The brutality of British politics has again proved delicious. It has also proved messy – the Brexit file is now in a shambles.
In the year since she replaced the hapless David Cameron, Prime Minister Theresa May has made zero progress in delivering Brexit or even defining precisely what it would look like when it comes into place. The outcome of the cynical and unnecessary election she called has actually piled another layer of uncertainty on the Brexit negotiations, which are to start in a week.
Her snap election was aimed at destroying Labour and handing the Conservatives a clear mandate for a "hard" Brexit. Instead, on Thursday, Labour destroyed the majority won by the Conservatives in the 2015 election. The Conservatives won only 318 seats, a dozen short of their previous tally; they needed 326 to govern alone. Labour, under Jeremy Corbyn and his socialists, gained 31 seats, taking them to 261 and allowing him to claim a victory of sorts.
Even though Ms. May vowed on Friday to stay on, she might have to pay for her failed gambit with her head. She has lost her credibility, and her enemies within the party will soon be circling. Already, some Conservative MPs are suggesting that her election fiasco should be punished, even though she quickly formed an informal coalition with Northern Ireland's Democratic Unionist Party (DUP), which won 10 seats, making the Conservatives captive to a tiny right-wing party with no presence in England, Wales or Scotland. What a humiliation.
Globally, Ms. May's survival is a trivial matter. But it matters a lot to British companies, especially the FTSE-100 giants, and to Europeans, who want to know how the election result will affect Britain's negotiations to exit the European Union and redefine its relationship with what is still the world's largest trading bloc. If Britain botches the negotiations, its economy – which is already in trouble as inflation rises and business investment stalls – could take a dramatic downturn. Getting the Brexit file right matters. The EU accounts for almost half of Britain's trade.
A hung Parliament and a Conservative leader under siege do not bode well for the Brexit talks. "May's premiership is in trouble," said Nicholas Spiro, a partner at London's Lauressa Advisory. "She has just lost the mandate she was seeking to negotiate a deal, regardless of whether it's a soft or hard Brexit."
Trade negotiators in Brussels do not know whether internal British politics will force a timeout, jeopardizing the Brexit timetable. The talks, including an interim trading relationship with the EU, were due to be completed by March, 2019. That deadline now looks hard to meet, putting Britain's negotiators under extreme pressure. Brussels does not know whether Ms. May will survive or whether Britons will be dragged to the polling stations yet again if she does not or if her coalition crumbles.
But the bigger Brexit issue is whether Ms. May, should she survive, still has a strong mandate for what she promised the 52 per cent of voters who endorsed quitting the EU in the referendum a year ago. Her cherished "hard" Brexit scenario would see Britain leave the single market and the customs union. This would leave Britain with full control of its borders and give it the option of negotiating its own trade deals with the EU and the rest of the world.
A "soft" Brexit would see Britain officially leave the EU but retain trading access to it (Norway, which has never been an EU member, has such a deal). In exchange, however, Britain would have to pay into the EU budget and accept some conditions, such as labour mobility, that would be anathema to the hard-line Brexiteers. They want Britain to have total control of immigration and have no appetite to keep paying billions into the EU budget.
It's hard to say today whether the Conservatives can still pursue a clean-break strategy. Faced with a reinvigorated Labour opposition, whose members generally support a soft Brexit, the Conservatives may be forced to remove the sharp edge from their hard Brexit goal. Another problem is the DUP, which has no interest in a hard Brexit if it means erecting a border between Northern Ireland and the Republic of Ireland. The Conservatives and the DUP will inevitably clash. How long before the DUP pulls the plug, making it impossible for the Conservatives to govern?
What does seem certain is that Labour, given its unexpectedly strong showing, will have more say in shaping the Brexit package than it did before the election. Any new package will not please the Brexit and anti-Brexit extremists but might present a pleasing compromise to the wider middle ground. This scenario would be good for democracy because both parties would own the result.
The flaw in the scenario, of course, is nasty British politics. Britain has been plunged into political instability. Until the turmoil ceases, the Brexit negotiations will be an afterthought. Blame Ms. May's arrogance. Her promise of a "strong and stable" government blew up in her face, increasing the odds that Brexit will turn into a negotiating failure.