On Wednesday, March 29, the British government formally notified the European Union (EU) that it will leave the twenty-eight-nation organization, officially setting in motion the procedure known as “Brexit.” According to Article 50 of the Treaty of Lisbon, the two sides now have two years to complete their separation and negotiate their future relationship. If no agreement between the two sides has been reached by March 29, 2019, the UK’s membership in the EU will automatically lapse, unless the EU agrees to prolong the negotiations. It will become just another foreign country with which the EU does business, treated no better or worse than Zimbabwe, Thailand, or Paraguay. And so the central issue for the UK remains: How will Brexit affect the UK economy?

With half of British goods exports going to other nations in the EU, and with the UK’s service industries, especially banking, heavily dependent upon unfettered access to the EU single market, the stakes for Britain in the forthcoming negotiations could not be higher. Even before the negotiations have begun there are multiple signs that Britain is heading for economic disaster—all the more unsettling in view of the apparent lack of awareness of this threat on the part of Prime Minister Theresa May and her ministers.

A crucial issue weighing on the negotiations is the future of the many global manufacturing and financial services corporations that are now located in Britain. Most of these firms are in the UK because of its membership, until now, in the European single market. Even before Britain officially gave notice of its intention to withdraw, five leading global banks with a strong presence in London’s financial district—Goldman Sachs, Morgan Stanley, Citicorp, UBS, and HSBC—announced that they would be moving parts of their operations to countries in the EU.

If the Brexit negotiations between the UK and the EU go badly, many more businesses in both manufacturing and services may follow suit, with severe consequences for growth, investment, employment, and incomes in Britain. These uncertain economic prospects are in turn closely linked to the least predictable influence on the negotiations: the evolving views of the British public about Brexit. An insistent claim of those favoring Brexit has been that the 52-48 percent vote for Brexit in the June referendum represents the unshakable “will of the people.” This has been repeated ad nauseam by the Europhobe London press, which has enormous influence over the British conservatives.

Led by Lord Rothermere’s Daily Mail, with the Daily Telegraph and the Daily Express bringing up the rear, the Europhobe press has worked relentlessly and unscrupulously to push the May government toward an acrimonious divorce from the EU. But public support for Brexit may be more fickle than either the Europhobe London press or the Europhobe wing of the Conservative party likes to believe. A poll taken just before the June referendum revealed that, for a large majority of respondents, support for leaving the EU was conditional on it being economically painless.

Asked if they would be “happy to lose any of their own personal annual income to tighten the control Britain has over immigration”—for May and her ministers now a central goal of Brexit—68 percent of the respondents said that they would not be prepared “to sacrifice a single penny of their income to the cause of immigration control,” including 52 percent of those intending to vote for Brexit. Another 11 percent said they would sacrifice no more than $120. How will these thrifty citizens feel when tens if not hundreds of thousands of high-paying jobs start leaving the UK for the safety of the EU single market?

In the Brexit negotiations the British government will be handicapped from the start by yawning imbalances of power between the UK and the EU: a population of 445 million in the EU versus 65 million in the UK; an EU GDP of $18 trillion versus a British GDP of $2.8 trillion; 44 percent of British exports in goods and services going to the EU, and only 16 percent going the other way.

The imbalance of power also manifests itself in the way major British industries, such as automotive, aerospace, and financial services, are structured. Aerospace and car manufacturers alone account directly or indirectly for around one million mostly well-paying jobs that are critical to the regional economies of the British Midlands and North. Both industries are fully integrated within pan-European supply chains that follow the practices of Japanese “lean” production.

Components and finished products move back and forth between the UK and the EU according to rigorous schedules, timed to the nearest hour and minute and, on the production line, seconds. Such systems are highly vulnerable to any kind of disruption, whether from strikes, system malfunctions, natural disasters, or, post-Brexit, from the delays and uncertainties of customs examinations at the UK-EU border. Not to mention the cost of multiple tariffs as products cross and recross borders.

In a statement last September about the potential consequences of Brexit, the Japanese government warned that full access to the EU single market was essential for Japanese plants located in the UK. Senior executives at Toyota and Nissan, along with their counterparts at Ford, Jaguar Land Rover, and Airbus, have said the same thing, warning that they will have to review their future investment decisions in the light of the UK-EU negotiations. If their UK plants can no longer count on being securely integrated within EU-wide supply chains, those supply chains will become increasingly biased toward the EU, with the UK segments declining and eventually dying.

Many of the same concerns apply to financial services, the UK’s single most important export industry to the EU and one in which London has become the union’s dominant hub. “Financial services” include the issuing and trading of debt and equity securities, foreign exchange trading, trading in derivatives, and asset management for corporations and high-income clients. London’s dominance in these areas depends heavily on its banks and brokerages having what are known as “passporting rights” into the EU single market.

When they possess passporting rights, banks, brokerages, and asset-management companies based in London can handle the business of clients located anywhere in the EU. But after Brexit, financial services based in London will lose these rights. According to The Financial Times, the CEO of Goldman Sachs, Lloyd Blankfein, warned Prime Minister May at Davos in January that there was no reason why European cities such as Paris and Frankfurt couldn’t take over much of London’s financial services business; this has already been demonstrated in the case of the five global banks including Goldman that have announced plans to start moving business out of London.

Even before the formal Brexit negotiations get underway, the diplomatic maneuvers of the two sides have shown how far apart their positions already are. Even though each of the remaining twenty-seven EU member states—from Germany with a population of 82 million to Malta with a population of 445,000—has an equal vote on the final terms of Brexit, the EU position has been remarkably consistent. Whether set out by German Chancellor Angela Merkel, French President Francois Hollande, Donald Tusk, the Polish President of the EU Council, Jean-Claude Junker, the Luxemburger president of the EU Commission, or Guy Verhofstadt, the former Belgian prime minister who will represent the European Parliament in the negotiations—the message for the UK has been the same: “no cherry picking,” or in Merkel’s often-repeated words, kein Rosinenpickerei.

One of the best and most succinct accounts of the EU’s negotiating position can be found in Guy Verhofstadt’s book Europe’s Last Chance, published in the US in January: If the UK, as a non-member, wishes to retain its present degree of access to the EU single market, or anything approaching it, the UK must also accept the obligations of single-market membership, including the free movement of labor between the UK and the EU, as well as recognition of the European Court of Justice as the final arbiter of trade disputes that arise within the single market.

Attempts by the UK to enjoy the benefits of single-market membership free of its obligations will be resisted as “cherry picking.” But this strategy has been at the forefront of the British government’s own rhetoric in advance of the negotiations, as expressed most succinctly by Britain’s cartoonish foreign secretary, Boris Johnson: “Our policy is having our cake and eating it.” Johnson is one among a cacophony of voices in May’s cabinet, but this notion is common to all of them. Foremost among these voices is Prime Minister May’s.

May comes across as a stern, highly principled disciplinarian, a latter-day version of the genteel but fearsome schoolmistresses who once loomed large in the classrooms of post-war Britain. Their stronghold was the Home Counties, the suburban and exurban districts surrounding London where May has her roots and where the intricacies of the British class system are at their most labyrinthine. But May’s record on Brexit reveals a high degree of opportunism, a certain skill in calculating domestic political odds, and a willingness to risk the economic wellbeing of the British people for the short-term political interests of herself and her party.

Before the June referendum, at a meeting in London with executives of Goldman Sachs, May explained with clarity and force why it would be economic folly for Britain to leave the EU. Unbeknownst to her, these pronouncements were recorded and can be heard on YouTube. The crucial passage:

I think the economic arguments are clear. I think being part of a 500 million trading bloc is significant for us. I think … that a lot of people will invest here in the UK because it is the UK in Europe. If we were not in Europe … there would be firms and companies who would be looking to say, do they need to develop a mainland Europe presence rather than a UK presence? So I think there are definite benefits for us in economic terms.

During the months leading up to last week’s formal invocation of Article 50, May made two keynote speeches on Brexit. The first was at the Conservative Party Conference at Birmingham in October 2016, the second at Lancaster House in London in January 2017. In London she addressed the ambassadors of the EU member states, with her ministers in respectful attendance, in the manner of General de Gaulle’s late press conferences. She did not share the dire prognosis of her Goldman meeting with either the party faithful or the EU ambassadors, and instead pandered shamelessly to the Europhobe London press and to the Europhobe wing of her own party.

In her speeches she vowed “to regain control of our borders,” thus ending the free movement of labor between the UK and the EU, and to make Britain once more a “fully sovereign state,” unlimited by the jurisdiction of the European Court of Justice. Knowing these demands to be incompatible with continued membership in the EU single market, May announced in her Lancaster House speech that the UK would indeed be leaving the single market and the EU Customs Union, which regulates the EU’s trade in goods.

Knowing also how damaging these withdrawals will be for the UK economy—as she admitted to her Goldman audience but not to her audiences in Birmingham and London—May presented a vision of what she called “Global Britain,” whereby the UK’s trade minister, Liam Fox, will seek trade deals with distant countries outside of the EU, including the United States, China, India, Indonesia, Malaysia, and Canada. But with Donald Trump’s extreme protectionism and “America First” rhetoric, and the hapless Dr. Fox at the helm, May’s “Global Britain” looks delusional from the outset.

Where does this leave the UK-EU Brexit negotiations, now set to begin? A close reading of May’s Lancaster House speech shows that cherry picking is still very much part of the UK’s negotiating strategy, despite the apparent finality of May’s decision to leave the EU single market and customs union. Having announced the two departures, May turned on a dime and decided that she wanted to get strategic sectors of the British economy—such as automotive, aerospace, and financial services—back into the single market, but with all its benefits and none of its obligations.

May envisaged a trading regime for these manufactured goods, which would be tariff-free and, in her words, “frictionless,” meaning that trade in these sectors would also be free of non-tariff barriers such as customs examinations for proof of origin and for conformity with EU regulations on product quality and safety. This regime looks very much like the one the UK now enjoys as a member of the EU, but with the big difference that it would be free of the labor flow and legal obligations of single-market membership that the UK government doesn’t like.

Negotiations over the UK’s financial services industry seem likely to follow a similar trajectory. In its February 2017 White Paper on Brexit, the UK government talked hopefully of a post-Brexit trading regime for financial services that would, in effect, give financial services based in London passporting rights to the EU single market without passports: “In our new strategic partnership agreement we will be aiming for the freest possible trade in financial services between the UK and EU member states.”

But once again, in neither the White Paper nor May’s speeches is there any mention of what the EU would receive in return for this access. If, as seems increasingly likely, May refuses to compromise on demands for free movement of labor and ECJ jurisdiction over trade, and pursues her “hard” Brexit, then an exodus of banks from London to the EU seems inevitable. Bruegel, a Brussels-based think tank, estimates that with this “hard” Brexit London could lose one third of its EU business, and the London consultants Oliver Wyman estimate that the job losses in financial services and related industries could be as high as 70,000.

There now seem to be three possible outcomes for the Brexit negotiations. In the first, Prime Minister May continues to seek an agreement tilted in favor of Britain and the negotiations likely come to a bad end before the two years are up. In this case, the UK runs a high risk of leaving the EU without any agreement on their future trading relationship, with little or nothing to show for Dr. Fox’s travels, and with severe damage to the UK economy.

The second possibility is that May comes to see the folly of her present course, and follows the pragmatic Swiss in negotiating compromises with the EU on immigration and the jurisdiction of the European Court of Justice. She could then secure a final deal with the EU that would almost certainly not be as good as the UK’s current arrangement, but that might not be too much worse, and with damage to the UK economy that could perhaps in time be remedied. But this would require May to show a degree of fortitude in standing up to the Brexit jusqu’au-boutistes in her party, and to the Europhobe London press, which on recent evidence is well beyond her.

The third possibility is that, as the negotiations go badly, and as the ruinous consequences of May’s Brexit economics make themselves felt, the British will recoil from the whole process. Their change of heart would show up in collapsing support for Brexit in the polls, leading to special elections in which May and her party would incur big losses. May now rules in the House of Commons with an iron hand, but that could change very quickly once she and her policies are seen to be wrecking the British economy and dragging down the Conservative Party.

If May falls, a possible successor is George Osborne, the long-serving chancellor of the exchequer (finance minister) in David Cameron’s government who opposed Brexit and was excluded by May from her government with a deliberate rudeness. Osborne’s succession seems unlikely in the present situation because, although still a member of the British parliament, he is now in the political wilderness and has just become editor of the Russian-owned London Evening Standard. But Osborne is one of very few senior conservatives untainted by May’s folly, and, if and when she falls, he is as well placed as anyone to take over. If he does, his best course would be to abandon the disastrous Brexit project altogether, and ask the British people in a second referendum whether divorce from the Europe, with its crippling costs, is really what they want.