LONDON — If the ruling Conservative party obtains a big majority in the general election in June this year, it will make it more likely for Britain to seal a trade transitional deal — a leeway period or phased process of implementation of Brexit agreements for the UK with the European Union.
Bank of America Merrill Lynch UK economist Robert Wood and his team, said a large Tory majority government as being hugely beneficial to Britain’s Brexit negotiations in a note to clients.
Here is the key part of the note:
“But we see today’s events as economically positive at the margin. In a scenario of a large Conservative majority, the chance of no Brexit trade deal at all – falling off the trade cliff edge – would decline in our view and the chance of a transition period increase.
“Why? Shoving out the next election after the 2017 election from 2020 to perhaps 2022 gives room for a transition period out of the EU before the next election.”
Prime Minister Theresa May is taking Britain towards a “hard Brexit” — shorthand for Britain leaving the European Union without access to the Single Market in exchange for having full control over immigration.
A large Conservative majority, the chance of no Brexit trade deal at all – falling off the trade cliff edge – would decline in our view
However, economists, lobby groups, and businesses have pushed the government for a transition deal that will allow Britain to have more time to adjust to the big change.
At the beginning of April, major finance lobby group AFME said Britain’s banks and other professional services institutions are going to struggle to fully prepare themselves for Brexit within the two-year deadline.
A transitional deal would be a temporary arrangement which would be in place from the minute that Britain leaves the EU at the end of the two-year Article 50 process until an expiry date agreed during the negotiations.
Basically, it would be a bridge between Britain ceasing to be an EU member in March 2019 and a point further down the line when Prime Minister Theresa May feels the country will be ready and equipped to complete its full divorce from all EU institutions.
Earlier this month, member countries of the EU signed European Council president Donald Tusk’s strict set of guidelines that detail how the bloc will approach negotiations with Britain over its withdrawal from the EU.
In other words, the UK will have to accept big fees and abide by EU laws and processes if it wants to be granted a transition deal. The EU is making this a “red line” in negotiations.
How people are likely to vote in the snap election
May called for an early general election on Tuesday. May said that an election will take place in just six weeks’ time on June 8, saying it is in “the national interest” to do so.
May said an election victory for the Conservatives would “guarantee certainty and stability for the years” and give her the public support to deliver her policies, including Britain’s imminent departure from the European Union.
On Wednesday, MPs voted in favour of a snap election.
A YouGov survey published on Sunday night showed that 44% of Brits intends to vote for the Tories at the next election, up 2% on the company’s last poll. 23% of respondents said they plan to vote Labour. Labour would need a massive shift in public sentiment to win a June election, these polls suggest.
The Times and The Telegraph also published data that said pollsters expect the Tories to win by a 100 seat majority while financial spread betting firm IG Market predicted amount of seats each party will win as follows:
- Conservatives — 370 seats (gain of 40 seats on current Parliament make up)
- Labour — 177 seats (loss of 52 seats)
- Liberal Democrats — 34 seats (gain of 25 seats)
- Scottish National Party — 50 seats (loss of 4 seats)
- UKIP — 1 seat
How will you vote? Take Business Insider’s poll here:
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