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May on back foot, advantage India?
It was not for nothing that the 8th of June was dubbed ‘Super Thursday’ or ‘Triple Threat Thursday’. Amidst a policy meeting at the European Central Bank (ECB), former Federal Bureau of Investigation director James Comey’s testimony before a Congressional committee in Washington and the unexpected results of the British general election, markets had flattened out, bracing for the worst.

America and Europe came through the month largely unscathed, but a political transition in Britain has left the country in the lurch - and on the back foot when it comes to negotiating trade deals.

Conservative Prime Minister Theresa May - who inherited the position after a brief but fierce leadership contest last year - called snap elections early in her term, hoping to gain an increased majority in Parliament. That would help her negotiate the terms of a Brexit (exiting  the EU) deal with Europe from a position of strength. 

The Labour opposition was led by Jeremy Corbyn, whose socialist credentials, lack of parliamentary support and failure at local elections convinced many even within his own party that he was unelectable. A series of events combined to turn the situation around. Theresa May squandered her early advantage through ill thought-through policies, poor oratory and a reliance upon Corbyn’s flaws rather than her own advantages. 

In the snap election, Corbyn’s Labour came a close second behind the Conservatives in the total number of seats, successfully robbing the Conservatives of their majority and even taking some of their traditional seats. The British markets reacted to the shock news with the pound falling against both the dollar and the euro. Theresa May’s ability to upset potential allies within her own party has also left her extremely vulnerable to leadership challenges. With her latest Cabinet reshuffle, three former opponents (Michael Gove, Andrea Leadsom, and Boris Johnson) are now brought closer to home, seemingly in an attempt to stave off threats to her authority. Nevertheless, the feeling both within and outside of the Conservative party seems to be that her inability to effectively win an election does not bode well for the upcoming EU talks. 

 

France, Eurozone on the march

The British position is made worse by the news from the Eurozone, where signs of growth are encouraging. Even with the fragility of southern European economies such as Greece and Italy, the bloc as a whole has performed better than expected. Whilst pro-Brexit campaigners had long predicted the collapse of the Eurozone, this latest news places Theresa May in a double-bind - not only will she be negotiating whilst fending off threats at home from her party and the opposition, but the reduced economic stature of Britain will make wresting concessions considerably more difficult. 

The Europeans are now keen to push the United Kingdom on the back foot during negotiations. EU officials have even threatened to set back the talks by a year if the UK attempts to discuss future trade deals in addition to the pre-planned discussions of the country’s ‘divorce from the EU. Other members, including French President Emmanuel Macron, have offered a chance to Britain to abandon Brexit altogether - a position which has become marginally less contentious as the economic implications have become clearer. 

 

France provides a stark contrast...

In stark contrast to the fractured, landscape of British politics, Macron’s huge victory at the parliamentary elections gives him an impressive mandate in French politics. His Republique En Marche! (REM) has done extremely well and gets a free hand to pursue its agenda. The party faces several issues, though, a stagnating economy, high tensions over immigration and terror attacks and major differences of opinion with economic powerhouse Germany over ways to proceed with the Eurozone. The lack of political opposition and an EU friendly stance will undoubtedly be to its advantage. 

For India, the UK’s weakness may be ideal for extracting favourable trade deals and more ease in securing visas. Theresa May, whose stance on immigration borders on the unworkable, has few obvious new trade partners at present. Clearly, she - or, equally likely, her successor - may have to compromise on the hard anti-immigration stance in order to embrace trading partners like India. 

By contrast, while politics in America continues to grow more convoluted, the economy remains strong and changes to the ‘America First’ policy are unlikely. As a result, the situation for Indians considering careers in America remains uncertain, with a review of the H1B visa authorised by executive order. Commerce minister Nirmala Sitharaman has argued that the number of visas won’t change. Time alone will tell if this is an accurate picture.

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