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Theresa May seemingly heads for destructive Brexit

by Hugo Dixon | 15.01.2017

If the advance billing of Theresa May’s big Brexit speech is correct, she’s not just taking UK out of the single market and customs union. It will also be hard to avoid the economy falling off a cliff at the end of the two-year negotiating period.

Meanwhile, Philip Hammond’s interview with a German newspaper – in which the chancellor suggested Britain would be forced to cut corporation tax and regulations if we don’t get good access to the EU’s market post- Brexit – increases the risk that we could be heading for a bitter divorce. If the EU thinks we are going to turn ourselves into a Singapore-style offshore tax haven, it will be even less inclined to let us have good access to its market.

According to the Sunday Telegraph, the prime minister will say in her speech on Tuesday that Britain must do the following:

  • Be prepared to leave the customs union to secure free trade deals across the world
  • Regain full control of its borders even if that means ending single market membership
  • No longer be bound by European Court of Justice (ECJ) rulings after Brexit.

If May makes the first two statements, she will be clarifying that Britain is heading for a hard Brexit. She has, of course, hinted as much many times since she entered Downing Street – including in an interview with Sky News last week.

Leaving the single market should come as little surprise. The prime minister is a prisoner of the hardliners in the Conservative Party. Given that free movement and ECJ jurisdiction are anathema to them, staying in the single market is a non-starter.

While we probably wouldn’t have to sign up to either free movement or the ECJ to stay in the customs union, we would have little freedom to cut trade deals with other countries. Given that the hardliners are extremely keen to do this – even though deals with small economies such as New Zealand couldn’t compensate for reduced access to the EU market – it is not so surprising May is said to be gearing up to quit the customs union too.

The latest worry is that the hardliners will also tie May’s hands so much that she can’t even negotiate a decent interim deal to prevent the economy falling off a cliff. Such an arrangement will be needed, since few think we can negotiate a new long-term trade deal in the two-year period available under Article 50.

However, if the premier rules out being bound by ECJ rules from the moment we quit the EU, we won’t be able to agree a deal with our European partners that allows us to keep single market access until that longer-term trade deal is nailed down. The best we will be able to hope for is interim access to the customs union – unless that, too, is scotched by the hardliners.

While the advance billing for May’s speech is hardly surprising, it is still worrying. It virtually guarantees a destructive, hard Brexit.

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12 Responses to “Theresa May seemingly heads for destructive Brexit”

  • Completely as indicated by EU officials from day one after the referendum. Absurd to see the U.K. race blindly to self-destruction. No doubt xenophobia and denial of the own role in this process will increase from now on. Happy new year!

  • Tax havens are not exactly popular at the moment although Britain oversees quite a lot already. So we suggest making the UK into another, at the same time as describing EU citizens as “negotiating capital”.
    How to win friends and influence the 27 countries who will soon be across the negotiating table?
    It’s truly unbelievable.

  • I suspect the Brexiteers have complete control. They don’t care how much damage they do to the country, this is all about their own profit and power.

    • Indeed. This has been the point all along, no-one, not one single Tory MP (Well, maybe Ken Clarke) really wanted to remain in the EU. Cameron and Osbourne, were the sacrificial lambs, who made way for a hard line Euro Sceptic team that was bound to head for the most destructive exit possible. All the Tories have ever seen in Europe is a force that can overrule their crassest and most exploitative policies, and that will never do!

      The very fact that Hammond warns (threatens?) ever more economically disastrous cuts to Corporation tax and more, 2008 creating, deregulation, should warn even the most blinkered Brexit voter of what is to come.

      The Tories want out because the EU stands in the way of the Neo-Liberal dream – a return to the 18th Century, ‘where’s there’s muck there’s brass’, way of doing things, and of course all the misery and suffering that crass, unrestricted, greed brought with it.

  • There is a wanton delusion that bilateral, or more precisely bespoke, trade deals can replace lost EU business with a random mix of jurisdictions, regardless of their market size and distance from the UK. These and other messages relating to the financial consequences of a Hard Brexit need to be continuously repeated to the broader public across the UK.

  • Just underlines the point that all sane clear-thinking Remainers must stop pussy-footing about (InFacts included) and shout from the rooftops that there is in fact no better deal available to the UK than remaining in the EU – whilst making more constructive efforts to effect its reform.

    • Couldn’t agree more! It may sound crazy, but I still think Brexit can be avoided. Good Brexit is no Brexit. Leavers are breaking just about every promise they made – let’s fight it out with them. The stakes are just far too high for us to give up just like that.

    • I agree wholeheartedly. It really is time that the Brexiteers woke up and faced the facts. They are living in a world of dreams, and the tragedy is that if somehow or other we do not face them down we shall find that the Britain they all say they love may well be destroyed for ever.

  • Of the top 10 countries who want a trade deal with the UK, we only run a trade surplus with the USA (marginal) and Ireland, and Germany and Ireland are not in a position to get a trade deal because they’re in the UK.

    I’ve done an FOI for trade figures for all 27 countries. It’ll be interesting to see how many of them are significant, but at the moment it wouldn’t surprise me if we have a trade deficit with New Zealand. When countries come looking for trade deals, it’s not so they can import our goods more cheaply (important as that is) – it’s so our manufacturers can export more.

    Of course, that gets balanced with the other problem: what use is it to have a free trade with the far east if multinationals already have local manufacturing bases in the region and can therefore transport things more cheaply and lock us out of the market that way?

  • The sooner the Tory Party implodes and falls apart the better. These people are so fanatical that they want their own way whatever the price, including economic suicide.

  • When are the next local and MP elections (Not general election)? There needs to be an effort to kick the Conservatives (And other hardliners) out of their safest seats with popular candidates from different parties that support the EU. We have Climate Change, the rise of the Far Right across the world and we’re wasting our valuable time leaving a union that while flawed, had promise.

    Also we need to find a way to break up Murdoch’s media empire, his long term vision of dominance over British media is succeeding and getting us out of the EU played a huge part in that. Imagine that, a foreign power having influence over our politicians and press.

    There’s gotta be some hope somewhere right? …Right?! (Jumps into the ocean)