Brexit and the French elections – American Enterprise Institute
The outcome of the UK’s snap election on June 8 has substantially weakened Prime Minister Theresa May’s hand in the upcoming negotiations. She will go into those negotiations with a hung parliament and with diminished political authority at home. That will make eventual parliamentary approval difficult for any Brexit deal that she might strike with her European counterparts. She will also go into those negotiations lacking the strong mandate that she had sought in those elections. The one clear thing that emerged from those elections was that the UK electorate did not share her view on the desirability of a hard Brexit.
If the UK elections will have weakened that country’s relative negotiating position, the French elections will have strengthened that of the Europeans. Following Emmanuel Macron’s decisive electoral victory, France will be led by a reform-minded president who is a strong believer in European integration and who will enjoy an overwhelming parliamentary majority that will allow him to implement his reforms. This makes it unlikely that France will wish to make meaningful concessions to the UK on the underlying principal of the free movement of labor within the Single Market. It is also likely to reduce France’s incentives to help reach a Brexit deal. With reforms at home, France would stand to benefit from the reallocation of investment away from the UK should that country lose access to the Single Market.
All of this would seem to strengthen the arguments of those who are pressing Mrs. May to back down soon from the hard-Brexit positon that she has been been advocating so single mindedly over the past year. She should do so even though such a course would likely reveal deep divisions on the Brexit issue within her Conservative Party. Failing to embrace a soft Brexit position is all too likely to undermine investor confidence and to make for some heavy going in the UK economy over the next few years.