On the 29^th March 2017 UK Prime Minister Theresa May triggered the two year process of the UK leaving the European Union. In the article below, Tim Ross and Robert Hutton detail what we have learned as a result of her triggering Article 50.

It is now well over two weeks since triggering Article 50, how much more do we now know?  Well, beside the call for a snap election, we know very little that is of any use to anyone, who owns or runs a business, appears to be the answer. The EU has now responded to Theresa May’s letter setting out their starting point and, if anything, relationships have worsened with both sides becoming more entrenched.  At stake are huge ramifications to businesses that trade and manufacture.  From our perspective, there is substantial uncertainty for manufacturers and for the logistics firms and assets that support trade (seaports, railroads, lorry operators, ocean carriers, etc.).  There are also large competitiveness implications for future inward investment into UK – so there will be large impacts to both government economic development objectives and industrial property interests.

The Brexit debate was driven by internal UK politics, which is evidenced by the complete lack of discussion on the real implications of what a vote to leave would mean. The Brexit Terms discussion will now be driven on one side by the same internal UK politics, but on the other side by the much wider European political landscape and inevitably decisions and agreements, or lack of them, will be made based on the politicians assessment of the impact those decisions will have on the political landscape as they see it in their part of the world.

Where does that leave us? Probably having to look out for ourselves is the answer and perhaps we are paying the price for allowing politicians to get on with it and not paying enough attention. The just called snap election can help affirm this path, or not.  Obviously, we need to pay attention through this next step but the assumption for now is that this I all about political cover to proceed.

While all this goes on time and business activity will not stand still. Banks and other financial institutions in the City of London, who are unsure of the effect on the City, are already making announcements about strengthening their European subsidiaries and transferring staff. Having cost effective supply chains and minimizing the costs of route to market are vital for any business. In uncertain times risk to business continuity needs to be considered and managed, that includes having access to alternative supply chains and understanding what could happen with the cost of route to market and what can be done to mitigate them.  Now is the exactly time to be reviewing options and put in place alternative plans and actions that will mitigate the effects of the major risks should they turn into realities.

Brexit Begins: What We Learned the Day May Triggered Article 50

by Tim Ross and Robert Hutton

“Dear President Tusk.” Thus Prime Minister Theresa May began a six-page letter giving the European Union formal notice that the U.K. is leaving. What did the contents reveal? And what can be gleaned from the reaction of the various capitals about the direction the negotiations will take?

Here are the takeaways.

’Brexit Means Brexit’

May was roundly mocked for her vacuous soundbite when she took office. Yet there were still some in Europe who believed Britain wouldn’t follow through on last year’s referendum vote to leave. On Wednesday, that hope was maybe dispelled.

By March 30, 2019, Britain will be out of the EU. “This is an historic moment from which there can be no turning back,” May told lawmakers in London. The recipient of the letter, EU President Donald Tusk said “there is no reason to pretend that this is a happy day, neither in Brussels nor in London.”

European Commission President Jean-Claude Juncker said he was “feeling fine” but that Britons had made “a choice they will regret one day.”

Despite the warmer tone from May, and corresponding pleasantries from Tusk, the two sides are as far apart as ever on how the negotiations will unfold.

May wants to be friends

After triggering Article 50, May no longer needs to convince her Tory Euroskeptic colleagues that she’s committed to their cause. She can now turn her attention to her EU counterparts and try to woo them instead.

May alarmed European leaders in January with threats to walk away from talks and turn Britain into a tax haven if the EU’s trade offer isn’t good enough but struck a far more conciliatory tone in her letter.

The U.K.’s vote to leave the EU “was no rejection of the values we share as fellow Europeans” she insisted. “I have listened carefully to you” and to other EU leaders, she told Tusk, promising Britain won’t be “cherry picking” elements of single market membership.

May said she understood the negotiations would be difficult, and that Britain would pay a price for leaving — losing influence over setting EU trade rules that U.K.-based businesses will have to operate by.

“It is a hard letter: Brexit is Brexit,” Dutch Foreign Minister Bert Koenders said. “But there were constructive elements in the letter like the protection of European values, the necessity of a good new relationship and the notion ’you can’t have your cake and eat it.”’

…But she can’t help making a threat

May casts Brexit as a deal that can’t just be about money and trade, but must be a “deep and special partnership” spanning prosperity and also security — which was mentioned 11 times in the letter.

A week after a terror attack in the British capital, she linked security to the economy repeatedly. Her argument reached a crescendo on the final page of the letter, when she set her demand for a security and trade accord in the context of wider threats to regional stability that stretch beyond areas of EU competence.

“Europe’s security is more fragile today than at any time since the end of the Cold War,” May’s letter said. “Weakening our cooperation for the prosperity and protection of our citizens would be a costly mistake.”

Later, Home Secretary Amber Rudd went further. “We are the largest contributor to Europol, so if we left Europol, then we would take our information — this is in the legislation — with us,” she told Sky News. “The fact is, the European partners want us to keep our information in there because we keep other European countries safe as well.”

European Parliament President Antonio Tajani responded that “close cooperation on defense, police intelligence and judicial matters should continue with the U.K. whether there’s a deal or not.” Guy Verhofstadt, the European Parliament’s point person for Brexit, interpreted May’s words as “a special threat on Ireland and also on Northern Ireland.”

The argument about the arguments has begun

May confirmed she thinks it’s vital to discuss the divorce terms alongside the framework for the new U.K.-EU trade deal. But Brussels instantly rejected this, insisting that Britain must accept its exit bill and other responsibilities before any discussion of the future can begin. Germany’s Angela Merkel was firm on the point too, while offering a glimmer of hope to May.

“Only when those questions have been dealt with, but hopefully soon, can we talk about how to craft our future relationship,” she said.

Some in the EU pointed to the complexity of the talks that lie ahead. Maltese Prime Minister Joseph Muscat said he was informed by the EU’s chief Brexit negotiator, Michel Barnier, of “a very interesting statistic which shows the degree of detail to which they are going” into: 250,000 cats and dogs cross annually from Dover to Calais with a pet passport.

Now about that cliff..

May also called for an early commitment from the EU to negotiate a transitional period — which she described as implementation phases — to help businesses avoid the “cliff edge” Brexit they fear.

Not so fast was the answer she got. In a draft resolution, the European Parliament, which must approve any Brexit accord, said “substantial progress” should be made “toward a withdrawal agreement” before “talks could start on possible transitional arrangements.”

May wants a deal for banks

After telling Bloomberg in January that she wanted to keep banks in London, May made her clearest demand so far for an EU deal to cover financial services, which she said were “crucial to our linked economies.” She urged Brussels to make talks on the future of financial regulation an early priority in order to preserve “fair and open” trade.

Britain would like to settle the bill

Some in May’s team claim the U.K. can leave the EU without paying anything — never mind the EU’s stated exit fee of 60 billion euros ($65 billion). But May took a small step toward acknowledging that she might have to cough up.

She also signaled the discussion won’t be one-way. Both sides will have to respect Britain’s “rights” as a departing EU member state, as well as its responsibilities, May said. This could be seen as a hint that the U.K. will hit the EU with a counter demand for a share of common European assets, such as buildings and other infrastructure, when the haggling begins.

What perhaps the U.K. and its adversary can agree on is that it will be a point of contention.

“There’s certainly going to be a dogged fight about that,” Austrian Chancellor Christian Kern said.

Don’t forget the people

Ever since she became prime minister, May has been asked what she plans for EU citizens currently living in the U.K. She’s refused to answer, arguing that she wants to guarantee their rights, but wants to secure agreement on the rights of British citizens in the EU at the same time. This is not, she said, the same as treating them as bargaining chips. In her letter, she called for “an early agreement about their rights.”

If this is an early example of May negotiating, it’s not promising: She’s holding onto an implied threat that she might not give people some rights that she’s also conceded she really wants to give them.

Instead of making a generous first move, she finds herself clinging to an early position that not even her own side supports.