World View: Britain’s Brexit Plans in Disarray After Court Requires Parliamentary Approval

Brexit Boom Bag, Project Fear, UK ecomomy
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This morning’s key headlines from

  • Britain’s Brexit plans in disarray after court requires parliamentary approval
  • Italy’s Monte dei Paschi di Siena, the world’s oldest bank, appears close to collapse

Britain’s Brexit plans in disarray after court requires parliamentary approval

Anti-Brexit protestors on June 25 in London (Getty)
Anti-Brexit protestors on June 25 in London (Getty)

A shock court decision on Thursday threatens to significantly delay implementation of Brexit, the referendum mandate that Britain leave the European Union. Negotiations between the UK and the EU are scheduled to take two years, but that two-year period will not begin until Britain’s prime minister Theresa May invokes “Article 50,” which triggers the beginning of negotiations. May had previously announced that she planned to invoke Article 50 in March of next year.

However, Britain’s High Court on Thursday ruled that Theresa May cannot invoke Article 50 on her own, without a vote in Britain’s House of Commons and House of Lords.

The court ruling immediately raised hopes in some quarters that Brexit may therefore not take place at all, though analysts I heard seemed to doubt that the parliament would be willing to reverse a decision supported by popular vote in a referendum.

Nonetheless, the path to Brexit implementation is now in disarray because Parliament will be debating the terms of the Brexit plan. There are many major issues to be resolved in the negotiations with the EU — whether Britain will be part of the European Common Market, whether Britain will have to continue accepting migrants, whether Brits will need visas to visit EU countries, and vice versa, how the land border between Northern Ireland (which is part of Britain) and the Republic of Ireland (which is an independent nation in the EU) will be managed, and so forth.

All of these issues require some sort of plan in advance of triggering Article 50, and May had hoped to keep that plan a secret until then. But a lot of people suspect that no such plan exists – that May does not have a clue what positions to take on issues like the ones listed above. So with the Parliament debating these issues, May will be forced to take positions on the issues prior to March. EU leaders will watch these proceedings with a combination of amusement and horror.

Britain is deeply divided by Brexit, and that extends to the Parliament. Analysts are predicting that anti-Brexit MPs will use the debating opportunities to delay the invocation of Article 50 by up to a year.

May is appealing the decision to Britain’s Supreme Court, which will hear the case in December and issue a ruling in the middle of January 2017. So expect the Brexit controversy to become extremely heated during the holiday season. Telegraph (London) and BBC

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Italy’s Monte dei Paschi di Siena, the world’s oldest bank, appears close to collapse

A proposed 5 billion euro bailout of Italy’s Banco Monte dei Paschi di Siena (MPS) by a consortium of other banks has been withdrawn, leading to the possibility that MPS will collapse by the end of the year.

Italy’s largest bank is Banco Monte dei Paschi di Siena (MPS), founded in 1472, and the world’s oldest operating bank. Its share of bad loans comes to $55.2 billion of bad loans on its books. These bad loans are so bad that it is estimated that selling these bad loans to a third party would only get 20% of face value, which means that MPS would require a bailout.

Investors are concerned that political pressure will force Italy’s government to use taxpayer money to bail out MPS. When Greece used taxpayer money to bail out its banks, the result was that the financial crisis spread from the banks to the entire country, resulting in Greece’s financial crisis, which is still unresolved. Italy’s financial problems would be larger than Greece’s. Italy also has a political issue: Prime minister Matteo Renzi has scheduled a referendum on a constitutional change for December 4, and he has promised to quit if he loses the vote.

According to a survey of 1,000 investors, Italy is now thought to be the country most likely to leave the eurozone this year, pushing Greece into second place. Reuters and Macedonia Online and The Street

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KEYS: Generational Dynamics, Britain, Brexit, Theresa May, Article 50, Italy, Banco Monte dei Paschi di Siena, MPS, Matteo Renzi, Greece
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