Carlijn Prins, Economist at Rabobank, explains that the British Prime Minister Theresa May has called for snap elections to be held on 8 June and a victory for Ms. May seems likely at the moment, which would strengthen her Brexit mandate domestically, and her negotiation position with the EU.
“In our view, this would therefore increase the likelihood of an orderly Brexit.”
“The impact of a victory for May on future trade is still very uncertain, as it increases her mandate to press ahead with her hard-line Brexit plans, but might also increase the room to make concessions to the EU to secure future free trade.”
“A victory for May will likely diminish political uncertainty from June onwards, although a defeat would obviously have the opposite effect.”
“In short, with elections out of the way pretty quickly and the outcome relatively predictable, May is betting on a stronger mandate, which will allow her to pursue her Brexit plans. After a victory, she will probably have more room to make concessions to the EU, increasing the chances of an orderly and smooth Brexit. Perhaps she will also use this room to secure partial access to the Single Market in order to keep the costs of trade low. A victory for May will probably diminish political uncertainty somewhat from June. On the other hand, a defeat will likely increase uncertainty about the Brexit process and outcome.”