We know at least one thing about the tentative Brexit deal that British Prime Minister Theresa May presented to her cabinet earlier this month: Someone will be breaking up with someone.
Exactly who breaks up with whom remains to be seen.
The details of the 585-page deal May presented were not precisely met with a standing ovation. Nine of her ministers reportedly opposed the proposal, which May described as “the result of thousands of hours of hard negotiation with EU officials.” Six of those ministers resigned the day after the cabinet decided to back the deal. The plan includes a 21-month transition period after the United Kingdom officially leaves the European Union, as well as the rights of EU and U.K. citizens to continue working and living across the border.
Though May won the overall (if not the unanimous) approval of her cabinet, and EU leaders met to finalize the deal on Nov. 25, May’s government still faces several major hurdles before the deal becomes a reality. As Neil Sedaka famously sang, breaking up is hard to do.
The idea behind Brexit is for the U.K. to break up with, or at least break out of, the EU. In a perfect world, it would be an amicable separation, with the sort of harmonious trade relations that the EU already enjoys with other neighbors like Switzerland and Norway.
But those countries were never in the EU in the first place. Breakups, more often than not, lead to at least some hard feelings – especially on the part of the party being dumped. In many quarters of the EU, there is a strong desire to make life at least a little uncomfortable for the Brits for having the temerity to walk out the door. In part, this harsh treatment is meant as a warning to lesser economic powers on the EU’s eastern flank that have their own contentious relationship with Brussels. In order to adopt the deal, 20 countries representing at least 65 percent of the EU’s population will need to agree to its terms. Before the EU Council can ultimately approve or reject it, however, the British Parliament will have to vote in favor. At first blush, this appears to be anything but a sure thing.
This particular breakup may extend beyond the two principal parties. Another possibility is that the U.K. ends up breaking up with itself – figuratively or otherwise. In Scotland, where voters rejected independence in a referendum in 2014, Brexit is wildly unpopular. The Scottish National Party remains the largest bloc in Scotland’s home-rule legislature, and First Minister Nicola Sturgeon loses almost no opportunity to criticize May and her government for anything Brexit-related.
Across the water on the Emerald Isle, Brexit raises the possibility of a restored “hard border” between Northern Ireland, a constituent part of the U.K., and the Irish Republic, which will remain in the EU. One of the most important elements of the draft separation agreement is an effort to avoid this by keeping the U.K. in a customs union with the EU through a transition period lasting at least several years, followed by a yet-undetermined future agreement. That agreement would, at least in theory, somehow prevent the hard border as well. But in some scenarios the only way to avoid establishing customs posts on the Irish border would be, in effect or in reality, to set them up between Northern Ireland and the rest of the U.K. instead.
This internal division of the U.K. is anathema to Brexit supporters, many of whom accuse May of having struck a bad deal. The alternative, however, is no deal at all. A no-deal Brexit would create at least short-term havoc immediately upon the United Kingdom’s departure from the EU next March 29. May’s Conservative Party is badly split on the issue. Many of her coalition partners from Northern Ireland’s Democratic Unionist Party are not happy with the deal either, particularly the prospect of effectively remaining under EU regulation in order to avoid a hard border.
Meanwhile, there remains strong opposition to Brexit within England, too. There have been ongoing demonstrations calling for a second referendum on leaving the EU. We can expect those demonstrations to get bigger and louder now that the pact exists, at least in draft form.
Before the deal can even make it to Parliament, May faces a major political problem in the form of a call for a no-confidence vote from within her own party. At least three Conservative members of Parliament independently issued letters calling for such a vote the day after the cabinet announced it would back the existing deal. It would take 48 such letters to trigger a vote within the party; as of this writing, 27 have arrived. It is not clear if hard-line Brexit proponents have the numbers to achieve a vote but, at a minimum, dissent within May’s party will make winning Parliament’s approval for the deal highly challenging.
Ultimately, this will all come to a pivotal vote in the House of Commons on Dec. 11. Almost anything could happen, including the fall of May’s government and failure of the pact. Or, faced with the prospect of a bitter divorce with years of fighting to come (mainly over money, as in so many breakups), May’s coalition may hold together. Or the deal may be rescued by the opposition Labour Party, if it decides its best route back to power is to act as the conciliator in this row. Labour leader Jeremy Corbyn has harshly criticized the deal and has promised his party will oppose it, but a tactical shift for political gain does not seem impossible.
Of course, the EU also needs to approve any pact. Right now that doesn’t look like as big an obstacle as the turmoil in London. But the 2016 vote in favor of Brexit was itself a surprise, a political earthquake not unlike the election of Donald Trump later that same year. It seems that in politics, anything can happen, on either side of the Atlantic. Stay tuned, and try to stay out of the crossfire.
Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book,
The High Achiever’s Guide To Wealth. His contributions include Chapter 1, “Anyone Can Achieve Wealth,” and Chapter 19, “Assisting Aging Parents.” Larry was also among the authors of the firm’s previous book
Looking Ahead: Life, Family, Wealth and Business After 55.
Posted by Larry M. Elkin, CPA, CFP®
U.K. Prime Minister Theresa May. Photo courtesy EU2017EE Estonian Presidency on Flickr.
We know at least one thing about the tentative Brexit deal that British Prime Minister Theresa May presented to her cabinet earlier this month: Someone will be breaking up with someone.
Exactly who breaks up with whom remains to be seen.
The details of the 585-page deal May presented were not precisely met with a standing ovation. Nine of her ministers reportedly opposed the proposal, which May described as “the result of thousands of hours of hard negotiation with EU officials.” Six of those ministers resigned the day after the cabinet decided to back the deal. The plan includes a 21-month transition period after the United Kingdom officially leaves the European Union, as well as the rights of EU and U.K. citizens to continue working and living across the border.
Though May won the overall (if not the unanimous) approval of her cabinet, and EU leaders met to finalize the deal on Nov. 25, May’s government still faces several major hurdles before the deal becomes a reality. As Neil Sedaka famously sang, breaking up is hard to do.
The idea behind Brexit is for the U.K. to break up with, or at least break out of, the EU. In a perfect world, it would be an amicable separation, with the sort of harmonious trade relations that the EU already enjoys with other neighbors like Switzerland and Norway.
But those countries were never in the EU in the first place. Breakups, more often than not, lead to at least some hard feelings – especially on the part of the party being dumped. In many quarters of the EU, there is a strong desire to make life at least a little uncomfortable for the Brits for having the temerity to walk out the door. In part, this harsh treatment is meant as a warning to lesser economic powers on the EU’s eastern flank that have their own contentious relationship with Brussels. In order to adopt the deal, 20 countries representing at least 65 percent of the EU’s population will need to agree to its terms. Before the EU Council can ultimately approve or reject it, however, the British Parliament will have to vote in favor. At first blush, this appears to be anything but a sure thing.
This particular breakup may extend beyond the two principal parties. Another possibility is that the U.K. ends up breaking up with itself – figuratively or otherwise. In Scotland, where voters rejected independence in a referendum in 2014, Brexit is wildly unpopular. The Scottish National Party remains the largest bloc in Scotland’s home-rule legislature, and First Minister Nicola Sturgeon loses almost no opportunity to criticize May and her government for anything Brexit-related.
Across the water on the Emerald Isle, Brexit raises the possibility of a restored “hard border” between Northern Ireland, a constituent part of the U.K., and the Irish Republic, which will remain in the EU. One of the most important elements of the draft separation agreement is an effort to avoid this by keeping the U.K. in a customs union with the EU through a transition period lasting at least several years, followed by a yet-undetermined future agreement. That agreement would, at least in theory, somehow prevent the hard border as well. But in some scenarios the only way to avoid establishing customs posts on the Irish border would be, in effect or in reality, to set them up between Northern Ireland and the rest of the U.K. instead.
This internal division of the U.K. is anathema to Brexit supporters, many of whom accuse May of having struck a bad deal. The alternative, however, is no deal at all. A no-deal Brexit would create at least short-term havoc immediately upon the United Kingdom’s departure from the EU next March 29. May’s Conservative Party is badly split on the issue. Many of her coalition partners from Northern Ireland’s Democratic Unionist Party are not happy with the deal either, particularly the prospect of effectively remaining under EU regulation in order to avoid a hard border.
Meanwhile, there remains strong opposition to Brexit within England, too. There have been ongoing demonstrations calling for a second referendum on leaving the EU. We can expect those demonstrations to get bigger and louder now that the pact exists, at least in draft form.
Before the deal can even make it to Parliament, May faces a major political problem in the form of a call for a no-confidence vote from within her own party. At least three Conservative members of Parliament independently issued letters calling for such a vote the day after the cabinet announced it would back the existing deal. It would take 48 such letters to trigger a vote within the party; as of this writing, 27 have arrived. It is not clear if hard-line Brexit proponents have the numbers to achieve a vote but, at a minimum, dissent within May’s party will make winning Parliament’s approval for the deal highly challenging.
Ultimately, this will all come to a pivotal vote in the House of Commons on Dec. 11. Almost anything could happen, including the fall of May’s government and failure of the pact. Or, faced with the prospect of a bitter divorce with years of fighting to come (mainly over money, as in so many breakups), May’s coalition may hold together. Or the deal may be rescued by the opposition Labour Party, if it decides its best route back to power is to act as the conciliator in this row. Labour leader Jeremy Corbyn has harshly criticized the deal and has promised his party will oppose it, but a tactical shift for political gain does not seem impossible.
Of course, the EU also needs to approve any pact. Right now that doesn’t look like as big an obstacle as the turmoil in London. But the 2016 vote in favor of Brexit was itself a surprise, a political earthquake not unlike the election of Donald Trump later that same year. It seems that in politics, anything can happen, on either side of the Atlantic. Stay tuned, and try to stay out of the crossfire.
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