Of the 317 sitting Conservative MPs, 200 voted for the Prime Minister. Yet this is anything but a glorious victory: 117 members of her own party voted against the head of the British government. Under normal circumstances, her poor performance would have been cause enough to give up the Party leadership. But what passes for normal in the UK these days? Yesterday morning, she still looked set to lose; the anti-EU camp drew vocal attention to its cause. Yet as the day wore on and ministers expressed their solidarity with the head of government, hope began to glimmer. By the afternoon, it had become increasingly clear that a positive outcome for May would be possible.
The important news it that Theresa May remains in power – at least until 2022, according to her statements. The Prime Minister has a mission: she wants to lead the country out of the EU in an orderly manner. But there is still a long way to go. Theresa May must first ask Brussels for concessions on the Northern Ireland issue. It is likely that the EU will agree to adapt at least some of the wording of the withdrawal agreement. However, whether the final text can win approval from the British House of Commons remains to be seen. Even after yesterday’s success, Theresa May’s future remains uncertain.
The last few days have shown that political developments in the United Kingdom are difficult to predict. Events continue apace, yet one thing is clear: the mood of the British population has changed. The majority of the population does not want a hard Brexit – and a parliament must take into account the will of the people. We therefore continue to expect a relatively mild outcome, with the UK retaining at least partial access to the single market. Were this to be the case, the British pound would see significant appreciation.
Dr Thomas Gitzel
Chief Economist, VP Bank Group