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Opinion: The 'phoney war' is over and the tough talking can finally begin in Brussels


UK Prime Minister Theresa May will trigger Article 50 on Wednesday Picture: Reuters

UK Prime Minister Theresa May will trigger Article 50 on Wednesday Picture: Reuters


UK Prime Minister Theresa May will trigger Article 50 on Wednesday Picture: Reuters

That nine-month Brexit "phoney war" is finally expected to end tomorrow. A letter from British Prime Minister Theresa May will formally tell the European Union Council president Donald Tusk that Britain intends to leave, kicking off two years of unprecedented negotiations.

Nobody expected to use the so-called Article 50 separation process when it was inserted in the Lisbon Treaty back in 2008. (Yes, that was one of the pair of treaties we in Ireland voted twice on - before we got the "right" answer.)

After all the waiting, we can expect a reasonably swift initial response from Brussels. President Tusk will send draft negotiating guidelines to the 27 other member states within 48 hours. So, by the weekend we should know the shape of things.

Britain is on course for a "hard Brexit". Mrs May has said she wants a clean break to regain control over immigration by leaving the single market and the customs union. The EU's chief negotiator, Michel Barnier, has equally stressed need for early agreements on citizens' rights, money and borders.

But Mrs May has revealed nothing of how she expects to secure "the best possible deal" for what is after all the world's fifth-largest economy. That letter tomorrow, and President Tusk's reply, may finally spell out some unpleasant details of what is to come.

Mrs May has other big domestic political problems on her plate. Monday's deadline to form a new power-sharing government in Northern Ireland has come and gone as expected without a result. Today, the home-rule Scottish Parliament is due vote on whether to hold a second independence referendum.

On Friday, revised GDP data will probably indicate that Britain goes into these Brexit negotiations with a healthier economy than many experts predicted after that shock referendum outcome on June 23 last. Still, all economic data will be very carefully monitored.

Then there was that other major political earthquake of 2016 - the election of US President Donald Trump. The economic fallout from this could play out at a much faster pace with a do-or-die rescheduled vote on a new healthcare bill fixed for Friday.

The vote is a crucial test of Trump's ability to work with Congress to deliver on pro-growth policies like tax cuts and infrastructure spending. Leaders from Trump's Republican party postponed what was supposed to have been his first legislative victory because of opposition from two flanks within the party.

And even if Trump gets a win in the House of Representatives, the legislation could face an even tougher fight in the Senate, the other chamber of Congress.

A raft of speeches from top Federal Reserve officials - 10 days after the bank raised interest rates for the second time in three months - may pale in comparison to the political drama, as could GDP revisions and key manufacturing surveys.

Across the 19 countries of the eurozone, inflation readings for March will be carefully watched. Price rises surged to a four-year high of 2.0pc in February, zooming up to the European Central Bank's target of "below but close to 2 percent".

Rising inflation across the 19-country bloc has put pressure on rate setters to say when and how extraordinary economic stimulus measures could be scaled back.

John Downing is an Irish Independent political correspondent

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