The Italian version was posted on 2016 10 13

Foreword

On the 23 June 2016 consultative referendum, 52% of votes went to the Brexit camp. A referendum is ‘consultative’ when it is meant to poll the voters and supply democratic institutions with the knowledge of the citizenry orientation on a particular subject. As such, a consultative referendum does not generate new legislation, whether through a further passage through the legislator or directly; nor it is a binding indication to the government to adopt actions or legislation in accord with the result of the referendum. It follows that Brexit was a choice of the Cameron Government. Everybody knows that Mr. Cameron, who had chosen to hold the referendum, has declined managing its aftermath. Mrs. Theresa May has taken over.

1. The most likely choice

Theresa May is PM of the Tory government since July 13. Ever since, two are the crucial questions everybody seems to be wanting an answer to:

1. Would Government exercise its right to invoke Article 50 of the Lisbon Treaty?
2. And, if the answer to question 1 were to be in the positive, would Government negotiate participation the to the common market in exchange for nationally-governed immigration control (‘soft Brexit’)? Or would it rather jump ship altogether and seek WTO trade rules without seeking any special relationship with the EU (‘hard Brexit’)?

Answers to both questions came on October 2 when, talking at her party congress, Theresa May explicitly stated that her Government prefers strict national control of labour movements over free access to the Single Market. To which she also added: “But let me be clear. We are not leaving the European Union only to give up control of immigration again. And we are not leaving only to return to the jurisdiction of the European court of justice.” As to the ‘when’ the Article 50 process would be set in motion, the chosen date was announced to be the end of March 2017.

The first and, so far, paramount effect of the referendum result, has been a very large depreciation of the pound (which by the way since the beginning of the year has become the world’s second worst performing currency against the dollar). We will get back to this issues of sterling depreciation and its effects at the end of this post. First we want to report on some signs of the shape that policy is taking with regard to the labour market. What emerges from an analysis of the press and direct observation of the Government is an amazing abundance of announcements followed by denials, partial or absolute. Which seems to point to a ‘Chaotic Hard Brexit’.

2. Labour policies in the making, and more

The way the May Government started out gave the impression of seeking to establish a significant change of direction in the field of labour market and labour support. Initially the PM stated that she wanted to make sure that employment regulation and practices are keeping pace with the changing world of work, which include the sizeable growth of part time labour as well as employment of independent workers by the companies of the so-called ‘sharing (or gig) economy’, such as Uber and Deliveroo (Theresa May eyes center stage with review of ‘gig economy’, Financial Times, 1 October 2016). The next day, while talking to the Tory congress in Birmingham,the PM emphasized that her G0vernment will supply that which individuals, communities and markets cannot: in clear, government will support the free market, yet intervening in instances of failure. Finally, government will offer support to firms and encourage free trade “but not accepting one set of rules for some and another for everyone else” (May Looks Beyond Brexit to Portray Herself as Workers’ Tribune, Bloomberg, 5 October 2016).

But in just a few days Government positions seem to shift quite a bit on the matter of labour rights and labour legislation. On October 4, we learn about the intention of making the NHS ‘self-sufficient’ by 2025 in terms of medical staff, a 25% of which is currently made up of non-natives (Theresa May Under Fire for Hinting NHS Doctors from Overseas Only Welcome Until 2025, Huffington Post, 4 October 2016).

Then on October 11 we learn from BBC that NHS patients are receiving special attention: they are expected to show a valid ID to identify eligibility for hospital services. It is still unclear if pregnant patients should show a valid identification … (Passport checks considered for pregnant NHS patients).

On to research and Universities. On October 7 Foreign Office told the London School of Economics that academics who were not UK nationals would be barred from doing government consultancy work on Brexit, officially for the risk of the spread of “restricted material” regarding negotiations with Brussels (UK government bars foreign academics from Brexit work, LSE claims, Financial Times).

Then Home Secretary Amber Rudd comes to the fore with her own proposal: UK-based firms ought to supply a list of their foreign-born employees (May’s Government Facing Split Over Plan to List Foreign Workers, Bloomberg, 8 October 2016). Corporations do not take this kindly (Amber Rudd will ‘flush out’ employers who fail to recruit Britons, Financial Times, 5 October 2016). Yet, the negative reactions do not lead to a withdrawal of the proposal: rather, it is announced that such list will not be made public, so that no name-and-shame will take place (Companies’ Foreign-Worker Lists Won’t Be Made Public, U.K. Says, Bloomberg, 9 October 2016).

The May Government has also announced that immigration control will be strengthened through an agreement with the Irish Government leading to stricter controls at the border of the Common Travel Area, that is, the free-circulation area comprised of Ireland and UK. The measure would be alternative to strengthening controls at the Ireland-North Ireland border, which could be interpreted as a violation of the Good Friday Agreement (Britain to push post-Brexit UK immigration controls back to Irish border, The Guardian, 9 October 2016).

Finally, and this is 12 October news, something not altogether heartening is beginning to emerge on the price front: the large depreciation of the pound which, in the heads of many an economics genius, ought to foster British exports and thus cushion possible negative effects of Brexit, is causing major international suppliers of British retailers to ask for substantial increases in prices to neutralize, at least partially, the depreciation of the pound. News worth to read, especially instructive for those who have been talking about the great benefits of, for instance, Italy exiting the euro…

We hope we are being too pessimistic, but ….

We’ll talk about all this again soon.

Daniele Langiu and Fabio Sdogati