LONDON — The UK may need to stop the clock on negotiations to leave the European Union while it sorts out a political mess, a JPMorgan analyst said, but the EU might seek to keep the original timeline.
Meanwhile Michel Barnier, the EU’s chief Brexit negotiator said that the “timetable and EU positions are clear,” hinting at keeping the March 2019 deadline for the UK’s exit.
Under Article 50 of the Lisbon Treaty, the two parties, which begin talks in less than two weeks, have until the end of Autumn 2018 to agree on complex issues such as new trading arrangements, how much money is owed and the status of UK and EU nationals living abroad.
That gives less than 18 months for the UK to form a government and negotiate Brexit. At the moment, it’s not even clear who will lead the UK’s negotiating team, according to Nomura.
Donald Tusk, president of the European Council of national leaders, was even more explicit, saying that while “We don’t know when Brexit talks start. We know when they must end.”
The ability of the UK “to sustain political continuity through the discussions looks challenged” following the result of the general election, Malcom Barr, a European economics analyst at JPMorgan, said in a note to clients on Friday.
“Perhaps the most obvious conclusion is that the likelihood of the UK needing to request a delay in the Brexit process has risen substantially, given the chance that political developments in the UK disturb what is already a time compressed process,” said Barr.
Here’s Barnier hinting at keeping the original timetable in a tweet following the election result of a hung parliament:
And here’s a graphic of the EU’s timetable:
The Conservatives lost their majority in parliament after voters rejected May’s call for a bigger mandate in order to “strengthen her hand” in Brexit negotiations, which may see the UK move towards a softer Brexit. Rather than step down, Prime Minister Theresa May could seek a coalition with Northern Irish MPs from the Democratic Unionist Party, which would increase the chance of the UK staying within the EU Customs Union.
“It is extremely difficult, however, to see how a stable and coherent policy toward Brexit can be constructed and implemented given this political backdrop,” said Barr. “The influence of Irish MPs concerned about ensuring a frictionless border is likely to create a contingency for a more pragmatic approach to Brexit.”