Politicians propose; markets dispose. Last week began with a statement by Theresa May, the UK prime minister, of her plans for Brexit. The foreign currency markets responded by writing down the value of UK assets. The UK is determined to “take back control” of its fate. But formal sovereignty is not power. The UK government announces its intentions. The reaction of others determines results.
The two speeches made by Mrs May at the party conference last week make a hard Brexit by far the most probable outcome. That is so for both procedural and substantive reasons.
The procedural reason is that she has decided to trigger the EU’s Article 50 exit procedure by no later than March next year. This would give the initiative to the other members and focus the negotiations on a divorce, to be finalised within just two years. Given the complexity of EU decision-making, this is too short for negotiating a bespoke deal.