Analysts at BBH expect that within a few days of the EU’s celebration of the 60th anniversary of the Treaty of Rome (Match 25), which founded the European Economic Community, UK Prime Minister May is widely expected to formally trigger Article 50 to begin negotiations of its exit from the EU.
“Since the referendum, the initiative has been the UK’s. It did not have to turn the non-binding resolution into law. It did not have to accept the small (52% to 48%) majority to be sufficient to pursue such a fundamental change. However, once Article 50 is triggered, the initiative shifts to the EU. Investors should be prepared for some jockeying for position and advantage in the coming weeks.”
“UK Chancellor of the Exchequer Hammond quickly reversed himself on a tax increase on self-employed, and reflects the weakened state of May’s government. The reversal was in the face of a revolt, not of Labour, which is struggling to be more than obstructionist, but among the Tories themselves. It makes the government look weak. The power struggle within the Tory Party is one of the factors encouraging speculation, despite denials from 10 Downing Street, that an early election will be called. There have been some rule changes that make the early election scenario more difficult, but not impossible.”