U.K. elections
It was an election that brought back a semblance of two-party politics. Both Conservatives and Labour could claim victory. The Conservatives took 318 seats, marginally increased their share of the popular vote and retained the right to govern. Labour took 262 seats, buoyed by a re-energized youth vote, and defying predictions of apocalyptic defeat. This left the remaining 70 seats (one-ninth) divided up among seven other parties, including the Liberal Democrats and the Scottish National Party, with none for the UK Independence Party.
Yet this also left one of the smallest parties in the U.K., Northern Ireland’s Democratic Unionist Party (DUP), with the power to uphold the new government or let it fall. On June 26 the Conservatives and DUP reached an agreement on the details of an alliance that creates a majority in Parliament. It creates some stability for the government, with the DUP promising to back it on Brexit and security, while obtaining more funding for Northern Ireland. But what effect it will have on power sharing in Stormont (Northern Ireland’s Parliament) remains a source of debate.
The new government and the Queen’s speech
Prime Minister Theresa May formed a new cabinet, but with key figures remaining in place. Chancellor Philip Hammond, Home Secretary Amber Rudd, Foreign Secretary Boris Johnson, Defence Secretary Sir Michael Fallon, Secretary of State for Exiting the EU David Davis and Secretary of State for International Trade Liam Fox all kept their positions.
The Queen’s June 21 speech outlined the government’s priorities for the coming Parliament. Unsurprisingly Brexit was at the heart. The issue had gone remarkably quiet during election campaigning only to re-emerge immediately afterwards. Eight Brexit-related bills were proposed; central among them is the Repeal Bill, which will transfer all EU laws into U.K. law, with Parliament then deciding what to retain. The government said, “Wherever practical the same rules and laws will apply after exit, therefore maximizing certainty for individuals and businesses.” Voting on the speech, the first test of the new government, is due this week.
Brexit negotiations
Negotiations between the U.K. and EU over the shape of the U.K.’s departure began on June 19. The EU outlined its core principles for the negotiations in April. While seeking to keep the U.K. as a “close partner,” it also reiterates that the EU’s four freedoms (goods, services, capital and labour) are indivisible so cannot be cherry-picked. The U.K. position was outlined in a white paper in February. Since the election, though, political pressure has grown for a more moderated outcome, e.g., seeking continued membership of the single market and customs union. What the result will look like is of course still unclear.
The focus of the early negotiations (and media interest) was on the process of separation, including financial settlement, as well as the status and protection of rights for EU citizens living in the U.K. and vice versa. The latter not only affects the well-being of those involved, but also has a business impact across a range of sectors, not least financial services, health care, agriculture, etc. May has presented a proposal for a “U.K. settled status,” which would give EU citizens who have spent five years in the U.K. equal rights on health care, education, benefits and pensions.
U.K. economy
Sterling remains low, having never fully recovered since the post-EU referendum drop in June 2016. Interest rates also remain low at 0.25%, and GDP growth was at 0.2% January through March, with prospects for similar results in April and June. At the same time, inflation reached a four-year high at 2.9%. Figures were also released last month showing a drop in net migration from the EU to the U.K. through 2016, based largely on lower numbers coming to the U.K. from Eastern Europe.
A final thought
This has been a challenging summer for the U.K., beyond politics and business, beyond the issues covered here. Many lives were lost to barbaric yet ultimately futile terrorist attacks, and to a terrible and tragic fire. These events bring into focus what is important – our families and friends, our societies – perhaps even reminding us why we do business in the first place. Above all, though, they demonstrated human bravery and kindness at their best – the ability to carry on and to support each other in the face of such adversity. Our thoughts are with all of those who were, and continue to be, affected. •
Rupert Potter is a U.K.-based writer, speaker and diplomat who has worked in Jordan, Bahrain, Sweden and Canada. His career has included work with the U.K. government. He currently runs an independent consultancy.
