May: "it's March"

UK Prime Minister Theresa May's announcement that she intends to trigger Article 50 of the Lisbon Treaty by March 2017 signals the end of the "phoney war" period that followed the Brexit referendum in late June.  Now things might really start to get ugly.

For the past few months it's been possible to imagine that the worst potential consequences of the Brexit vote might be avoided.  Ministers talked confidently about retaining the UK's access to the EU's free market, including the all-important "passport" that allows UK-based financial institutions to operate freely in the EU.  This was, of course, the basis on which the Leave supporters campaigned all along.  The economy has held up well in the wake of the vote, prompting some of the more excitable Leave supporters to declare that there's really nothing to worry about.

All of that is changed in the wake of May's announcement.  It is now clear that the Government has largely abandoned hope of retaining free access to EU markets, since Brussels has emphasized that the price of such access is continued free movement of workers between the EU and the UK.  This would, of course, completely nullify the Leave campaign's pledge to "regain control of Britain's borders" -- i.e. to reduce immigration.

The fact that May is explicitly making this a higher priority than trade access shows conclusively that, despite all the rhetoric about the unaccountable EU bureaucracy and unacceptable interference by European courts, the result back on June 23 was almost entirely about immigration. The campaign may not have started out that way, but the Leave side was quite happy to appeal to the baser instincts of the electorate once it became clear that the purely economic arguments could not be won.

The loss of tariff-free access to the EU market will have severe consequences for the UK economy -- and if the financial services "passport" is also at risk, the effects could be devastating.  Companies planning to sell goods throughout the EU will no longer have any reason to locate in the UK -- and those already in the UK may seek compensation for the higher cost of doing business, as Nissan has already indicated it will. Remarkably, Chancellor of the Exchequer Philip Hammond has indicated he will look favourably on Nissan's request, which seems to guarantee a flood of similar demands in the coming months.  The inevitable drying-up of business investment will damage the UK economy for decades to come.

Then there are the political consequences of a "hard Brexit".  May seemed to go out of her way to antagonize Scotland and Northern Ireland this week, making it clear that those jurisdictions would have no say in the process, even though both voted to remain in the EU.  As Scottish First Minister Nicola Sturgeon quickly remarked, this was an odd approach for someone who wants to keep the UK together to have taken. Another Scottish independence referendum seems inevitable, with a different result from the first vote looking very likely.  As for Northern Ireland, people on both sides of the border are adamant that they want to avoid a return to the border controls of the past.  However, if the UK really wants full control of its borders and of immigration, it is hard to see how the land border between Northern Ireland and the Republic can remain open.

There have been surprisingly few signs of "buyers' remorse" among Leave voters over the past few months.  That will change slowly but inexorably over the next couple of years, as the real costs of the electorate's stunningly unwise decision become ever more apparent.