Today, Brexit turns one year old and how time flies! While, the UK’s vote to leave the European Union and “take back control” was always going to be complicated, the issue has managed to become even more confusing over the past year. It’s still unclear what Brexit will ultimately mean and more divisions are emerging in the government since British prime minister Theresa May called a “snap general election” June 8 and lost her mandate. This hasn’t stopped negotiations between the UK and EU formally starting this week—even without a fully-functioning British government.
Here’s how the UK has come full circle in the last 365 days.
May was ridiculed for months last year for her slogan “Brexit means Brexit.” It was infuriatingly meaningless and seemed to represent what was wrong with the referendum to start with: The 16-word question put to the electorate didn’t specify what leaving the EU entailed, how complicated the process would be, and neither side in the campaign properly shed light on the issue.
At the beginning of the year, May finally delivered a 12-point outline that was supposed to clear up the matter. In short, it meant leaving the EU’s single market—which allowed free movement of goods, workers, services, and capital within the bloc—exiting the customs union, sending less money (but not no money) to the EU, and no longer being under the jurisdiction of the European Court of Justice.
Reality hits. After 40 years, the UK officially filed for divorce from the EU. May triggered Article 50 of the Lisbon treaty and began the two-year countdown for leaving the bloc. It’s still undecided what Brexit will mean for EU and UK nationals not living at home, the border between Northern Ireland and the Republic of Ireland, shared security measures, and other joint projects that are in progress.
Just over two months later, the UK is back to square one, without a coherent idea of what Brexit means. As the economic cost of Brexit—higher inflation and stagnant wage growth—has started to make itself felt, the general public’s opinion on how the government is handling Brexit is getting worse. The public seemingly rejected May’s vision for Brexit in the election that was supposed to deliver her a personal mandate to launch her 12-point plan. She lost. Even worse, the UK reverted further back than to square one because the election produced no clear winner. Instead, the Conservative party led by May formed a minority government and responded with U-turns. May returned Michael Gove, a key orchestrator of the campaign to leave the EU, to her cabinet as the new environment secretary.
But even Gove has changed his tune. He now says the government should try to get the “maximum possible consensus” on Brexit among all political parties and incorporate the views of people who voted to remain in the EU.
Negotiations between the UK and EU officially began. The EU won round one. It was decided that negotiators would first iron out the bill and other aspects relating to the UK leaving the bloc and then negotiate a trade agreement if enough progress had been made. The UK, however, had wanted to negotiate leaving and a new trade deal simultaneously.
Back in London and the biggest signal that the government is softening its stance on Brexit has come from Chancellor Philip Hammond. Holding the second most senior role in government, Hammond is prioritizing the UK economy and jobs over immigration. In a speech on June 20, Hammond said the UK needed to trade more, not less, and maintain “strong trade links with European markets.” He also wanted the UK to be open to the “talent, the ideas and the capital that have driven the success of our economy in the past.” Already this implies that the government’s plan to cut migration into the country to just tens of thousands instead of hundreds of thousands is no longer a priority and keeping a stronger relationship with the customs union than previously suggested is on the cards.
Hammond also named one project the UK would seek to stay involved with after Brexit: the European Investment Bank, which provides funds for big infrastructure projects and venture capital.
In theory that is. In the Queen’s speech delivered by Queen Elizabeth on Wednesday, marking the state opening of parliament and setting out the government’s legislative agenda, eight bills relating to Brexit were revealed. Bills on trade, customs, and immigration suggest the government is continuing ahead with plans to leave the customs union and the single market. However, these bills will need to be written, voted into law, and be allowed for by EU negotiations, so nothing is certain yet.
Back to Hammond. One of the issues extensively discussed about Brexit in business circles, but rarely anywhere else, is the probability that the UK will need a transitional agreement with the EU. This would mean keeping some features of EU membership in place after the two-year deadline passes in March 2019 until a new trade agreement can be reached. Hammond raised the issue again this week and said he was pushing for an early agreement on a transitional period that could last several years after 2019.
Mike Collins, senior investment officer at PGIM Fixed Income, told Quartz on a trip to London that he wasn’t sure Brexit would actually happen. “It’s hard to move smoothly off the status quo,” he said. Alternatively, if Brexit goes ahead, it will be so “watered down” that it will only amount to minor changes and the results of May’s snap general election suggests things are moving that way, Collins said.
Meanwhile, senior business leaders in the UK are trying to sway the UK towards the softest version of Brexit and raising concerns about plans to significantly cut immigration and leave the single market. But some strategists, such as Stephanie Flanders at JPMorgan Asset Management, say it’s too early to suggest May’s election failure means the government will take a less hardline approach to Brexit.
Ultimately, it’s hard to tell which way May will go. The minority government could force May into seeking cross-party support for most of her policies. These other political parties tend to support a softer version of Brexit. On the other hand, the confusion created by the election could consume so much of the negotiating time that the UK crashes out of the EU in March 2019 without a deal simply because it ran out of time.
While the UK still wonders what Brexit it really wants—if any— everyone is mindful that the clock is ticking.