for more power, despite having their additions rejected. The Lords wanted to add the right to veto May’s negotiation decisions in regards to the terms of leaving the EU. They also wanted to insert guarantees for foreign nationals living in the U.K.
Opposition Leaders Still Want More Brexit Oversight
The opposition voiced disappointment regarding the eventual resolution of the vote. But Jeremy Corbyn, the leader of the Labour Party, vowed to keep pressure on the government to protect foreign nationals. Theresa May has referenced fair treatment of non-U.K. citizens as a priority. However, she was unwilling to promise anything because of the similar situation regarding Brits living in other EU countries. None of the other EU member states would discuss post-Brexit plans prior to May triggering Article 50.
Scotland Seeks to Leave the U.K.
Thanks to this final confirmation that Brexit is on track, Nicola Sturgeon, First Minister of Scotland, wants a new public vote on whether Scotland should move towards independence. Her hope would be that the referendum would take place in late 2018 or early 2019. However, Article 50 negotiations conducted based on Scotland being part of the U.K. would just be coming to a close. This makes it unlikely that the EU would agree to renegotiate new treaties with Scotland.
European Elections Overshadow Brexit Concerns
So far, the markets have not reacted to the vote with the same level of disquiet that came in the wake of the original Brexit vote. This is partly because there has been nearly a year to weigh the likely consequences of an independent U.K.. Also the circumstances have changed in the political climate of both Europe and the United States. Populism gains a hold on a global scale. Now more analysts are worrying about elections in France and the Netherlands than Brexit.
May’s Leadership Lowers Investor Insecurity
May’s handling of the situation reassured investors. During the leadup to the Brexit vote, May had campaigned to remain in the EU. Some critics complained that she was delaying action. However, in January she published a 12 point plan covering her vision for the U.K.’s departure. This countered the previous lack of direction and helped the pound rebound from its lows of the previous summer.
EU Negotiators Agree to Delay Payment Settlements
The EU presented an informal arrangement regarding outstanding payments owed both by the U.K. to other E.U. states, as well as for its share of liabilities for payments owed to countries outside of the EU. Michel Bernier, the negotiator picked by the EU to manage the Brexit process, has agreed to decide the final sums towards the end of the two year time frame for the U.K. to withdraw. Estimates for the amount that the U.K. will owe range from 82 to 104 billion pounds.
How Will the Brexit Vote Affect Trading?
British companies may see a drop in profitability. They will carry the cost of adjusting business to a new multinational system. The London FTSE will drop, led by the banking sector. The pound fell to an eight week low following the House of Lords vote. However, once May formally triggers Article 50 and negotiations begin in earnest, the U.K. currency should regain its value fairly quickly.