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Eitan Urkowitz: This is Eitan Urkowitz at the Peterson Institute for International Economics. British Prime Minister Theresa May announced that she's going to be holding snap elections in early June before the Brexit negotiations start. Joining me is Jacob Kirkegaard to discuss this. Thank you for joining me, Jacob.
Jacob Kirkegaard: My pleasure.
Eitan Urkowitz: So why did Theresa May decide to hold the snap elections?
Jacob Kirkegaard: I think it's a combination of several things. I mean fundamentally the political temptation to do so just probably got too big. I mean if you look at the latest opinion polls from the UK, the Conservatives are now 20 points ahead of the Labour Party, which is obviously suffering under Jeremy Corbyn's erratic leadership.
So she has a chance, if you believe the polls, to get really a crushing majority and that proved too big a temptation. At the same time, I think it's clear that none of the Article 50 negotiations have started, the clock is ticking. We know that Theresa May will, if she wants a deal, need to make some really hard compromises on issues like immigration, money, and other things. And that would likely upset part of her own party and they may even vote against her.
So by now going to the British people asking for her own personal mandate likely a bigger majority, she'll be in a much better position to basically tell her own sort of hard core, pro-Brexit, right-wing people to take a hike. So it greatly potentially, at least, strengthens her ability to implement the kind of Brexit that she wants.
Eitan Urkowitz: So if she wins, how would this actually affect the Brexit negotiations going forward?
Jacob Kirkegaard: Well, I mean as I see it, it would be a mistake to think that a reelected Theresa May even with a landslide victory should gain, in my opinion, much advantage vis-à-vis the other EU members because the basic logic of article 50 remains. The two-year window is here. If there's no deal at the end of the process, you have a very bad scenario for the UK economy.
But what it does is it greatly strengthens Theresa May domestically and particularly in her own party because it basically means that she is likely to be able to push through the likely required tough compromises relatively to sort of an ultra-hard Brexit that some in her party wants. And therefore what this probably does is that it reduces ultimately the sort of risk that you're going to have what markets call a cliff edge that the UK is going to crash out without a deal. Because, ultimately, Theresa May is now domestically potentially in a better position to impose one.
Eitan Urkowitz: So is this vote really going to be a referendum on Brexit?
Jacob Kirkegaard: Well, I think that's really one of the open questions. There is certainly the risk that this is just going to be a rerun of the referendum. But, I think, at the same time that it's a real possibility that actually Article 50 now has started. And both the main parties, the Conservatives and the Labour Party, are in favor of going through with Brexit.
And it may just be that voters have already moved on. That basically rather than we litigate the whole Brexit remain-leave thing, they want to talk about the sort of traditional bread and butter local political issues; house, healthcare, income inequality, the dominance of London, and other sort of retail political issues. So that Brexit in the campaign, ironically, because this is very important for the way Brexit unfolds may not be as decisive as many think.
Eitan Urkowitz: So if she loses at another party like the Labour Party win, do you see any difference with the Brexit negotiations?
Jacob Kirkegaard: Well, I think if she loses and the UK needs to have either another prime minister or perhaps more likely that she needs to enter into negotiations with another party to have a coalition government, this will certainly greatly offset the timetable for the Brexit.
But I think unless you have a sort of miraculous recovery of the Liberal Democrats, which is the only party that have said that they are sort of campaigning to keep the UK in the EU that is not ultimately going to change Brexit. But certainly if she loses, although right now it doesn't look like she will, the timetable for Brexit will become even more compressed because who knows how long it's going to take to negotiate a potential new government. And the two-year clock is still ticking.
Eitan Urkowitz: Thank you, Jacob.
Jacob Kirkegaard: My pleasure