Sunday 19 / May / 2024
London: UK Prime Minister Theresa May will next week signal plans for a "hard Brexit’’ by saying she’s willing to quit the European Union’s single market for goods and services to regain control of Britain’s borders and laws, the Sunday Times reported.
In a speech scheduled for Tuesday in London, May will prepare to withdraw from tariff-free trade with the region in return for the ability to curb immigration, strike commercial deals with other countries, and escape the jurisdiction of the European Court of Justice, the Sunday Times said without saying how it obtained the information.
Such a blueprint for Brexit risks alarming investors, bankers and company executives who will fret that May is prioritizing social issues over the needs of the economy. The pound fell last week to its lowest level against the dollar since October on concern about May’s intentions.
The prime minister’s office declined to comment on the report when contacted by Bloomberg News. It said in a separate statement that May will declare in her speech that having divided over Brexit, voters are now uniting behind making it a success.
"The overwhelming majority of people — however they voted — say we need to get on and make Brexit happen,” May will say. "So the country is coming together.”
To avoid fallout from the breakup and grant businesses some certainty over the outlook, May will seek a transitional phase between splitting from the EU and the beginning of a new trading relationship, the Sunday Times said, citing Brexit Secretary David Davis.
"We don’t want the EU to fail, we want it to prosper politically and economically, and we need to persuade our allies that a strong new partnership with the UK will help the EU to do that,’’ Davis wrote in the newspaper. "If it proves necessary, we have said we will consider time for implementation of new arrangements.’’
Seven months after 52 per cent of voters chose to quit the EU against 48 per cent who wanted to remain, and less than three months before her own deadline to open two years of divorce talks, May is under mounting pressure at home and abroad to detail her plans. In a report released on Saturday, the panel of British lawmakers charged with scrutinizing Brexit said her government must outline its road map by the middle of February.
Costly for exporters
May will hope to eventually line up a new free-trade partnership with the bloc, yet in the meantime leaving the EU’s single market and customs union risks making it costlier and more complicated for British exporters to trade with their biggest market. It may also force banks to carry out their threats to move jobs to the continent from London to ensure they maintain access to it.
Still, staying in the customs union would prevent the UK from lining up free-trade pacts with non-EU countries such as the US and China. Foreign Secretary Boris Johnson returned from a trip to the US last week saying he’d been told President-elect Donald Trump’s administration will want a fast trade pact with the UK.
Leaders from the EU’s 27 other states including German Chancellor Angela Merkel have held steadfast to the line that they won’t allow May to "cherry pick’’ the best parts of EU membership without accepting the responsibilities, including allowing free movement of labour.
Currency jitters
That requirement has become a pressure point in the UK with net migration to the UK from the EU reaching 189,000 in the year ended June. May has repeatedly indicated she views June’s referendum as a call from voters to slash such numbers.
Tuesday’s speech is likely to be closely watched by the financial markets, with currency traders increasingly seeing May’s pronouncements on Brexit as a trigger to sell the pound. Sterling fell following her speech at the Conservative Party conference in October, which fanned speculation she was eyeing a clean break with the EU, and dropped again following her first television interview of 2017.
A survey by Opinium conducted on Jan. 10-12 and published in Sunday’s Observer newspaper found 30 percent of respondents viewed May’s Conservatives as most likely to deliver the best Brexit outcome, compared with 13 per cent who said the same of the opposition Labour Party.
