A Different Brexit?
American businesses provide the largest source of foreign investment and more than a million jobs in the UK. Emanuel Adam of BritishAmerican Business asks if the UK election result provides a new window of opportunity for US firms when it comes to the UK's future with the EU
The outcome of the United Kingdom general election did not produce what many in the United States had expected when Prime Minister Theresa May called for a snap election to take place on 8 June 2017: that is a greater majority for the Conservative Government. Instead, British voters chose to significantly reduce the seats given to the governing party, creating a 'hung Parliament', in which no party has the overall majority in the House of Commons.
While the UK must digest yet another surprising result in recent elections, some in the US business community are pondering whether this election result will open a window of opportunity or add more complexity to UK politics at a time where the UK Government is charged with delivering one of the greatest political and legislative challenges of our time: negotiating the new relationship between the UK and the European Union.
At first sight, this result clearly increased the level of uncertainty US businesses have faced since the UK's vote to leave the EU. With the clock for the Brexit negotiations ticking, the Prime Minister now depends on support for policies from a limited set of willing partners and may face uncomfortable leadership questions for some time to come. In that context, it will likely take time for the Conservatives to govern in a way that delivers the certainty the Prime Minister promised in her campaign.
Between the two leading parties, US businesses had generally favoured the Conservative policy manifesto over the one offered by the Labour party which some felt had moved too far to the left. Under its leader Jeremy Corbyn it promised to take back railways, water and postal service among other services into public ownership. Alternatively, the Conservatives' manifesto didn't offer a convincing agenda on how to build the strong economy needed to face the upcoming Brexit negotiations. The pledge outlined by the Prime Minister in the Conservative manifesto to double the immigration charge for companies employing non-EU workers, for example, was met with strong concern, particularly at a time when the country is trying to curb migration from the EU.
But it was also the Prime Minister's definition of 'certainty' that had caused the most headache among US businesses who provide the largest source of foreign investment and more than a million jobs in the UK. With the snap election, Theresa May sought a mandate to negotiate a 'hard Brexit'; a deal by which the UK gives up full access to the single market and full access of the customs union with the EU. Her party also maintained that it would walk away from a deal if it was not considered to be a "good deal" for the UK. For a business community that uses the UK as a gateway to the EU, that preferred that the UK remain part of the EU and hoped that at least access to the single market and customs union can be retained, a rather gloomy outlook.
A 'hard Brexit' option, however, did not find much cross-party support in the campaign. With the exception of the United Kingdom Independence Party (UKIP), which lost its single seat in the election, no party had formulated terms as strong as the Conservatives when it comes to Brexit. Other party manifestos offered a softer tone, ranging from considering access to single market and customs union to a second referendum over the final deal in Parliament. In fact, it seems that more than ever Britain is divided as to what kind of Brexit would serve the country best.
The best outcome from this election would therefore be that politicians across parties achieve broader consensus on how to pursue the Brexit negotiations in a way that is of interest to the UK, EU and US, but foremost to businesses that operate in or with the UK. US businesses in particular have a vested interest that the UK remains embedded in a strong transatlantic and global economy. So despite the added level of complexity in UK politics, a new consensus among legislators around how to achieve this goal could be a 'window of opportunity' that the new UK Government and Parliament may want to use in the interest of Britain, US business and business overall.
Emanuel Adam is Director of Policy & Trade at BritishAmerican Business, incorporating the American Chamber of Commerce in the UK