There is a lot of rhetoric on both sides, but for me, I simply cannot see that we hold any huge leverage over the rest of the EU - especially once article 50 is triggered. Everyone seems to agree that after 2 years we are then out with whatever deal we have been able to secure (or not). If we don't secure what we (the UK) want we are still out - we simply revert to 'rest of the world' status in terms of our dealings with the EU - this is obviously more costly than being part of the free trade area. I accept the arguments that this would also hurt the EU, but not as much as it would hurt us, bearing in mind we are a net importer of goods. The more negotiations drag towards that 2 year limit, the more twitchy business gets, stirred up be a partisan press who sensationalise the smallest story into a scare and are, for the most part, fiercely anti-EU, especially the red tops.
Re-balancing our economy and trading with the rest of the world will take time (probably decades, if at all). While pragmatic heads of state in Europe may want to deal, others will be far less inclined for a multitude of reasons - belief in the EU project and closer integration, to prevent similar votes to leave the EU from other members, to prevent independence votes from regional governments, fear of precedent and contagion, appeasement of their own electorate and so on. It is all well and good George Osbourne proposing to cut business tax to 15%, but how is the shortfall going to be made up?
New PM can be as stroppy (sorry, tough in negotiations) as she wants, but we are bluffing with a very weak hand, the EU know what cards we hold, will try and tempt the best of these to jump ship (finance to Paris or Frankfurt for example) and we are against the clock! For those that hope for the collapse of the EU in a domino effect, I don't think they appreciate the interconnected world and what this actually means. Deutsche Bank is currently close to insolvency, Italian banks need urgent recapitalisation (against EU rules) and Greece is still on life support. If the EU powers that be decide offering us a good deal will precipitate any of that then they have no choice but to be tough in negotiations - they would rather punish us than collapse their own house of cards and who can blame them?
I hope to goodness there are realistic and sensible people (on both sides) behind the scenes doing the best for a compromise deal that satisfies both parties enough. Neither will fully obtain what they desire and one can only hope that the hot air currently being spouted is not taken seriously - each needs to recognise that negotiation is the only way forward given the stakes.
I would anticipate our new PM touring EU heads of states as a 'how do you do tour' to disguise the negotiations we shouldn't have prior to article 50 initiation and to gauge the depth of feeling, scope for compromise and room for maneuver we actually have. I would also like to think negotiations are ongoing at the civil servant level at least between us and the EU.
Predictions - we will come out, but with a deal both sides can sell. We will get a points based immigration system that in reality will be a fudge but will enable us to obtain access to the free market at better than 'rest of world' status, but not as good as 'EU member' status. Timescale - Article 50 triggered before xmas on a 2 year window, but behind the scenes there will already be the basis of a deal and a plan on both sides of how to progress. We wont get everything Brexiteers want, but it will be sold as a victory nonetheless. The compromise on free movement will be enough for the EU to sell as a victory from their perspective. This will likely come down to 11th hour negotiations before being signed off!
Steve
