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Europe gets ready for 'messy' Brexit talks

U.K. Prime Minister Theresa May has given more clarity on what she wants from a post-Brexit relationship with the EU, but expects talks "to get messy", the former Prime Minister of Finland told CNBC.

"There should no illusions about the complexity of the negotiations even if Prime Minister May is looking for a clean exit. These things have a tendency to get messy," Alexander Stubb, former prime minister of Finland told CNBC on Tuesday.

Stubb was also finance minister during the troubled negotiations between Greece and the European Union.


British Prime Minister Theresa May arrives to deliver a speech on the government's plans for Brexit at Lancaster House in London on January 17, 2017.
Kirsty Wigglesworth | AFP | Getty Images
British Prime Minister Theresa May arrives to deliver a speech on the government's plans for Brexit at Lancaster House in London on January 17, 2017.

"We move from three possible options - soft, hard and cliff edge - to two. Soft Brexit is now off the table," Stubb said.

May's speech outlines how the U.K. wants to exit the EU's single market, which allows for free movement of goods, services and people. By doing so, the U.K. hopes to better control the number of EU migrants entering its borders.

In case the EU and the U.K. cannot strike a trade deal, May said the UK would leave the union completely. "No deal for Britain is better than a bad deal for Britain," she told an audience in London.

However, there are many issues on the table that need answers. The U.K. and the EU have now to decide how to trade with one another, how to ensure equal rights for EU citizens who already leave in the U.K. and British expats who live in other UE countries. They also have to decide about a land border between Ireland and Northern Ireland.

Kathrin Muehlbronner, senior vice president and lead UK sovereign analyst at Moody's, said in an email: "It remains to be seen how far-reaching and comprehensive such a new agreement will turn out to be."

"In our current baseline scenario we have indeed assumed that the UK should be able to secure an agreement that preserves many advantages of the UK's current Single Market access. We will see how likely such an agreement will be, once negotiations get under way with the EU in April," she added.


Prime Minister's May attitude of a hard Brexit of cliff edge solution supports the view that the talks may become tense in the months ahead.

"Messy negotiations (are) highly likely," Kallum Pickering, senior UK economist at Berenberg said in an email.

"Emboldened by the stronger performance of the UK economy since the June 23 referendum, May announced that 'no deal is better than a bad deal' and that the UK would respond in kind with competitive tax cuts to support UK the economy if the EU looked to offer the UK a bad deal for future trade," he noted.

Furthermore, France, Germany and the Netherlands – founding members of the EU – will also be busy with national politics, facing key elections amid rising support for anti-European rhetoric, which could make them less willing to accommodate the U.K.'s demands.

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