Analysts at Nomura noted that EU ministers continue to push for Hard Brexit.
"The core leaders of the European Union have been vocal in their Hard Brexit rhetoric. At last week’s EU summit, Francois Hollande said that accepting free movement of people was a condition of securing access to the single market. Angela Merkel has previously showed no sign of giving up the values of free movement of labour.
The EU president Donald Tusk has also repeatedly warned it is “Hard Brexit or no Brexit”. While the EU “core” is pushing for a Hard Brexit – either as a negotiating stance or out of principle – the non-core countries may be more flexible about the UK’s deal. EU perspectives on Brexit”, the final deal must not just be accepted by the UK, but unanimously by all other member states.
The divergence of opinion within the EU could work in the UK’s favour, perhaps providing opportunities to exploit differences between member states. Furthermore, euroscepticism developing in many countries could soften the hardline stance of some members. Moreover, unanimous voting systems tend to favour status-quo outcomes.
While momentum is headed for a Hard Brexit, if support for a Soft Brexit increased within non-core members, the hardline rhetoric could weaken. However, there are a number of caveats to these arguments. Core EU countries could likely find ways of incentivising peripheral countries to endorse a “Hard Brexit”.
The rise of euroscepticism also provides incentives for the establishment to make an example out of the UK’s exit."
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