Changing Europe

UK: Elections-not as bad as it looks

1: The message from the electorate is undeniably arguing in favour of a U-turn, or at least a slowdown, of the public sector spending cuts. That is likely to be growth positive.

2: This result should make the Brexit negotiations more reasonable, not less favourable for the UK. It is a fact that the two years of negotiations triggered with Art50 are not enough for any country to put in place all the trade agreements needed to continue business as usual. This result should force Mrs. May and the Conservative party to take a more humble stance on this issue. No deal being better than a bad deal is true to some extent, but it is not a sufficiently good plan given the magnitude of the task ahead. A stronger voice from Labour, in our view, should make it more likely that either the negotiations will be extended or a second referendum will be held on the Brexit deal, reducing the possibility of a genuinely bad compromise. To those that point out that a weak government bodes ill for the start of the Brexit negotiations, we would reply that, in the past year, the EU has kept a tough stance on this issue, and it appears clear that the EU is so caught up in its own internal politics that it simply does not have enough capacity to put in place a well thought out long-term strategy for Brexit and its long-term implications. Both sides need more time and more humility in order to deliver a mutually beneficial outcome for their citizens, in our view.

3: Like it or not Jeremy Corbyn and the Labour manifesto have injected some fresh new blood into the Socialist’s stance in Europe, which was simply not present until now. In France, Macron’s victory is unlikely to bring a genuine revolution on policies – this is his weakness. The EU needs bolder ideas on policies and a more frank discussion about them. An uber-accommodative monetary policy and a nominally more credible fiscal strategy is not a good enough roadmap to deliver prosperous countries and happy voters.