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U.K. Cabinet Resignations Mean Business’s Brexit Uncertainty Isn’t Going Away

July 10, 2018, 12:53 PM UTC

The United Kingdom’s divorce from the European Union has always been a messy situation, but it’s just become even more tortured. And businesses operating across the U.K. and EU find their position more uncertain than ever.

In the last day and a half, both David Davis (the minister in charge of negotiating Brexit) and Boris Johnson (the foreign secretary) have resigned in protest against Prime Minister Theresa May’s so-called soft Brexit plans.

Johnson, let us not forget, is the man who responded to concerns about Brexit’s impact on companies such as Airbus and BMW by saying “F—k business”—this, from a leading light of the U.K.’s supposed pro-business party. He is being replaced by Jeremy Hunt, the former health secretary, who responded to the aforementioned companies’ warnings over Brexit’s impact by saying it was “completely inappropriate” for them to speak out, as doing so undermined the British government.

So if big business was already finding it difficult to make its voice heard in the conversations between the U.K. and EU, that’s unlikely to change.

Davis, meanwhile, is being replaced by Dominic Raab, formerly the housing minister. As Davis spent a mere four hours this year negotiating with his EU counterpart, Michel Barnier, his absence also may not make much of a difference. May’s Brexit advisor, Oliver Robbins, has been handling most of that load for a while anyway.

In the short term, May’s hand might be strengthened by the departure of two problematic individuals who think her Brexit plans don’t go far enough. But those plans are themselves a problem.

For businesses, the issue is that May’s latest proposal involves free U.K.-EU movement of goods, but not services. The U.K. economy is largely based on services these days. Even if the EU went for May’s proposal—which it will not, because it famously doesn’t allow cherry-picking when it comes to free movement—then most businesses would still face significant uncertainty.

And the U.K.’s continental rivals are not shy about taking advantage of the situation. Most recently, witness French President Emmanuel Macron’s success in tempting BlackRock and Citigroup to expand their Parisian operations, rather than investing in London. For large financial services concerns, that can’t have been a difficult choice to make.

It’s quite remarkable to have a shake-up as high-profile as the resignations and replacement of Davis and Johnson make the situation only slightly more shambolic than it already was.