UK final EU break set for March ’19; Pound down again, Brexit loss now 13%.

British Prime Minister Theresa May yesterday provided further certainty on the world’s fifth largest economy’s departure from the European bloc. First, Brexit is definitely going to happen: formal negotiations will begin before the end of March. Second, as the process must be concluded within two years, the UK will no longer be part of the EU from the second quarter of 2019. Thirdly, as a bridge to re-establishing its judicial sovereignty while providing businesses with guidelines, all EU laws will be incorporated into existing UK legislation. The Pound lost another cent against the US Dollar, taking its post-Brexit decline to almost 20c, a loss of 13%. Mrs May’s announcement will have been keenly heard by millions EU citizens living in the UK; and British currently residing on the continent. Things will now start to accelerate. The EU couples access to its trading bloc with the free movement by citizens within all countries. The UK puts control over immigration above membership of this arrangement – but has pointed out that as it runs a significant trade deficit with the other 27 EU members, they stand to lose more by kicking Britain out. A wild card is next year’s general elections in EU powerhouses Germany and France where anti-EU parties are enjoying growing momentum. The Pound fell sharply last night on concerns that Mrs May is preparing her country for a “hard” Brexit. But a lot can happen between now and March 2019. – Alec Hogg

After peaking at almost $1.48 ahead of Brexit, one pound will now buy less than $1.30 as this graph from Yahoo Finance illustrates.
After peaking at almost $1.48 ahead of Brexit, one pound will now buy less than $1.30 as this graph from Yahoo Finance illustrates.

By Eddie Buckle

(Bloomberg) — Business groups and opposition parties pressed Prime Minister Theresa May for more detail after she said she’ll start pulling the U.K. out of the European Union in the first quarter of 2017,and hinted that she’s tending toward a so-called hard Brexit.

The premier told her Conservative Party’s annual conference in Birmingham, central England, that she’ll invoke Article 50 of the EU’s Lisbon Treaty — the formal trigger for two years of talks — by the end of March. May also said she’ll introduce a bill to convert all existing EU laws into U.K. legislation to provide certainty for business and investors. But she left unanswered most questions about what Brexit will actually look like.

“The prime minister has removed one big question — on timing — but has accelerated an urgent need for answers on others,” Confederation of British Industry Director-General Carolyn Fairbairn said in a statement. “Businesses cannot continue to operate in the dark in other areas.”

Read also: What UK must ask for in Brexit. One chance. Don’t blow it.

May, attending her first Tory conference as leader after June’s referendum decision to quit the EU upended British politics, is having to balance the will of the electorate with the demands of a fractious party and the desire of business for as little disruption as possible.

The pound is meanwhile being undermined by speculation of a hard Brexit in which Britain would willingly surrender membership of the single market for trade in return for more power over immigration, law-making and the budget. Sterling fell as much as 0.5 percent against the dollar in early trading in Asia following May’s comments.

‘Real and Pressing’

Britain's Prime Minister Theresa May attends a news conference at the Prime Minister's Chancellery in Warsaw, Poland July 28, 2016. Agencja Gazeta/Przemek Wierzchowski/via REUTERS
Britain’s Prime Minister Theresa May. Agencja Gazeta/Przemek Wierzchowski/via REUTERS

The decisions business face “are real and pressing,” said Fairbairn. “The government’s desire to play its negotiating cards close to its chest must be tempered by clear indications on how we will trade with the U.K.’s most important partner and how firms will be able to employ the people needed to drive growth.”

May on Sunday pledged to control immigration in Britain’s best interests while retaining access for business to the single market, seeking “the best deal possible” for U.K. companies.

“I know some people ask about the ‘trade-off’ between controlling immigration and trading with Europe. But that is the wrong way of looking at things,” she said. “We will do what independent, sovereign countries do. We will decide for ourselves how we control immigration. And we will be free to pass our own laws.”

Read also: Brocklebank: No need for Brexit blues – all round UK really is better off outside EU

Those words on migration indicate that May is “leaning towards a hard Brexit,” Anand Menon, professor of European politics at King’s College, London, said in an interview. “But I don’t think that’s necessarily where we get to from here. The bits about having the best possible trading relationship are important, and there’s a long way to go.”

Jobs ‘Disaster’

The leader of the pro-EU Liberal Democrat party, Tim Farron, said “May has just confirmed that we are going for a hard Brexit.” Such a move “means disaster for British jobs, businesses and our economy,” he said in a statement.

As well as commerce and immigration, the U.K. and EU must find common ground on rights for their citizens in each other’s territory, the border between the two Irelands and what, if anything, the U.K. contributes to the EU budget. There are also a string of legal, regulatory, energy, agricultural and security issues to address.

“The terms under which the U.K. will eventually leave the EU have not become any clearer,” Carsten Nickel, deputy director of research at Teneo Intelligence in Brussels, said in a note to investors. “The uncertainty surrounding the Brexit process will remain heightened for the foreseeable future.”

Customs Union

May’s trade secretary, Liam Fox, suggested that leaving the EU’s customs union would not be a serious problem for the U.K.

“Most businesses in the world are outside the European Union. The United States is outside the European Union — it doesn’t seem to be seriously hampered in doing business with Europe because it’s not in the customs union,” he told an event at the conference on Sunday when asked how businesses would avoid more red tape outside the customs union. “You have to be rational about all of that.”

May’s announcement means the two years of Brexit negotiations should be completed in 2019, 46 years after the country joined what was then the European Economic Community, though Fox cast some doubt on that timetable. “What we want is the best exit for the United Kingdom, not the quickest,” he said. “I wouldn’t put a timescale on it.”