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Brexit trigger: Market reaction muted, as serious talks start only in May
BREXIT has officially begun, but the sterling pound and the stock market fell only slightly as serious negotiations are expected to begin only in May, after the French presidential elections.
Detailed trade, investment and banking talks are slated to intensify after the September elections in Germany, the leading member of the European Union (EU).
Immediate negotiations are expected to involve exit payments by the UK for its commitment to the other 27 EU members. As an initial negotiating stance, chief EU negotiator Michel Barnier claimed that Britain's exit fee should be 60 billion euros (S$90 billion) before other talks can begin.
But his counterpart David Davis, Brexit Secretary of State, has said that such figures cannot be calculated "on the back of an envelope". The UK has assets in the EU, including intellectual property rights, far exceeding any possible commitments, he added.
European Commission (EC) President Jean Claude Juncker also conceded in a BBC interview that the exit payment has to be "scientifically calculated".
The other key initial negotiation involves the residential rights of around 3.2 million continental EU citizens living in the UK, and some one million British residents in France, Spain, Italy and other EU nations.
In her Brexit letter to European Council president Donald Tusk, British prime minister Theresa May stated "that at the heart of our talks are the interests of all our citizens", and that efforts should be made to strike an early agreement about their rights.
Her six-page letter triggered Article 50 of the Lisbon Treaty, which begins a two-year countdown to the UK's exit from the EU.
When Sir Tim Barrow, Britain's most senior diplomat to the EU, handed that letter to Mr Tusk, Mrs May told Members of Parliament that it was her "fierce determination to get the right deal for every single person in this country" and that included EU citizens.
Appealing for the country to draw a line under the divisions of the referendum, she added: "Now that the decision has been made to leave the EU, it is time to come together ... We all want to see a Britain that is stronger than it is today. We all want a country that is fairer, so everyone has the chance to succeed."
In the evening before her letter to Mr Tusk, Mrs May telephoned him, as well as German chancellor Angela Merkel and the EC's Mr Juncker.
A Downing Street spokesman said: "In separate calls, they agreed that a strong EU was in everyone's interests and that the UK would remain a close and committed ally.
"They also agreed on the importance of entering into negotiations in a constructive and positive spirit, and of ensuring a smooth and orderly exit process."
In her letter to the EU, Mrs May stated that the UK would leave the single market, but that the British government wanted to come to an agreement on "a deep and special partnership between the UK and the EU, taking in both economic and security cooperation".
"At a time when the growth of global trade is slowing and there are signs that protectionist instincts are on the rise in many parts of the world, Europe has a responsibility to stand up for free trade in the interest of all our citizens.
"Likewise, Europe's security is more fragile today than at any time since the end of the Cold War. Weakening our cooperation for the prosperity and protection of our citizens would be a costly mistake."
The two-year time-frame of Article 50 - a tight one considering that complex trade talks are likely to begin only after the German elections - can be extended only by unanimous agreement from all EU countries. During this time, the UK will remain a fully fledged member of the EU, pay contributions to the budget and follow the EU rules of free movement of EU citizens and capital; free trade and services with the EU will continue as normal.
If no agreement is reached in two years and no extension is agreed to, the UK automatically leaves the EU and all existing agreements - including access to the single market - would cease to apply to the UK.
But this rule would also require a ruling of the European Court of Justice, because no country has ever left the EU and Article 50 does not explicitly say whether the process after two years can be halted.
Article 50 also states that any exit deal must be approved by a "qualified majority" (72 per cent of the remaining 27 EU states, representing 65 per cent of the population), but must also get the backing of members of the European Parliament.
A paragraph of Article 50 also raises the possibility of a state wanting to rejoin the EU after having left it, but that would be considered under Article 49.