General election 2017: What does the result mean for Brexit?

 
Catherine Neilan
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Theresa May's hope of a stronger mandate with which to negotiate the UK's exit from the European Union is in tatters as the electorate has voted for a hung parliament.

The Prime Minister is expected to clarify her position in a statement due at 10am this morning, as calls for her resignation grow.

She fought the campaign claiming she was best placed to secure a good deal in its divorce from the EU - but voters did not appear to agree. And, with less than a fortnight before negotiations are scheduled to start, there are fears the result has put the UK in a weaker position than it was previously.

A long kiss goodnight

May wanted to have things done and dusted. After last night, that is unlikely.

Naeem Aslam, chief market analyst at ThinkMarkets, says:

The Brexit process has become even more arduous and it is highly likely that we may not see the negotiations starting in two weeks. This is really a horrible outcome for the UK because the other party has more leverage and they can shift the dialogues in their favour more easily. Brexit itself is an uncharted territory thing and under the current circumstances, we don’t even know how it is going to impact this process.

Will there be a second referendum?

This is unlikely, but not impossible. Kallum Pickering, senior UK economist for Berenberg, says:

With typically around two-thirds of MPs in the House of Commons being pro-EU, the hung parliament introduces a small but not negligible probability of a second referendum. Now that the risks of exit, and the challenges in securing a good deal with the EU are clear, could the UK change its mind on Brexit? Maybe, Labour gains appear to be in areas that voted "remain" in the Brexit referendum.

Aslam adds:

If Theresa May’s decides to step down and Jeremy Corbyn becomes the Prime minister, I would not be surprised if the prolonged Brexit negotiation process triggers another round of referendum around Brexit. Soft Brexit would be the outcome.

Bye-bye hard Brexit?

The Tories have failed to secure a mandate for a hard Brexit. However, the DUP - which is expected to help the Tories form a coalition government - campaigned on a pro-Brexit platform and Labour hardly put up much of an opposition to critical elements such as freedom of movement.

But moderate Tories and Europhile Labour MPs may put pressure on the new government to seek a softer Brexit policy than May had been pushing for. The growth in the number of Lib Dem seats will certainly add weight to this. And, although Ukip had no seats to start with, an 11 per cent drop in vote share suggests that the public may have changed its mind.

Here's what Neil Wilson, senior market analyst at ETX Capital, had to say:

A technically hung parliament does mean uncertainty but for sterling there is the compelling trade-off with a softer version of Brexit more likely now as Mrs May’s mandate to push through her clean, hard Brexit has evaporated. Voters didn’t want to hand her the blank cheque for Brexit. It may leave negotiations in limbo but would also tend to suggest that the downside for sterling is limited. A weakened Tory majority also presents limited upside in the near-term while also this shakes out.”

And Aslam again

It is highly that the soft Brexit could only be just a watered down version of current relationships which the UK has with the EU.

Deal or no deal?

Strong and stable we are not, especially not in the eyes of the European Union.

Grant Lewis of Daiwa Capital is feeling gloomy about our prospects at the negotiating table:

Trouble is, in eleven days’ time, the Brexit negotiations are due to commence. And with Theresa May having already triggered Article 50, meaning that the clock is ticking towards the UK leaving the EU at the end of March 2019 before calling what always looked to be a very reckless election. And with so much to negotiate between now and then, any time lost (having already lost seven weeks to the election campaign) will merely serve to raise the risk of ultimate failure for the talks.

Hello again Mr Farage?

Nigel Farage has said he will have "no choice" but to return to British politics if Brexit comes under threat. He added:

"We may be looking down the barrel of a second (EU) referendum".