UK - EU: When neither side wants to share a home.

(Baonghean) - The "divorce" story between the UK and the European Union has reached a decisive point. British Prime Minister Theresa May's signing of the letter to the EU officially activating Article 50 of the Lisbon Treaty on March 28th has turned a new page in this relationship.

Between two streams

After more than four decades of being "under one roof," the relationship between Britain and the European Union has reached a critical juncture. Whether they like it or not, and despite lingering ties, both sides must accept the reality that they must abide by the results of last June's referendum: the majority of Britons supported leaving the EU.

And the fact that Prime Minister Theresa May, representing Britain, signed the letter to European Council President Donald Tusk regarding leaving the Union was merely a historic formality for this farewell.

From now on, Britain will have to define its new position in its relationship with Europe. This could be a friendly and fair relationship for both sides. But it could also be a turbulent transition with very high costs. This will depend on the next two years of negotiations.

British Prime Minister Theresa May signed the official document activating Article 50 of the Lisbon Treaty on March 28. (Photo: Independent)

In fact, on that historic evening when he signed the letter to European leaders, the British Prime Minister had separate telephone conversations with EU President Donald Tusk, European Commission President Jean-Claude Juncker, and German Chancellor Angela Merkel, individuals who would play a decisive role on the EU side.

The UK Prime Minister's office said that in the phone calls, the leaders agreed that "a strong Europe is in the interest of all parties and that Britain will remain a trusted and close ally."

The leaders also agreed on the importance of entering negotiations in a constructive and positive spirit, as well as ensuring a smooth and orderly withdrawal process.

On March 29, Prime Minister May also delivered a speech to Parliament and pledged to represent the interests of all those living in the UK, including EU citizens, during negotiations with Brussels.

Storms await.

The process of ending the "one family" relationship between the UK and the EU will be complex and time-consuming. This is simply because both sides have so many ties, and ending this relationship would affect numerous interests. Despite British Prime Minister Theresa May's commitment to a more flexible stance in Brexit negotiations, few believe that prospect is realistic.

Firstly, there are few signs that either the UK or the EU will reach a compromise in the negotiations. The EU has stipulated that the UK must agree to "principles for a structured withdrawal from the EU" before any trade talks can begin.

Specifically, the UK needs to agree on its financial contribution obligations as well as clarify the rights of 4 million immigrants, including EU citizens in the UK and British citizens in the EU. The head of the EU negotiating delegation, Michel Barnier, stated that the new UK-EU partnership will take time and that agreements on a transition period are necessary.

The measures applied will remain within the framework of EU law and the European Court of Justice (ECJ). This means that the UK will still be bound by EU law and subject to the ECJ's jurisdiction.

Conversely, the British government wants to resolve the "divorce" as quickly as possible, meaning defining the bilateral relationship along with a free trade agreement. The British government even maintains its stance that it will either secure a good deal or nothing at all.

The UK wants to immediately remove certain existing EU regulations that London believes hinder the British economy after the conclusion of negotiations in March 2019, rather than waiting until the end of the transition period. It remains unclear how long this transition period will last.

Brexit shock

While the public eagerly awaits the negotiations over the next 24 months, the market is thinking differently about the "breakup." The focus is on the future shifts within the UK and EU economies, and that is what is attracting the most attention right now.

The negotiations between the UK and the EU raise many questions. Photo: Telegraph

There are positive signs on the verge of triggering negotiations. The UK economy continued to grow at an impressive 1.8% GDP last year and is projected to reach 2% in 2017. However, this is considered the calm before the storm that will follow the negotiations with the EU.

This achievement is due to the wise management of the British government, the liquidity support measures from the Bank of England for the banking system, and the unwavering confidence of consumers.

However, fundamentally, the consequences that were warned about after the UK officially sat down at the negotiating table remain. S&P's leading economist, Boris Glass, stated that in early 2017, the demand for capital from businesses and households had somewhat decreased, which were the first signs that the economy would gradually slow down.

Consumers are also starting to notice rapidly rising prices due to the depreciating pound, which leads to higher import costs.

Cartoon outside 10 Downing Street on the day Article 50 of the Lisbon Treaty was triggered. Photo: Daily Star

Activating Article 50 of the Lisbon Treaty is likened to officially "riding the tiger," as Britain would have to be prepared for a scenario where it ends up empty-handed after the negotiations. If that happens, London and Brussels would have no trade agreement defining their relationship. A chain reaction of breakdowns would be unavoidable.

Phan Tung