Fixing the ImpossiBle
24/7 (202) 973-1300   

Good Morning Brexit

One might have expected not to be able to pass down Avenue du Luxembourg this morning for all the lobbyists turning cartwheels of joy at the news that the UK has turned its collective back on the EU. After all, the major beneficiaries of Brexit will ultimately be the lobbyists and lawyers who will have to plug the breach left behind by all those departing British officials and politicians from Brussels on behalf of their clients. However, this Brussels-based British lobbyist, for one, is not rejoicing, and the mood in the EU Quarter is indeed a somber one. If anyone was in any doubt about Brexit’s catastrophic potential, then one need look no further than the run on the pound overnight.

However one spins it, all parties have emerged weakened as a result of the UK deciding to turn its back on the EU and uncertainty still reigns. Which is obviously not good news for business, investors or government. Therefore unleashing its worst regulatory instincts would not now be the wisest direction for the EU Commission to go but that could precisely be where we’re heading as moves to reassert EU core principles threaten to become a knee-jerk reaction to Brexit. Voices both inside the French government and EU Commission assert that “more Europe” is the solution to a host of problems confronting the EU despite the referendum result. Which could translate in the long term as more regulation coming down the road for business to deal with.

The implications of Brexit for the corporate world are legion of course. Post-Brexit, there could be a kicking out against liberal economic and trade policies associated with the UK in Europe. In regard to TTIP, the pace of negotiations will slow to a snail’s pace now the UK has departed as both the French and German governments face elections in 2017 and encounter fierce domestic opposition to TTIP. New Tech companies from Silicon Valley and elsewhere will discover to their cost that not having the UK on The Council, or, British MEPs at parliament, means there will be no reliable moderating influence on some of their more protectionist and privacy fixated continental counterparts in Brussels.

So what exactly can companies do to make sure their voices are heard and interests defended? In the immediate term, all companies need to make those negotiating, both on behalf of the EU and the UK, fully understand what is at stake for all concerned. Business voices like Markus Kerber, head of the BDI (the German employers’ lobby), are calling on Europe’s leaders not to risk damaging trade with punitive post-Brexit tariffs—yet there will be pressure from many in Paris and Berlin to make an example of the UK to avoid other countries having the same idea. In the medium to long term, U.S companies will need to significantly intensify their political engagement in both Brussels and at EU member state level and, they will also have to be readier to enter into coalitions with local actors in member states in order to leverage their domestic political support in Brussels to insulate themselves.

So what now in regard to the negotiations? The unvarnished truth is there is no real precedent for the situation in which we find ourselves today. We can probably expect protracted periods of uncertainty marked by intermittent flare-ups of mutual recrimination and resentment as negotiations unfurl. Much hangs on how the UK’s former partners react to the choice the British people have made and the spirit in which a new Westminster administration negotiates. On the British side, the tone will be set by whoever sits in Number 10 Downing Street.

David Cameron has also just stepped down, meaning this autumn’s Conservative Party conference will look more like the hustings of a leadership contest. A new Conservative Government might not be in place until late November. This could add to the uncertainty and delay around negotiations.

The Vote Leave team’s renegotiation roadmap stressed that the process should “not be rushed” but they didn’t seem to taken into consideration the views of those sitting across the negotiating table. Every indication is that Britain’s former partners do not want drawn-out negotiations. Jean-Claude Juncker and Emmanuel Macron are not the only ones in Europe to be terrified by the specter of Brexit “contagion” and a feeling seems to be taking hold that the British need to be dealt with firmly as a deterrent to other disaffected member states getting “uppity”. Let’s all hope that the voices of the likes of the Markus Kerbers of this world start to be heeded and heeded soon.

Eliot Edwards, Director Public Affairs and Government Relations at Aspect Consulting

More Posts