Friday, June 09, 2017

Are the British Rethinking BREXIT?

Before Donald Trump won the presidency through a flaw in America's Electoral College system that ignored Trump's significant loss of the popular vote, we witnessed a campaign similar to that of Trump which emphasized xenophobia and bigotry in the United Kingdom for that nation's exit from the European Union.  As in America, many British were shocked that the forces of hatred and isolation won the day in the BREXIT vote.  Based on the results of yesterdays elections in the UK, perhaps many voters are having second thoughts.  Prime Minister Theresa May’s had called elections in what some see as remarkable gamble on a snap election to increase her party's power.  It backfired and now Conservatives no longer hold a majority of seats in the House of Commons.  As in America where urban areas oppose the Trump/GOP agenda, in the UK urban areas rejected the policies of the Conservatives and, by extension, Brexit.  A piece in the New York Times looks at how the election results may put Brexit in danger.  Here are highlights:
In a global economy amply stocked with anxiety-provoking variables, Britain just added another.
An election designed to bolster the government’s mandate instead yielded fundamental confusion over who is in charge as the nation prepares for fraught negotiations in its pending divorce from the European Union.
Prime Minister Theresa May had called the election on the assumption that her Conservative Party would emerge stronger, solidifying her negotiating position. Instead, the electorate’s stunning rebuke of her leadership all but guarantees a period of unpredictable political jockeying, intensifying uncertainty about future commercial dealings across the English Channel.
Investors took the latest turmoil in Britain as a prompt to unload the British pound. As European markets began trading on Friday, the currency slipped about 2 percent against the dollar.
And yet the shocking electoral outcome also has the potential to diminish the looming economic costs of Britain’s exit from the European Union, commonly known as Brexit.
It enhanced the possibility that a chastened government led by Mrs. May, or perhaps an administration led by someone else, would now strike a less confrontational approach with Europe while seeking a way to keep Britain within the bloc’s large single marketplace.
As Britain prepared for its face-off with Europe, the prime minister had been adamant that her country would impose strict limits on immigration, a posture seemingly enhanced by recent terrorist attacks. Yet limiting immigration appeared certain to cost Britain inclusion in the European single market, a swath of the globe stretching from Ireland to Greece and holding some 500 million relatively affluent consumers.
The European authorities have consistently emphasized that Britain’s continued inclusion in the single market requires that it abide by the bloc’s rules — not least, a provision that people be allowed to move freely within its confines.
This redrawing of the basic geography of European commerce was playing out just as President Trump was disavowing regional trade deals across the Atlantic and Pacific, while variously threatening trade hostilities with Canada, China, Germany and Mexico.
This election could change that trajectory.
Whoever will be in charge — a government led by a weakened Mrs. May, another member of her Conservative Party, or a coalition spearheaded by the Labour Party — might well construe a mandate to pursue a softer Brexit. The unexpected new political configuration might compel Britain to relinquish its pursuit of immigration limits in an effort to keep itself within the single market.
In short, the election has complicated the assumption that Britain is headed irretrievably toward the exits, producing a moment in which seemingly everything may be up for reconsideration.
Those who have favored Britain remaining within Europe, or at least softening the terms of its exit, now have “an expectation, or at least a hope, that cooler heads will prevail,” said Jeremy Cook, chief economist at World First, a company based in London that manages foreign exchange transactions. “It may be that hard Brexit has been rejected by the electorate.”
Worries about the economic impact of Brexit have been weighing heavily on the pound, which plunged after the referendum last June that unleashed Brexit. With Britain at risk of suffering barriers to trade, it has lost some of its considerable luster as a place for companies to invest, making its money a less desirable currency to hold.
A weakened pound has, in turn, translated into rising prices in Britain — on food, gasoline and imported components used by domestic factories. All of this has reinforced concerns about the fate of the economy. 
Would that America could hold a snap election.  With Trumps approval levels at new lows, perhaps Americans could rid themselves of the foul and dangerous occupant of the White House.  Meanwhile the Trump/GOP border tax could similarly impact prices in the USA and make goods more expensive for Trump's knuckle dragging supporters. 

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