Finance & Currency Risk Management
News Index
By Philippe Gelis

May’s election gamble: a secret sabotage of Brexit?

Published June 9, 2017

As the results of the UK’s latest election trickle in, it’s becoming clear that Theresa May’s Conservative party lost their absolute parliamentary majority.  If you’ll remember, May called the snap election to reaffirm her mandate to negotiate the UK’s split from the European Union.  Despite an unusually bizarre campaign season, May openly predicted that she would win resoundingly, giving her a clear path to complete the Brexit.

However, I can’t help wondering if that, deep down inside, the Prime Minister secretly wanted the Tories to lose their majority in the hopes of sabotaging Brexit.  Could this have been the case? Let’s look a bit deeper.

A controversial Brexit

First, Brexit was controversial from the start.  Last June, the “leave” vote eked out a razor-thin victory over the “remain” camp 51.9% to 48.1%.   With such a thin majority, Brexit was controversial from the start.

Perhaps more damning was the fact that until you reached the 45+ age demographic, the voting population adamantly elected to stay within the EU.  This group represents the youth – people who will spend the next 20-45 years working and, more importantly, paying taxes that will support the state and the social security system for decades to come.

Second, the real costs of Brexit outweigh any benefits. If the UK wants to continue trading with the European Union, they will have to comply with any and all EU regulations.  However, when (or if) the UK leaves, they will have zero say in crafting the rules they will have to follow to gain access to the bloc.   Further, EU estimates for the ‘exit fee’ are at 50 billion GBP, representing an enormous tax on the British population.

London – which overwhelming voted to stay in the EU – stands to lose its spot as the world’s financial capital, chasing tens of thousands of estimated, high-paying jobs from the British Isles to mainland Europe.  In a world where money talks and bull manure walks, May was no doubt well aware of the dire financial consequences Brexit will have on the City and Canary Wharf (not to mention the numerous banking back-offices spread throughout the country).  

An exit from Brexit duties?

Given these grim realities, one can’t help to think that maybe, deep down inside, May was looking for an excuse to stall Brexit permanently.  After all, she said that wanted these elections to embolden her mandate knowing full well that as a seasoned politician, a win was far from guaranteed.  

May’s reputation is one of a tough negotiator, and never officially took a stance on Brexit before last year’s referendum.  Instead, she came on as PM to represent the voters’ decision on a controversial issue; one that not even the most ardent pro-Brexiter Nigel Farage wanted to take on.  

 

With the conservatives losing an outright majority, May’s options have opened up.  Will she use it as an excuse to reassess the UK’s commitment to Brexit?  Will she be able to form a coalition with a willing partner to the most controversial issue in Britain’s post-war history?   Or will she stand down to let someone else complete the divorce?

Time will only tell.  However, it’s hard not to think that deep down, this result is exactly what Theresa May was hoping for.  

Leave a Reply

*