The battle cry of Leave campaigners was that the UK should withdraw from the EU and “take back control” of its laws, borders and money – it sounded good but was always just a rhetorical device. All the EU nation states are sovereign and there is no overarching body which can tell a member state what it must do except in very limited circumstances. Eurozone member states agree to abide by common standards when it comes to the environment, worker rights trading standards and the like. They agree that relevant legislation related to these areas will be incorporated into their domestic laws, to enable the Single Market and customs union to function. Eurozone member states agree to certain fiscal discipline rules, but as we saw in Greece and Italy, these are not always adhered to. Whilst some laws do get passed on qualified majority voting, member states retain a veto over any contentious legislation.
Now the UK is in a position where its Prime Minister must write to the President of the European Council, Donald Tusk, to ask if the other EU states will agree to extend the UK’s notice period under its A50 notice for, it is suggested, 3 months. Unless all agree, the answer is no.
May’s cabinet is hopelessly split and her European Withdrawal deal currently looks highly unlikely to gain a majority in the Commons – even if it can be represented. Far from “taking back control”, the fate of the UK is no longer in its own hands.
Michel Barnier is the EU’s chief Brexit negotiator and he has made it clear that extension is not a forgone conclusion. May’s letter must offer concrete proposals that will justify an extension, a game changer, if you will. Such an element might be the promise of a further referendum or a general election, but it is unlikely that a plea for more time to browbeat MPs into backing her deal for fear of something worse will not be enough.
The European Council will meet tomorrow and the UK’s request will be discussed. If just one state refuses to grant the extension or will not accept the proposed length (or the EU’s counter-proposition for duration) then the UK is set to crash out to a no deal exit – against the expressed wishes of parliament – in nine days. In such an event, there would be no transitional period and the UK would be a third nation state on 30/3/19. In these circumstances, Sterling is going to drop in value like a stone. Many traders are going to be rethinking their currently long Sterling positions – unless they are gambling that the UK would revoke its A50 notice before 11PM on 29/3/19 which would be her last sovereign chance to act over its fate, of course.