Britain's May to launch EU divorce proceedings on March 29


UPDATE 3-Britain's May to launch EU divorce proceedings on March 29

* UK's exit from EU to alter future of country, Europe
    * EU's Tusk to issue negotiating guidelines by March 31
    * May says will negotiate for whole of UK
    * EU vows no sweetheart deal to avoid spurring more exits

 (Adds remarks by May, Merkel)
    By William James, Elizabeth Piper and Gabriela BaczynskaLONDON/BRUSSELS, March 20 (Reuters) - Prime Minister Theresa
May will trigger Britain's divorce proceedings with the European
Union on March 29, launching two years of negotiations that will
reshape the future of the country and Europe.
    May's government said her permanent envoy to the EU had
informed European Council President Donald Tusk of the date when
Britain intends to invoke Article 50 of its Lisbon Treaty - the
mechanism for starting its exit after a referendum last June in
which Britons voted by a 52-48 percent margin to leave the bloc.
    The EU said it was ready to begin the negotiations and
within 48 hours of the trigger on March 29, Tusk will send the
other 27 member states his draft negotiating guidelines, which
means that talks could start at the earliest in May.
    Sterling slipped from a three-week high against the dollar
on what Brexit minister David Davis described as a move taking
Britain to "the threshold of the most important negotiation for
this country for a generation". [nL5N1GX2VQ]
    May said she would negotiate for "everyone across the United
Kingdom and all parts of the UK".
    "We're going to be out there, negotiating hard, delivering
on what the British people voted for," she told reporters.
    The 60-year-old leader hopes to negotiate terms that keep
trade, financial and political relations with EU member states
as close as possible after Brexit, but also satisfy eurosceptics
in her Conservative Party who demand a complete break from an
institution they say has stolen British sovereignty.
    It will be a difficult and ambitious balancing act. Talks on
departing the prosperous club Britain joined in 1973 are likely
to be the most complex London has held since World War Two, with
other EU leaders saying they will not give May an easy ride.
    With nationalism and anti-establishment, anti-immigrant
sentiment spreading across Western Europe, the EU leadership in
Brussels is anxious to avoid encouraging others in the 28-member
bloc to bolt.
    At the same time, May faces threats by Scottish nationalists
to call a new independence referendum that could splinter the
United Kingdom and fears in Northern Ireland that a "hard
border" with EU member Ireland will return after Brexit.
    May has revealed little of her strategy for securing what
she calls "the best possible deal" for the world's fifth largest
economy and making Brexit as painless as possible.
    Although she succeeded David Cameron as prime minister soon
after the June 23 Brexit referendum, she delayed triggering
Article 50 to give herself time to work on her strategy for
talks that are likely to determine her political legacy.

    Article 50 allows for two years of talks to decide an EU
member state's divorce terms, "taking account of the framework
for its future relationship with the Union". May says that
clause means the two sides can set out deals to cover future
trade and other ties.
    German Chancellor Angela Merkel said the EU also had two
tracks to work on over the next year.
    "The first track is Britain's exit, including what all this
means in terms of future relations with Britain when the exit
terms are known," she told a news conference alongside Japanese
Prime Minister Shinzo Abe at a technology fair in Hanover.
    "The second track is how we can strengthen and invigorate
cooperation between the EU27 and make them weatherproof in the
21st century."
    Britain's referendum exposed geographical and social
divisions in the country that have deepened over arguments about
its future relationship with the EU.
    Nationalists in Scotland, which voted to remain in the bloc,
have accused the May government of pressing for a hard Brexit by
committing to departing the EU's lucrative single market of 500
million consumers. Scotland's first minister, Nicola Sturgeon,
has called for a new independence referendum. [nL5N1GW0BJ]
    In Northern Ireland, which also voted to stay in the EU, the
largest Irish nationalist party, Sinn Fein, has said it wants a
referendum on splitting from the United Kingdom and uniting with
the Republic of Ireland "as soon as possible".
    Against the backdrop of trying to keep the UK together, May
has a long wish list for the EU - the closest possible trading
ties, security cooperation, regaining control over immigration
and restoring sovereignty in various policy areas. [nL5N1GG551]
    The EU has baulked at her demands, saying they amount to
"having your cake and eating it". May's government acknowledges
its opening position is bold, and is also preparing for the
possibility of crashing out of the bloc with no deal.
    While the government has signalled areas for compromise and
is keen to remind EU leaders of the benefits of cooperation,
government departments are still awaiting the final word from
May's office on which economic sectors to prioritise.
    Britain's commitment to payments into the EU budget - which
officials in the bloc estimate to reach around 60 billion euros
- are shaping up to be one of the first, and possibly most
contentious, parts of the divorce talks. [nL5N1FG1EX]
    Any argument over money would underline the challenges May
will face. She wants to show goodwill in the talks but will also
be under pressure from pro-Brexit lawmakers for a total break -
something that could harden the case for independence movements.

 (Additional reporting by Alistair Smout in London and Joseph
Nasr in Berlin, writing by Elizabeth Piper; editing by Mark
 ((; +442075424758;))


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