The worst terror attack on British soil since 2005 struck London on Wednesday, killing four people and hurting scores more, just yards from Parliament. Coming a week before Prime Minister Theresa May triggers Brexit, the tragedy drew expressions of solidarity and offers of help from the European Union governments she will soon be engaging with. It may also serve as a powerful reminder of the need to maintain cooperation on security and intelligence with the EU beyond the breakup. Home Secretary Amber Rudd recently said extending such relations would be a “desirable outcome” of the exit talks, but it’s by no means guaranteed. The U.K. is a member of Europol, which helps police fight crime across borders, and is a signatory to the European Arrest Warrant system, in which EU members transfer people sought by another. EU countries also share data on air passengers and information on suspects. Yet failure to strike the right deal would pose problems for the U.K., former Deputy Prime Minister Nick Clegg and a panel from the House of Lords wrote separately in December. According to Clegg:  “The police would find their access to European databases cut off, and would no longer be able to use the Schengen Information System to quickly check the identity of suspects or their vehicles, or to pass on the details of missing persons.” The committee of peers said the same month that the U.K. and EU “must maintain the closest possible police and security cooperation if there is to be no diminution in the level of security afforded to U.K. citizens after Brexit.” These issues will have to wait their turn during two years of talks. On Thursday, leaders including German Chancellor Angela Merkel rallied around May with messages of support. Walkout Worries In the hours before the attack, Europe’s political minds were again occupied by the challenges of Brexit. Bloomberg revealed that EU negotiator Michel Barnier and Spain’s government have both warned that the EU should prepare for failure, and the prospect of Britain walking out of talks. Barnier noted privately that Conservative politicians in the U.K. are already trying to undermine the talks. In a subsequent public speech, he said the U.K. “must settle the accounts” when it leaves and warned of “serious consequences” if the sides fail to strike a pact. The fallout, said Barnier, would include greater uncertainty for U.K. citizens living in the EU and vice versa, supply problems for companies, air-traffic disruption, tougher custom controls and no more circulating of nuclear material.  Still, he expressed hope common ground could be found and also endorsed May’s call for an ambitious trade deal. The Diary Barnier also outlined a helpful calendar of events after Theresa May invokes Article 50 on March 29 and the EU-27 leaders release a declaration in response:
  • March 31: EU to issue draft negotiating guidelines on Brexit
  • April 4: EU Parliament to make a declaration on Brexit
  • April 11: National government representatives, or “sherpas,” will meet
  • April 24: Sherpas will conevene for a second time
  • April 26: EU Ambassadors will meet
  • April 27: General Affairs Council
  • April 29: Leaders will hold a summit in Brussels to discuss Brexit
On the Markets British stocks are suffering the biggest hit from this week’s Europe-wide increase in financial market stress. Bets for volatility in the FTSE 100 Index climbed 19 percent in the past three days, rebounding from a more than two-year low.   Separately, Moody’s said the implications of Brexit for corporate debt are “likely to remain modest and manageable.” In its base case, the breakup will have “no substantial credit negative consequences” for banks although reduced single market access could affect profits.  Brexit Round-Up
  • Bosses of Britain’s public companies approach their annual general meetings with a strong sense of anxiety, as May puts a greater focus on executive pay
  • The number of EU-born workers in the U.K. fell by 50,000 in the last quarter of 2016. Graduates, banking and construction sectors led the decline, Resolution Foundation says
  • YouGov and Centre for Economics and Business Research say consumer confidence dipped slightly ahead of Brexit talks
  • The EU has warned that airlines, including EasyJet, should relocate their headquarters or sell shares to European nationals if they want to keep flying internal EU routes after Brexit, the Guardian reports
  • Economies trading with the EU under World Trade Organization rules increased their exports to the single market five times faster than the U.K. over the last two decades, an analysis by Civitas shows
  • The European Central Bank will allow banks relocating to the euro area from London to continue using their U.K.-approved risk models to smooth transition
  • 22 percent of men think Brexit will open job opportunities compared to 14 percent of women, according to CEB
  • 64 percent of global firms see Brexit reducing their profitability, Hogan Lovells survey says
  • European draft guidelines on Brexit will contain a paragraph on Ireland and the need for no return to a hard border, says Premier Enda Kenny
  • One in 10 of London’s tech firms say investors have withdrawn funding since the referendum, according to Tech London Advocates.