Conservative Party leader Theresa May. Photo: iStock
With the UK set to have a new prime minister months earlier than expected, there are hopes among European officials that the UK's process of withdrawing from the European Union can finally start – although the EU may well be disappointed.
Reacting to the news that UK home secretary Theresa May looked set to be installed as the new prime minister this week, Pierre Moscovici, the European Commissioner for economic affairs told CNBC on Monday that "it's a good signal that the process (can) accelerate, that we have a new prime minister (in the UK). Because as I said, there can be a negative impact of Brexit economically."
"Volatility is bad for all of us. The impact on the real economy can be substantial – and I'm not talking just about the markets – and it can also be reduced. It really depends on us," he said, speaking to CNBC in Brussels where the Eurogroup of Eurozone finance ministers met on Monday.
May campaigned for Britain to stay in the union and there are hopes that this pro-EU position could help during talks between Britain and the EU on what form their new relationship will take. However, it is unknown when May, known as a pragmatist and respected as a competent and experienced politician, will trigger Article 50 of the Lisbon Treaty which sets in motion the process of withdrawal.
So far, there has been an impasse between the UK and EU over an exit. The UK wants to know what kind of post-EU membership deal is on offer before triggering Article 50 while EU leaders have refused to go into any kind of talks before the withdrawal process is formally started.
May has indicated that she could wait until next year before triggering Article 50, a move bound to anger EU leaders who have urged the UK to stop wasting time and prolonging uncertainty.
Moscovici reiterated on Monday that "reducing uncertainty is the best way for the UK and the EU altogether."
The Brexit vote has already prompted the European Commission to revise down its preliminary estimates for growth in Britain and the euro zone this year.
"We expect the increased uncertainty to reduce UK GDP by 1 to 2.5 percentage points by 2017 compared to the baseline scenario of remaining (in the EU). In the 27 EU member states and in the euro area the impact could be between 0.2 and 0.5 percentage points," Moscovici said on Monday, a statement from the European Commission confirmed.
Moscovici told CNBC that the revisions were not a fait accompli but a first analysis of the current situation. "It is not a fatality, it can be combated (by) reducing uncertainty. I think the article 50 can be invoked (now)," he said. "We must be very adaptive to what happens."
Discussions over a new relationship between the UK and EU could take place once a new British prime minister was in place, he said. That will come sooner than expected with UK Home Secretary Theresa May expected to be prime minister by Wednesday evening.
A new leader was not expected to be announced until September but the leadership race came to an abrupt end on Monday after May's rival for the post, Energy Minister Andrea Leadsom, pulled out, leaving May as the only candidate.
Portugal's Finance Minister Mario Centeno also told CNBC on Monday that the political transition happening in the UK was a positive step.
"You can start building upon that," he said. "Brexit is a structural change for Europe. And as any structural change, it needs a time period which given the size of the structural change needs to be large enough and long enough so that we can adjust. And we need to act fast. So yes in that respect the nomination of Theresa May [could] be good news for the process itself."
Like these London protestors, incoming PM May was a Remain supporter but has since pledged to honour the June 23 Leave victory's mandate. Photo: iStock
— Edited by Michael McKenna
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