We are just a couple of weeks from beginning the negotiations that will take us out of the EU. The FT have an article today (I can't post a link because it's behind a paywall) quoting various senior sources in the EU saying that they expect a serious row with a possible walkout at the end of summer or in October. I think this is almost bound to happen.
Neither side can afford to be seen to start off by showing they are in a weak position and giving way on some fundamental issue. There will be immediate disagreements on the so-called Brexit "bill" and on the phasing of talks. I fully expect us to say we will not discuss the money unless the EU agrees to run trade talks alongside the withdrawal discussions, something they have said will not be possible. There will be an impasse, as I wrote some time ago (HERE), because whoever shows a willingness to compromise will be thought of as fragile and pathetic. The issue will certainly spill out onto the money markets and sterling will come under some pressure. It will probably be quite a roller coaster ride.
Mrs May is actually in the weakest position but can least afford to be seen as such. Firstly, because she has said publicly and repeatedly that she is strong and stable but secondly because the anti-EU press will launch furious attacks on her and she may then find herself isolated. This is always the problem for the underdog isn't it? To appear strong when weak they have to attempt suicidal options and engage in plenty of brinkmanship. If they advance their cause, all well and good. But failure means they always look absolutely stupid. My money is on the latter.
