Theresa May should get a full vote of confidence from the Tories, but will that actually result in real policy? Ask Donald Trump.

Earlier I wrote about the challenges that come with Theresa May’s decisive win for a snap June election. Even with the full support of her Conservative party, there is still political and policy uncertainty:

Second, there is still a lot of political uncertainty, even if May wins. What happens with Scotland? What does the Bank of England or parliament do if wages turn negative? What kind of deal will May get? There’s a case to be made that May could get a worse deal, because there isn’t an opposition party to try to craft new provisions, and general elections won’t happen until 2022. The E.U. would have no reason to walk softly because they see an opportunity for better terms in the near future.

There are many factions within the Conservatives – some with a more nationalist bent, others (May included) that are business-oriented globalists. If this sounds a lot like America’s Republican party, you’d be correct.

Lessons from Donald Trump’s First Months

Donald Trump won the presidency with a mandate to “put America first,” including a decidedly nationalist economic agenda. This can crudely be described as putting American workers and factories first (second-order economics be damned), less regulation, and a terrific health care system. Trump’s Republican party has majorities in both the House and Senate, so any legislation should be a slam dunk.

Or at least that was the thought until the American Health Care Act died because of competing interests within the Republican party.

It’s hard to align an ideologically diverse group of people together, even if they all wear the same political party label. It’s even harder to get buy-in when details matter and outcomes impact many people. Health care has been a difficult issue for both parties for decades because it is difficult to push your stated desires and write legislation that is politically palatable to your constituents. The Brexit negotiations are no different.

Lessons from the Democrats’ First Months of a Trump Presidency

In this situation, the E.U. is in the position of the Democrats. Clearly Brussels would have preferred the British to vote down the Brexit referendum last summer, but the decision was made, and now everyone can move forward with their own interests in mind.

But both in the U.S. and across the Atlantic, there is still an economic calculus:

  • Britain is a big trading partner to the E.U., but it isn’t obvious that the E.U. needs the U.K. more than the British needs the continent. Here, it’s becoming clear that Trump needs support from congressional Democrats to pass major legislation.
  • The E.U. is in the drivers seat in these negotiations precisely because the British handcuffed themselves to the Brexit decision. And with one dominant political party, May is the face of the entire British government – even though her party is as fractious as America’s House of Representatives.
  • The U.K. was a net payer into the EEC, so that direct subsidy should end. However, the British could see more companies move to the continent. Inflation could rise as it costs more to import goods. And more time and money could be spent renegotiating trade deals that are inferior to what was in place pre-Brexit. In the U.S., states that voted for Trump are still major exporters, and increased costs in trade could fall hardest on these workers.

So if we enter the summer with a victorious Theresa May and an emboldened Tory party, don’t expect the Brexit negotiations to go smoothly. Just ask Donald Trump and Paul Ryan.


Photo: Number 10, Flickr Commons