Untested Theresa May to manage Brexit

The new prime minister's primary task is to negotiate a new relationship with the bloc

Theresa May prepared on Tuesday to take over as Britain’s prime minister facing a nation in such flux that she has a chance to leave a lasting imprint. But her steady and cautious public profile, and her swift, ultimately unchallenged ascent in the wake of the political chaos set off by the country’s stunning decision to leave the European Union, has left supporters and opponents alike lacking a clear sense of whether she is up to the job.

The task before her is daunting. She must negotiate the terms of the country’s withdrawal from the bloc in a way that minimises the economic damage but lives up to the spirit of the vote, especially in limiting immigration, while at the same time seeking to maintain British influence on the global stage.

She is confronting strains on the continued existence of the United Kingdom as currently constituted, with Scotland again agitating for independence and some republicans in Northern Ireland trying to use the “Brexit” vote to leave the European Union as reason to advance the cause of unification with Ireland.

And like leaders on both sides of the Atlantic, she is facing populist political forces that are challenging traditional ideologies and electoral coalitions, introducing a volatile element into governance. But the circumstances also provide her with a fair amount of room to manoeuvre.

Nearly every other senior figure in the governing Conservative Party was either sidelined or put in political peril by the vote on Europe, leaving a leadership vacuum that she is now filling with support from across the party’s fractious elements. The opposition Labour Party is in disarray and at risk of splitting.

In her one substantive campaign appearance before the rapid sequence of events on Monday that cleared the way for her to take power, she set out a vision of a Conservative government intent on doing much more than decoupling from Europe and eager to seize the political centre. Seeking to address the underlying causes of the vote to leave the union, she suggested that she would address the anxieties and frustrations of the British who feel left behind or imperiled by globalisation and its effects, including inequality.

“Within the Conservative Party some of her obvious foes have either been undermined, or have undermined themselves, so she does have a clear opportunity,” said Philip Cowley, professor of politics at Queen Mary, University of London. He also said that the Labour Party was “almost in an existential crisis and those who are talking about it possibly splitting are not too far off.” Cowley said May faced formidable challenges but added that there was a golden rule of sorts in British politics: “Don’t underestimate Theresa May.”

Her transition moved ahead rapidly Tuesday. Prime Minister David Cameron chaired his 215th and final Cabinet meeting, planned to go to Queen Elizabeth II with his resignation after a final appearance before Parliament on Wednesday and was already preparing to move out of No 10 Downing St. to make room for May.

May, though little known internationally and having never held an economic or foreign policy position in government, has assumed office. How she will approach the new job is only starting to emerge because, despite her years in the Cabinet, she has done one job, home secretary, which put her in charge of the Home Office dealing with issues like security, policing and immigration.

In a speech on Monday in Birmingham, England, May outlined some wider ambitions, positioning her to the left of many of her colleagues on economic issues, calling for new mechanisms to curb executive pay and warning big multinational companies that they must pay their share of taxes.

Though May has sometimes been compared to Britain’s previous female prime minister, Margaret Thatcher, May’s centrist-like speech in Birmingham provoked comparisons to the agenda of former Labour Party leader Ed Miliband. One former Labour adviser, Tom Baldwin, posted on Twitter: “Tory PM-elect steals Ed Miliband’s slogan.”

The daughter of a clergyman, May was regarded as a moderniser in the Conservative Party before taking over at the Home Office. In 2002, she told Conservative Party activists that they risked being known as members of the “nasty party.” Yet the issue of Britain’s departure from the European Union will almost inevitably define May, too, because her primary task is to negotiate a new relationship with the bloc.

She has made clear that the outcome of the referendum is the final word on Britain’s membership in the union, but she appears intent on moving cautiously. That is, in part, because she sided with those who wanted to remain, so her every move will be watched closely by those in her party who championed leaving.

A trade-off
One challenge for May is that the country did not vote on a specific plan to replace Britain’s current relationship with Europe. “The problem is that nobody knows what Brexit means,” Cowley said. “Almost anything she can deliver is going to disappoint somebody – perhaps by being insufficiently restrictive on immigration,” he said. “Some of those who voted for Brexit exp-ecting big cuts in immigration – or even repatriation – are going to be disappointed,” he added.

Talks on the exit are most likely to come down to a trade-off between the amount of access Britain wants to Europe’s single market of goods and services and the extent to which it curbs the free movement of workers that this entails. While big business will press for access to the single market, May will be under pressure from Brexit supporters to deliver cuts in immigration.

And the longer Britain drifts, the greater the uncertainty for businesses that could postpone investment decisions until things are clearer, potentially pushing the nation into a recession. The financial markets have been encouraged by May’s appointment, but they are not celebrating yet. “The speed at which the Conservative Party has rallied around May is heartening and promises greater clarity around upcoming negotiations.

This is probably the most important political development, and a positive one,” wrote Eric Lascelles, chief economist at RBC global asset management. “On the other hand, tangential Brexit risks have become more dangerous,” he added, citing Britain’s commercial real estate market where there are fears that foreigners will relocate their businesses and homes abroad.

Delivering Brexit will therefore be May’s defining task and, as Cowley puts it, this will hardly be easy. “If the pessimistic scenario for Brexit comes true, she is going to be delivering all this against the background of economic difficulty,” he added.