Americans hold our Declaration of Independence in special regard. The evidence is on our national calendar; we celebrate not the Continental Congress’ vote for independence on July 2, but the approval of the particular principles underpinning the act two days later.
I don’t think January 17 is going to become a new British holiday, but Prime Minister Theresa May’s speech, delivered earlier this week, had a lot in common with the former colonies’ announcement of separation from their parent country.
Despite the fact that May has been purposely close-lipped about her plans for negotiating Britain’s exit from the European Union, her speech is by far the most comprehensive look at how she envisions that departure. Like our familiar 1776 document, May’s speech is a statement of guiding principles and goals, not a formal plan of governance. We had to wait for the Articles of Confederation (and, when that blew up, the Constitutional Convention); the British will have to wait for a formal exit agreement from the EU, assuming the parties involved can reach one.
However, May has clarified some questions that have worried both her own people and observers abroad. Perhaps most critically, May made explicit that the U.K. will leave the EU’s single market – the so-called “hard Brexit” that will ensure the country reasserts control of its immigration policies and preserves the ability to negotiate new trade deals with countries outside the bloc. The U.K. will pursue a “frictionless” trade deal with Europe, but as a neighbor, not as a member.
This clarification seemed to soothe the market. Ahead of the planned speech, the pound dropped sharply, but its value surged after the speech made clear May planned on a clean break. Moreover, this decision is really the only sensible way to approach Britain’s departure. By freeing itself of the EU marketplace (including its extensive bureaucratic rules), the EU court system and EU budgetary demands, Britain will regain its freedom to chart an independent commercial and political course. In this way, it will proceed much as has non-EU Switzerland, a country whose economy is even more closely tied to Europe than is Britain’s. Brexit will eventually put Britain in a place within the European ecosystem more akin to that which the Swiss currently occupy.
This assumes, of course, that the EU and the U.K. come to mutually acceptable terms. May made clear that she would walk away rather than accept what she sees as a bad deal for her country. It is inevitable that some on the EU side of the table will want to punish Britain by imposing harsh trade terms and, especially, by demanding freedom of migration of their citizens to live and work in the U.K.
In her speech, May emphasized that Britain will always want high-skilled immigration, especially from other European countries. But she also made clear that control of immigration policy was an essential point that Brexit is meant to secure, and that she will not sacrifice this control merely to secure tariff-free trade. As I observed in this space a few months ago, Europeans will hurt themselves more than the British should they decide to cut off free trade with a country whose economy will only become a stronger competitor going forward in markets such as Asia and the Americas. The British economy also provides badly needed jobs for people from all over Europe; May will come to the negotiating table with quite a strong hand as a result.
May also displayed confidence in her country and its political system by confirming that she will put any proposed exit deal to a parliamentary vote. Given the tug-of-war over Brexit between May and Parliament last fall, pledging to put the final deal before both houses before it goes into force is a public gesture of good faith. Sure, the deal could be rejected, with uncertain consequences – at a minimum, it would certainly bring down May’s government. But a new government would still be under a mandate to negotiate an exit from the EU. Even if the first deal is rejected, after some revisions it is nearly certain some form of the deal will ultimately pass.
More likely, however, May’s government will be able to get its own deal through, at least in the House of Commons. And the House of Lords, whose very existence is subject to some debate in Britain, is unlikely to serve as the final obstacle; in fact, while it can delay legislation, it generally cannot block it.
For some in Britain, May’s speech and the plan it outlines will seem an opening to revisit the entire question of leaving the EU at all. Scotland, in particular, is a hotbed of opposition to May’s plan, and Scottish nationalists see their own chance for a do-over of the independence referendum they lost a few years ago. But a rerun of the “stay-leave” referendum is unlikely, and a different outcome is even less probable, given how much better Britain has performed since last year’s vote than the naysayers predicted. Staying in the EU is no more attractive today than it was last June to the many Britons who voted to leave.
It will be a long road with sharp turns and bumps along the way, but the British have good reasons for asserting their independence. May has explained them eloquently and staked out a good negotiating position to help her country achieve that freedom.
Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s recently updated book,
Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us,” and Chapter 4, “The Family Business.” Larry was also among the authors of the firm’s book
The High Achiever’s Guide To Wealth.
Posted by Larry M. Elkin, CPA, CFP®
photo courtesy Surrey County Council News
Americans hold our Declaration of Independence in special regard. The evidence is on our national calendar; we celebrate not the Continental Congress’ vote for independence on July 2, but the approval of the particular principles underpinning the act two days later.
I don’t think January 17 is going to become a new British holiday, but Prime Minister Theresa May’s speech, delivered earlier this week, had a lot in common with the former colonies’ announcement of separation from their parent country.
Despite the fact that May has been purposely close-lipped about her plans for negotiating Britain’s exit from the European Union, her speech is by far the most comprehensive look at how she envisions that departure. Like our familiar 1776 document, May’s speech is a statement of guiding principles and goals, not a formal plan of governance. We had to wait for the Articles of Confederation (and, when that blew up, the Constitutional Convention); the British will have to wait for a formal exit agreement from the EU, assuming the parties involved can reach one.
However, May has clarified some questions that have worried both her own people and observers abroad. Perhaps most critically, May made explicit that the U.K. will leave the EU’s single market – the so-called “hard Brexit” that will ensure the country reasserts control of its immigration policies and preserves the ability to negotiate new trade deals with countries outside the bloc. The U.K. will pursue a “frictionless” trade deal with Europe, but as a neighbor, not as a member.
This clarification seemed to soothe the market. Ahead of the planned speech, the pound dropped sharply, but its value surged after the speech made clear May planned on a clean break. Moreover, this decision is really the only sensible way to approach Britain’s departure. By freeing itself of the EU marketplace (including its extensive bureaucratic rules), the EU court system and EU budgetary demands, Britain will regain its freedom to chart an independent commercial and political course. In this way, it will proceed much as has non-EU Switzerland, a country whose economy is even more closely tied to Europe than is Britain’s. Brexit will eventually put Britain in a place within the European ecosystem more akin to that which the Swiss currently occupy.
This assumes, of course, that the EU and the U.K. come to mutually acceptable terms. May made clear that she would walk away rather than accept what she sees as a bad deal for her country. It is inevitable that some on the EU side of the table will want to punish Britain by imposing harsh trade terms and, especially, by demanding freedom of migration of their citizens to live and work in the U.K.
In her speech, May emphasized that Britain will always want high-skilled immigration, especially from other European countries. But she also made clear that control of immigration policy was an essential point that Brexit is meant to secure, and that she will not sacrifice this control merely to secure tariff-free trade. As I observed in this space a few months ago, Europeans will hurt themselves more than the British should they decide to cut off free trade with a country whose economy will only become a stronger competitor going forward in markets such as Asia and the Americas. The British economy also provides badly needed jobs for people from all over Europe; May will come to the negotiating table with quite a strong hand as a result.
May also displayed confidence in her country and its political system by confirming that she will put any proposed exit deal to a parliamentary vote. Given the tug-of-war over Brexit between May and Parliament last fall, pledging to put the final deal before both houses before it goes into force is a public gesture of good faith. Sure, the deal could be rejected, with uncertain consequences – at a minimum, it would certainly bring down May’s government. But a new government would still be under a mandate to negotiate an exit from the EU. Even if the first deal is rejected, after some revisions it is nearly certain some form of the deal will ultimately pass.
More likely, however, May’s government will be able to get its own deal through, at least in the House of Commons. And the House of Lords, whose very existence is subject to some debate in Britain, is unlikely to serve as the final obstacle; in fact, while it can delay legislation, it generally cannot block it.
For some in Britain, May’s speech and the plan it outlines will seem an opening to revisit the entire question of leaving the EU at all. Scotland, in particular, is a hotbed of opposition to May’s plan, and Scottish nationalists see their own chance for a do-over of the independence referendum they lost a few years ago. But a rerun of the “stay-leave” referendum is unlikely, and a different outcome is even less probable, given how much better Britain has performed since last year’s vote than the naysayers predicted. Staying in the EU is no more attractive today than it was last June to the many Britons who voted to leave.
It will be a long road with sharp turns and bumps along the way, but the British have good reasons for asserting their independence. May has explained them eloquently and staked out a good negotiating position to help her country achieve that freedom.
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