Speaking ahead of the Conservative Party Conference the UK Prime Minister, Theresa May, announced the government’s intention to Trigger Article 50 of the Lisbon treaty which would start the two year process of leaving the EU by the end of March 2017. Previously, it was stated that this would not happen before the end of 2016, so it is not exactly earth-shattering news.
What will alarm the business community in the UK and further afield is the apparently intractable position that the UK wishes to end uncontrolled migration from the EU (the much cherished EU freedom of movement, allows EU citizens the right to live and work anywhere in the bloc) and to withdraw the UK from legislative oversight of the European Court. The PM continued to insist: "It's not just important for the UK, but important for Europe as a whole that we're able to do this in the best possible way so we have the least disruption for businesses, and when we leave the EU we have a smooth transition from the EU." Clearly, this statement is nonsense. The UK’s stated position is utterly irreconcilable with continued membership of the Single Market on any terms remotely approaching those it enjoys now. This will mean that the financial sector will lose the rights to “passporting” which will deal a heavy blow to the City of London’s remaining the major financial hub of Europe.
The Pound has been taking a hammering on Forex markets and has fallen to a fresh 31 year low against the US Dollar. Whilst this may help UK exports, it means that imports are dearer and will give a fresh impetus to inflation. At the time of writing, Sterling has fallen to $1.2884 (it was as low as $1.2852 earlier).
The government announced its intention to launch a “Great Repeal Bill” which would revoke all pertinent EU legislation and convert it (essentially unchanged) into British law once the notice period for Article 50 had expired. It appears that such a bill would be presented to parliament in the next Queen’s Speech, but with a Tory majority of just 12 and many Conservative MPs staunchly pro-European, it must be far from certain that it would be passed in either of the Houses of Parliament.