The BBC reported yesterday that the UK government is facing another legal challenge over whether the UK stays inside the single market after it has left the EU, notes Lee Hardman, Currency Analyst at MUFG.
“According the report, the government could be challenged over whether withdrawing from the EU automatically results in the UK leaving the European Economic Area (EEA) as well. All EU members are in the European Economic Area and it had been assumed that when the UK leaves the EU it would leave the EEA as well. However, some lawyers are arguing that leaving the EEA would not be automatic and would happen only if the UK formally withdraws by triggering Article 127 of the EEA agreement.”
“The report adds additional uncertainty to the Brexit process and follows the successful legal challenge over whether the UK government can trigger Article 50 on its own without parliamentary consent. The pound has strengthened since the successful legal challenge as hard Brexit concerns have eased, although it remains unclear what exact from of Brexit the UK government will trying to secure. According to a leaked memo from a Conservative official, the UK might try to obtain a “Canada plus” deal although it has been downplayed by a government spokesperson.”
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