The Brexit paradox – and your cash

The British public may be getting tired of Brexit, as even Theresa May admits. But it will not go away, however much we might wish it would.

In fact, with a delay scheduled until the end of October, things have become even more complicated – because the UK now looks to be compelled to take part in European Elections.

It is something of a paradox, and it might just affect your financial plans.

What are the European elections?

The European Parliament is elected by voters in all Member States and has been steadily gaining powers through amendments to the European treaties.  Quite how many of European Union’s 500 million citizens understand these powers, or even know who their local Member of European Parliament, (MEP) might be, is debatable.

However, the European Parliament does affect us all. From rules on how many hours we can work, the quality of the air we breathe and even the data privacy we can enjoy, it passes hundreds of laws each year. It also approves EU budgets and appoints the President of the European Commission.

It is a growing power that Eurosceptics dislike.

The European Parliamentary elections are at the end of this month – and they’re causing an additional complication not just for Brexit, but for the whole EU.

Currently, the European Parliament has 751 seats, the maximum allowed by EU treaties. Following the Brexit referendum, EU leaders decided to redistribute some UK seats to under-represented member states and remove the rest.

But that all changed when EU leaders and Mrs May agreed last month to a second Brexit extension lasting up until the end of October. It included the condition that the UK must either secure a withdrawal agreement, face a no-deal exit or participate in the elections.

What is behind it all?

The reasons why Britain must take part are complicated. Without British participation all decisions by the Parliament would be open to legal challenge.

But even more important, any hope the EU leaders have about Brexit not taking place would be dashed.

Hence the paradox. The EU must allow the UK to take part in the elections even though the results could be anything but positive for the EU. Turnout for European elections in the UK is historically low, but the current impasse could mean more interest and our European friends may not like the results.

The EU’s Brexit coordinator Guy Verhofstadt, criticised EU leaders’ decision to allow another Brexit extension and the UK’s participation at the polls, suggesting it will “poison” the elections.

He may be right. Polls show that Eurosceptic parties would see a sharp rise in support in the European elections. According to new projections published by the European Parliament itself, Nigel Farage’s newly formed Brexit Party is already showing a surge. The Brexit Party and UKIP party would collectively hold 19 seats in EU Parliament, according to the projections.

So, Europe’s highest institution may need to face a larger, disruptive, and above all, anti-European presence.

Where does this leave us?

This could not come at a worse time for Europe. Extreme parties and populist forces are on the rise, and there are worries about whether growth can continue. In the latest Eurobarometer survey, the number of citizens who consider that things are moving in the wrong direction in Europe has increased.

Cynics might suggest that this type of confusion is typical of the EU. It certainly makes forward planning more challenging.

However, at Continuum, we are confident about one thing – that there are solutions to deal with the uncertainties that affect your own financial future, whatever happens in Europe. Please call us to discuss them.

The information contained in this article is based on the opinion of Continuum and does not constitute financial advice or a recommendation to suitable investment strategy, you should seek independent financial advice before embarking on any course of action.

Sources:

yougov.co.uk – Brexit Party leading in EU Parliament polls – 17th April 2019

news.sky.com – What are the European elections and why do they affect Brexit? – 14th May 2019

ec.europa.eu – EUROPEAN COMMISSION Public Opinion