News in brief:
- The UK election has resulted in a hung Parliament. The Conservative Party remains the largest, winning 318 seats (with 42.4% of the vote), however they have lost their majority, with 326 seats needed. The Labour Party confounded expectations and has made significant gains, winning 261 seats (with 40% of the vote).
- Despite calls for Conservative leader and current Prime Minister Theresa May to resign, it is believed that she intends to stay on and later today will seek permission from the Queen to form a government.
- In Northern Ireland, both the DUP and Sinn Fein increased their seats, winning 10 and 7 seats respectively, while the SDLP and UUP lost all their seats. Sinn Fein have stated they will maintain their policy of abstention and not take up their seats, reducing the number of seats needed to reach a majority. The DUP have given their assurances of support to the Conservative Party, although will not enter into a formal coalition agreement.
- In response to exit polls last night, Sterling fell almost 2%, to a new low of £1.13 against the euro.
In a result that seemed unthinkable just a few short weeks ago, UK Prime Minister Theresa May’s gamble on an early election has backfired, leaving her Conservative Party short of a majority and putting her under pressure to resign. Should she leave, Boris Johnston, current Foreign Secretary, is the favourite candidate to replace her.
The gap between the Conservative and Labour parties narrowed significantly in the last two weeks, largely as a result of domestic issues, in particular in reaction to perceived “austerity politics”. In the end, the high turnout of young voters, as well as those who wish to remain in the EU, was a decisive factor in Labour’s significant gains. This result will have major implications for the Brexit discussions.
With the election called by Theresa May on the grounds of providing a strong mandate for her vision of Brexit, this has now been rejected by the British people and we have moved significantly closer to seeing a “soft” exit for the UK. Reacting to exit polls early this morning, David Davis, the UK’s Secretary of State for Exiting the EU, stated that they may have lost their mandate to withdraw from the customs union and even the single market.
Additionally, the Conservative Party are now seeking to form a government under an informal “confidence and supply” arrangement with Northern Ireland’s Democratic Unionist Party (DUP). In return for their support, it is highly possible that the DUP would call for the UK to remain within the customs union, as they have stated that achieving a “seamless and frictionless” border with Ireland is their chief priority in the Brexit discussions.
In response to the election outcome, European Commission President, Jean-Claude Junker, said, “I hope that the British will be able to form as soon as possible a stable government. I don’t think that things now have become easier…”, reflecting the fear that a weak UK government could lead to uncertainty and unpredictability in the negotiations. EU Budget Commissioner Günther Oettinger additionally stated, “With a weak negotiating partner, there’s the danger that the Brexit negotiations will turn out badly.” However more positively, he affirmed that “a hard Brexit is a British goal” and not the EU’s.
With the exit negotiations between the UK and the EU Commission due to start in just 10 days’ time, on the June 19, the UK position remains unclear. ICOS will now focus on engaging with the Ulster Farmers’ Union over the coming days, to ensure that the DUP have a clear understanding on what the agricultural sector needs from the discussions, so that this may be reflected in the UK’s formal position.
For any questions, comments or to be added to the mailing list for future Brexit Briefings, please find my contact details below.
European Affairs Executive
Irish Co-operative Organisation Society Ltd
Tel: +32 22 31 06 85
Mobile: +32 487 64 86 80
14 Nov 2017
14 Nov 2017