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UK's summer sunshine masks simmering Brexit civil war
WHEN voters chose Brexit in the June 2016 UK referendum, sterling and the stock market slumped.
Despite the risks from a bitter civil war within the ruling Conservative government that has ensued since, and growing possibility of a hard-left Labour Party successor, the perils have been ignored. The latest resignation of ministers from Prime Minister Theresa May's shaky Conservative government, including the Foreign Secretary and Brexit Secretary this week, seems to have had minimal impact on both the UK and European markets.
Perhaps this is the UK's best summer since 1976, with a young football team reaching the World Cup semi-finals; and Wimbledon, Ascot and the Henley Regatta in full swing. Perhaps the good mood and hot weather encouraged traders to believe that the UK Parliament and European Union negotiators will accept Mrs May's proposed "soft" Brexit; that EU member governments will be happy that the UK will effectively remain in the Union, albeit with no voting rights. But as summer turns to autumn, the political and market communities may recognise the deepening disenchantment of the populace. Poll after poll already show that voters are furious with the squabbling politicians and the performance of the prime minister. In the meantime, Brexit and Labour MPs have indicated that they will not vote for Mrs May's Brexit proposals. The EU is also likely to reject immigration controls and other wishes. Traders could then perceive a political fallout that would likely deter foreign investment and hurt trade and financial services, leading to a rapid deterioration in market sentiment.
If there is indeed another sterling and stock market rout, it would stem from the decisions of two preceding premiers and blunders of the present incumbent. Besides the Iraq war, Tony Blair made another mistake: He did not take advantage of an EU ruling that allowed the UK, France, Germany and others to block Eastern European immigration for seven years after the countries became new members of the Union. Instead, Mr Blair's Labour government opened the floodgates. Failing to win immigration and other concessions from the EU, David Cameron - backed by Parliament - made the mistake of holding a simple majority referendum.
Mrs May took on the poisoned chalice. Then followed a series of blunders which have led to the present unstable political impasse. Mrs May decided on an ill-advised election that decimated her majority. In the manifesto and subsequent promises, she insisted that the UK would no longer be a member of the EU's Single Market and Customs Union, and would make its own laws.
Signs that Mrs May would renege on her promises came when she sidelined Brexit Secretary David Davis. She left negotiations with the EU to Oliver Robbins, a civil servant whom Brexiteers regard as a Europhile and appeaser. Mrs May also made no contingency plans to keep the Ireland and Northern Ireland border open after Brexit. Negotiations with the EU dragged on with some agreements of massive UK payments. There have also been no plans in the event of a failed Brexit deal. The premier's relationship with US President Donald Trump is regarded as poor - a bad mistake considering that the US is the UK's biggest single nation trading partner and leading foreign investor.
Sadly, Brexit and blunders have left the UK with a weakened premier and a government with broken promises and shrinking respect. The hope is that the EU will be flexible, and a reasonable deal will be negotiated by the deadline.