PM Theresa May to trigger Article 50 on 29 March 2017
Prime Minister Theresa May is to trigger Article 50 later this month, formally starting the two-year period during which the United Kingdom (UK) and European Union (EU) will hope to reach an agreement over the terms of the UK’s exit by 29 March 2019. This comes nine months after 51.9% of the UK voted to leave the EU in the June referendum.
The UK’s EU representative, Sir Tim Barrow, notified the EU this morning that a formal letter should be expected on 29 March 2017 followed by a statement to parliament from Prime Minister May later in the day. The Brexit Secretary, David Davis, outlined that the two-year period thereafter will involve “the most important negotiation for this country in a generation”.
It is expected that the EU member states will issue their terms within forty-eight hours of the UK’s formal intention to leave. Leaders of the remaining EU member states have indicated that they wish for negations to be concluded within eighteen months to provide ample time for ratification by both the UK and EU Parliaments.
Commentary
Today’s announcement is the first in a series of communications aimed at tempering market activity. Since the June 2016 referendum, Downing Street has carefully managed communications in an attempt to counter the risk of a market collapse. To date, the UK economy has fared well due to the fall in sterling to its thirty year low and its impact on international competitiveness. Its important to recognise however that we have no real idea as to what the final outcome of this negotiation process will be, and how the market or sterling will perform during that period.
This is the first time that a member state has chosen to exit the EU and so we are entering uncharted territory. Rachel Lomax, former Deputy Governor of the Bank of England, outlined in a recent speech that nothing in set in stone during this process. Should no agreement be reached in the two-year period, it is feasible that both the EU and UK could agree to extend the negotiation period.
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