Hung, drawn and quartered?
Upcoming Breixt talks are on everyone’s mind as the dust settles from Friday’s shocking general UK election results. The pressure is on how things will play out and affect the Brexit. The vultures are already circling over Theresa May, who has been described by former chancellor George Osbourne as a “dead woman walking”.
Despite May’s insistence that she will remain as Prime Minister, there are many who firmly believe she will not survive the fallout from the disastrous performance of the Conservatives in the election.
As May hastily tries to finalize a collation government with the Democratic Unionist Party (DUP) which was confirmed over the weekend is still in the negotiation stage, she’s also had to face the wrath of Tory backbenchers who are furious over the loss of their majority.
Theresa May’s decision to call a snap general election has resulted in the Conservatives losing 13 seats while their arch rivals, the Labour party increased their number from 232 seats to 262.
Even if she is able to hold onto number 10 for now, the authority and power she had over her party are certainly diminished which leaves the question open on whether the Brexit will be a soft or hard one.
A soft Brexit scenario
With the disastrous election result, many feel that the risk of a hard Brexit has receded as the poor result is an indication that May’s stance on leaving the single market has been rejected by the populous in favor for a more cooperative deal with Europe. With a minority government, the Prime Minister will have a weaker hand and her so called “very difficult woman” approach will not be the case, as she will be forced to accommodate many EU requests for the UK’s divorce with the European Union.
A hard Brexit scenario
Theresa May’s weaker position in her own party could lead the way for the hard-line Eurosceptics to steamroll her into a hard Brexit. Combine that with the alliance with DUP who are also very anti-EU, then the probability of a hard Brexit is likely to increase.
The Brexit and current market reaction
Despite all the political uncertainty, after crashing on Friday, the Sterling has remained stable at the start of this week. However, this ongoing drama around number 10 and Brexit negotiations on the horizon, could take away this stability for the pound.