From endless trade disputes to long drawn out speeches from unelected bureaucrats clinging desperately to power – there are some stark similarities between the Star Wars saga and the EU. But as Disney’s latest instalment cleans up at the box office, Prime Minister May has her own cabinet rogues to keep under control. Whether its Boris making bewildering gaffes on human rights, Dr Fox lamenting on business executives playing golf, or David Davis quashing hopes of a Brexit transition deal for the City, the PM can ill afford any further blunders in 2017.
Particularly as, despite the outspoken trio’s best efforts to waver from the party line, a certain European banking crisis could provide an ideal excuse to tip the renegotiation balance in May’s favour. Believe it or not, the toxic sub-prime mortgage loans that shook the finance sector almost a decade ago continue to weigh down on the European banking system. The oldest lender in the world, Italy’s Monte dei Paschi, has already had more cash pumped into it over the break. The trouble is that Italy is by no means the only EU country with dodgy loans clogging up its banks’ balance sheets. As a result, there is considerable concern among politicians and financiers that a new banking meltdown could be triggered across Europe. While this may provide an unwelcome distraction for the ECB and the various EU institutions, it presents a clear political point scoring opportunity for the PM and her team.
In order to gain the upper hand, May must control her cabinet colleagues with a taste for political gaffes. Any further slip-ups that directly criticise the EU’s current handling of this crisis will only backfire. Instead, the Government should be using the negativity surrounding Europe’s banking woes as an excuse to promote the UK’s banking stability. After all, any uprooting of the City’s financial infrastructure to destinations such as Paris or Frankfurt would come at a huge cost to the continent, at a time when European banks are clearly in need of capital. With this in mind, May will need to use her force to keep Boris and co in line if she has any hope of securing a bespoke deal for financial services once the renegotiation war begins.
Tim Focas is a director of financial services at Colloquium