This week has been one for Theresa May to forget; the cabinet took time away to thrash out a deal at Chequers which has seen key party members leave. She has been undermined by Trump on the subject, whilst he was on a red carpet visit and now faces the very real possibility of her deal not being endorsed by the party and appears vulnerable to a vote of no confidence. The Pound exchange rates have faced similar vulnerability this week, however, some believe that the Pound could have choppier waters ahead.
Once the dust had settled from the weekend negotiations at Chequers the first casualties made themselves know. The first being David Davis the Brexit minister who clearly didn’t share Theresa May’s vision of Brexit. Davis who has made it very clear that he sat very much in the Brexit rather than remain camp unable to support the party’s soft Brexit approach.
David stated the key points of his rationale for resigning included feeling that he was no longer the best person to execute the prime minister’s Brexit strategy. Continuing, Davis said that he felt the UK was giving away ‘too much too easily’. Although acknowledging that the resignation could be of great detriment to his political career Davis said that it was a personal one that he had to make.
The departure of the Brexit immediately undermined the PM’s stance on Brexit and arguably created a further divide between an already splintered Tory party. However, this resignation was not the least of the week.
No sooner had David Davis given notice and been interviewed by the media as Boris Johnson announced his departure. Whilst the Foreign Secretary is due to deliver a speech in the House of Commons explaining the motivations behind his departure, never shy of the camera or publicity he has already enlightened some of the media.
“Since I cannot in all conscience champion these proposals, I have sadly concluded that I must go.”
Unlike Davis, who debatably slipped away relatively quietly compared to Johnson. Boris elected to openly publicise his resignation before the house of commons were able to respond to his resignation. Many since have questioned his appropriateness of the resignation and openly questioned his motives.
Some now believe that Boris is now primed to swoop if may was to face a vote of no confidence in the coming weeks.
The most recent departures have certainly undermined the prime minister’s stance and therefore further weakened her position. The question on the lips of many is whether the Tory party are willing to oust the PM, potentially opening themselves to a labour leadership challenge. My guess would be not, especially as the calibre or potential Tory replacement seems lacking.
Despite the noise surrounding departures and disagreement around the Chequers Brexit plan a plan was none the less agreed. Key elements of the Chequers Brexit plan include the following of a common rulebook, the rule book applies to goods and products.
The UK will seek a frictionless border between the UK and EU, overcoming the issues posed by Northern Ireland and ensuring fluid trade between the two parties. A key point for manufacturing plants based in the UK who imports parts and materials from the EU.
The UK is requesting the freedom to search out new trade agreements with other nations. All of which will be managed by UK Parliament, allowing the UK to deviate from EU trade rules. However, the UK is also aiming to ensure a good level of cooperation between the UK and EU trade competition regulators. Flexibility will be pursued for the services sector, in order for the sector to remain competitive.
For legal and jurisdictional rules and regulations agreements, the Tory party plan to seek a negotiate a ‘joint institutional framework’ between the UK and EU. Decisions that were concluded in the UK would however respect the joint rule book. If these cases could not be agreed upon they would be referred to the European Court of Justice (ECJ).
A key attribute to the UK’s decision to leave the EU remains immigration. The tory party wish to end their free movement agreement between the UK and regain control of UK borders. A framework has been suggested in order to offer mobility for UK and EU citizens to work and study in the area.
The timing of Trump’s visit couldn’t have been worse for the PM, especially due to his opinionated nature and the fact that the visit had been shrouded in controversy, sparking organised marches across the UK.
Readily happily to openly comment on Brexit, Trump could barely resist. Commenting on the UK’s political landscape and the Brexit negotiation Trump he described the UK as ‘being in turmoil’. Much to the disdain of the PM he also openly endorsed Boris Johnson:
“Let me tell you, he’s a very talented guy. I was very saddened to see that he was leaving government and I hope he goes back in at some point because I think he’s a very … I think he’s a great representative for your country.”
Speaking on trade he warned that the UK’s new soft Brexit stance had the possibility of killing a UK – US trade deal.
“If they do a deal like that, we would most likely be dealing with the European Union instead of dealing with the UK, so it will probably kill the deal.”
The Pound has naturally devalued as talk of a fractured cabinet, a watered-down Brexit plan which doesn’t represent the aims of May’s mansion house speech has been set out. Despite this, the Pound-Euro has managed to hold on to the 1.13 range. Following the simultaneous resignations, the Pound-Euro fell to 1.1254.
The currency pair has recouped the majority of losses and recovered fairly promptly, potentially due to the fact that many investors will favour soft Brexit over the uncertainty of Hard. The currency pair does however have scope to fall much lower especially if a vote of no confidence was to materialise. The GBP/EUR currency pair closed at 1.326 on Friday, incredibly the currency pairs limited volatility have equated to just a -0.81% over the year.