U.K. Prime Minister Theresa May is accustomed to having bad weeks.
The Brexit negotiations have been nothing short of a nightmare for any number of reasons, not the least of which is that nobody knows exactly what “Brexit” means.
It’s not even clear what part of speech “Brexit” is. Is it a noun? If so, is it a proper noun, or is it just capitalized by default because the first two letters denote the name of a country? Or maybe it’s a verb. If that’s the case, how does one “Brexit”?
Whatever the case, it’s an amorphous concept that had symbolic meaning to the extent it conveyed something about public sentiment, but had little to no practical applications at the time of the referendum. Effectively, Britain voted to do something and then left it to policymakers to figure out what it was they had voted to do.
“Brexit was offered as a single liberating proposition, when in fact it involved multi-layered consequences and implications that require negotiation with others”, The Guardian’s Martin Kettle wrote this week.
But while it might not have any practical applications prior to U.K. and E.U. officials figuring out what Brexit means for the U.K.’s relationship with the rest of Europe, the market sentiment the Brexit vote engendered has had very real implications for the country. Here’s BofAML, from a note dated July 13:
The UK has been something of a trailblazer, providing a test case for the costs of undoing free trade. UK growth held up immediately following the vote as consumers spent in the shops. But costs are now evident. FX-driven inflation has eventually taken a toll on consumers, while business investment is stagnating in the face of uncertainty. The UK is the only country in the G7 to see growth slow since 2016. Brexit has probably already cost 1-2% of UK GDP (see Chart 1 and estimates here). This is a reaction to only the potential for trade disruption. No trade barriers have actually been imposed yet.
You can see why some policymakers are a bit hesitant when it comes to pushing a hardline stance in Brussels.
Theresa May has an impossible task. She’s being asked to negotiate the terms around a concept whose meaning can only be known once those same terms are set. There is no fixed point of reference; the meaning of the term “Brexit” can’t be known until after the negotiations are complete.
Whatever the outcome, everyone is going to end up losing for the same reason that everyone will end up losing in an all-out trade war. “Globalization has created complicated supply chains, with countries specializing in areas of comparative advantage [so] splitting up is very much a negative-sum game”, BofAML writes, in the same note cited above, adding that “there is no good scenario here.”
Given that, May’s position is decidedly unenviable, and it was made even more so this week when Donald Trump humiliated the Prime Minister by criticizing her Brexit approach in an interview with The Sun. He also explicitly endorsed Boris Johnson for May’s job. Worst of all, the interview was released at the tail end of a gala dinner May hosted for Trump.
Trump would later attempt to “fix” the situation in a truly bizarre interview that found him accusing The Sun of flying too close to the, well, too close to the sun when it comes to printing “fake news”. Ultimately he delivered what counts as “apology” for Trump.
In the course of that press conference, the President also said he gave May some advice about how to go about Brexit-ing, advice he described as “a little bit tough”.
What, you might ask, was that “tough” advice? Did Trump suggest Britain should invade Belgium? Enquiring minds want to know (and the tabloid reference there is particularly apt in this case due to The Sun’s involvement).
May answered that question on Sunday, in an interview with BBC’s Andrew Marr. Here’s what she said:
He told me I should sue the EU. Sue the EU, not go into negotiations, sue them.
You can watch the clip below and do try to appreciate the incredulity inherent in May’s matter-of-fact tone as she delivers the punchline.