A week is a long time in Brexit.
Last week, Prime Minister Theresa May affirmed her commitment to taking the UK out of the European Union, reiterating that “Brexit means Brexit.”
She also got three pieces of unexpectedly good economic news, confounding those who predicted that a Brexit shock would begin to show in August: Business confidence bounced back from July, the construction industry showed signs of recovery and British manufacturing got a boost.
It seemed as if, just maybe, Britain might get away with leaving the EU without a huge dent in its economy and global standing.
But, with a solid Brexit negotiating stance still to be thrashed out, it didn’t take long for cracks to appear. And this weekend’s G20 meeting has served as a wake-up call. Look how far away she is from President Obama and Chancellor Merkel:
In this carefully staged “family photo” of the G20 leaders May is anything but front and centre in an image which will be interpreted as showing the ability of each country’s leader to project their power. The front row is occupied by the US, Germany, China, and Russia. Theresa May was relegated to the second rung, far left, next to a Saudi deputy crown prince.
In previous years, David Cameron was placed more centrally in the photo. While there is a lot of protocol that goes into the photo — leaders with the most time in power get preferential spots on the podium — the image also works as a symbol of how Brexit has affected Britain’s standing on the international stage.
Theresa May herself warned that Brexit would spell “difficult times” for the economy.
“We have had some good figures and better figures than some had predicted would be the case. I’m not going to pretend that it’s all going to be plain sailing,” May said in an interview. “I think we must be prepared for the fact that there may be some difficult times ahead. But what I am is optimistic.”
Then the Japanese government published an unprecedented 15-page guide to how Brexit could affect inward investment from Japanese companies. It did not make for happy reading. Japan’s foreign ministry said that big financial, pharmaceutical and manufacturing companies would shift operations elsewhere “if EU laws cease to be applicable in the UK.”
According to the BBC, Japanese companies employ around 140,000 people in the UK. Nomura, the investment bank, as well as Honda and Toyota all having major bases in the country.
“Japanese businesses with their European headquarters in the UK may decide to transfer their head-office function to Continental Europe,” the Japanese letter warned. The loss of jobs and investment would be devastating if Japanese companies really did flee the UK, even if it took several years to feel the effects.
Apart from Australia, which has proposed a post-Brexit trade deal, the leaders have not hidden their dismay at the outcome of the vote.
Brexit was an agenda point at the G20 leaders meeting, which presents the situation as a problem to be dealt with rather than the opportunity touted by the Brexiteers. Meanwhile, there were important side meetings that the UK was left out of, including with the US, according to The Times.
8.President Obama and John Kerry met Merkel and Hollande this morning. An EU/US summit with UK out of the room.
— Sam Coates Times (@SamCoatesTimes) September 5, 2016
So, while there might be heated debate domestically as to whether Brexit is good or bad for Britain, the message from international leaders is quite unanimous. It will be bad.
A hard Brexit will see foreign direct investment change course and flow elsewhere, hitting the economy. From a diplomatic point of view, the damage is already starting to be felt.
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