After months of speculation about the nature of Britain’s exit deal from the European Union, Theresa May set out initial plans in a landmark speech on Tuesday. Here, she highlighted that Britain would not seek to remain in the European Single Market but would still aim to seek a “bold and ambitious free trade agreement with the EU”. It was also confirmed that the final Brexit deal would be passed through Parliament before implementation.
The Prime Minister interpreted the June referendum result as a demand for restrictions on the levels of immigration into the country and withdrawal from the binding jurisdiction of the European Court of Justice. It was finally acknowledged that these objectives could not be achieved whilst remaining in the single market.
It is true that the optimistic and nationalistic tone of May’s speech, which offered some clarity and provided reassurance that there would be a parliamentary vote on the final exit deal led to a surge in the value of the pound. Following the announcement on Tuesday, the sterling jumped in value by more than 2.7% which was its highest one-day gain since 2008. The US dominated FTSE 100, also reacted to the rise in the value of the sterling and fell by 1.46%, the highest drop since the referendum result was announced.
Nevertheless, it could be considered that the Prime Minister’s optimism about securing a favourable trade deal with the European Union is ill-founded. For example, May has stated that she will not tolerate Britain being punished for choosing to leave the EU, and if this is seen to be the case, she will walk away from a “bad deal”. Equally, she discusses how partial membership of the customs union is beneficial for both EU member states and Britain. Regardless of this, it remains that a detailed trade agreement is likely to take years to negotiate and will inevitably encounter some resistance from the remaining EU Member States.
Canada’s negotiation of a trade deal with the European Union provides a clear example of how long the process can take in reality. Despite the fact that the Comprehensive Economic and Trade Agreement (Ceta), was approached by good will on both sides, it still took seven years to complete negotiations. Even more so, there was still resistance from Wallonia in Belgium which almost uprooted the deal in September 2016. Negotiations with Britain and the European Union are unlikely to be approached with the same level of good will and compromise, showing just how difficult Brexit negotiations could be.
Conversely, it could be argued that the Prime Minister’s speech skillfully attempted to foster relations with the EU Member States, by stating that the UK was leaving the European Union but not leaving Europe, and highlighting a willingness to continue to cooperate in areas such as crime and anti-terrorism. The fact that May stated that the UK will not remain “half in half out” of the European Union, will also satisfy those who voted to leave in the EU Referendum. It was also reiterated that Britain could move to a low-tax regime to gain investment if they were unable to negotiate a good deal. This shows that the Prime Minister does hold some bargaining power, and is willing to threaten to use it- even at this very early stage.
It is true that some EU diplomats have welcomed the Prime Minister’s “more realistic” plans on leaving the single market. However, others have highlighted the implausibility of reaching a trade deal before Britain leaves the EU in 2019 and unrealistic expectations that Britain will be able to negotiate partial membership of the customs union with the ability to set independent tariffs. Europe Minister for the Czech Republic Tomas Prouza said that Theresa May has set out a vision of a relationship where the “benefits go to the UK only”.
Political reaction to the speech saw Labour leader, Jeremy Corbyn claim that May wanted to turn the UK into a “bargain basement tax haven”, whilst Liberal Democrat leader Tim Farron accused the Prime Minister of outlining UKIP’s vision of Britain’s relationship with Europe. The declaration that Britain will not stay in the EU single market, has led to Scotland’s first minister Nicola Sturgeon stating that a new vote on Scottish independence is now highly likely.
The Prime Minister has stated her proposals for a Brexit which is both orderly and pragmatically conducted in the sphere of mutual interest. However, it is unlikely that Britain will be able to maintain a favourable trade agreement with the EU, control immigration and withdraw from the European Court of Justice without any repercussions. To avoid chaos, May must be prepared to compromise whilst expanding her vision for a prosperous and united Britain with trade deals worldwide.
Be sure to take a look at our other Brexit stories here as we take a look at one of the biggest political shake-ups in recent history!