Theresa May to say UK is ‘prepared to accept hard Brexit

In a speech to be delivered on Tuesday, the prime minister is said to be preparing to make clear that she is willing to sacrifice the UK’s membership of the single market and customs union in order to bring an end to freedom of movement.

An article in the Sunday Telegraph cites “sources familiar with the prime minister’s thinking” as saying that May is seeking to appease the Eurosceptic wing of her party by contemplating a “hard”, or “clean”, Brexit. In the speech to an audience of diplomats at London’s Lancaster House May will hope to end months of speculation about her intentions by setting out her aims for Brexit. According to the Sunday Telegraph, she will say that the UK must:

  1. be prepared to leave the EU customs union;
  2. regain full control of its borders, even if that means losing access to the single market, and
  3. cease to be subject to rulings by the European court of justice.

It is unclear at this stage whether Theresa May is stating her final and non-negotiable end goals, or merely stating an opening negotiating position. Elsewhere in the article, Brexit Secretary David Davis is quoted as saying that the UK may be open to negotiating an initial transitional deal, because

“We don’t want the EU to fail, we want it to prosper economically and politically, and we need to persuade our allies that a strong new partnership with the UK will help the EU to do that.”

Aw schucks, thanks a bunch, your concern for the well being of the EU is noted…

Interestingly, the new hard line is being announced just as the EU’s chief negotiator had signalled a possible softening of the EU’s negotiating position:

According to unpublished minutes seen by the Guardian, Michel Barnier indicated that he wants the remaining 27 countries to have a “special relationship” with the financial markets of the City of London.

The paper said he told a private meeting of MEPs that work was needed to avoid financial instability once Britain left the bloc, according to a summary of the talks by the European Parliament. “Some very specific work has to be done in this area,” he said, according to the minutes. “There will be a special/specific relationship. There will need to be work outside of the negotiation box … in order to avoid financial instability.”

The disclosure will encourage pro-Brexit MPs who have long argued that the UK will have more leverage in the negotiations than some critics have allowed.

However it is clear from Barnier’s reference to “outside the negotiating box” that he, too, is referring to transitional measures to avoid financial disruption, not some kind of long term Brexit deal.

Meanwhile…

May’s Brexit strategy is a recipe for trade war, says Corbyn

British Prime Minister Theresa May has been accused of preparing to trigger a full-scale “trade war” with the European Union amid reports she is ready to pull Britain out of the single market.

In a ratcheting up of the Government’s rhetoric, British Chancellor Philip Hammond signalled ministers could slash corporation tax rates if British exporters were faced with new tariff barriers outside the EU.

—<snip>—

Asked by the Welt am Sonntag newspaper if the UK’s future was as the corporate “tax haven of Europe”, the Chancellor said ministers were ready to change if they had to.

“If we have no access to the European market, if we are closed off, if Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short-term,” he said.

“In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do.

“The British people are not going to lie down and say, too bad, we’ve been wounded. We will change our model, and we will come back, and we will be competitively engaged.”

Labour leader Jeremy Corbyn said Ms May was pursuing an “extremely risky” negotiating strategy which could hit exports hard.

“It seems to me a recipe for some kind of trade war with Europe in the future.

“That doesn’t really seem to me a very sensible way forward,” he told BBC1’s The Andrew Marr Show.

“She appears to be heading us in the direction of a bargain basement economy on the shores of Europe where we have low levels of corporate taxation, we will lose access to half our export market.”

So the battle lines are becoming clear.  In order to regain control of EU immigration, the UK doesn’t want to be part of the EU, the Single Market,  the Customs Union, or be subject to the rulings of the ECJ. But if the EU were to erect any kind of trade barriers in consequence, it would retaliate by reducing corporate tax rates in order to “regain competitiveness”.  The fact that these remarks were delivered in an interview with a top selling German newspaper makes it clear that a shot across the bows is being delivered.

I can just see the EU leaders quaking in their boots. Not.

If anything this strategy just underlines how weak May’s position is in her own party. In A Brexit doomsday scenario I wrote:

Thus, far from clarifying things, the political processes used to reinforce opposing negotiating mandates may help to transform the Brexit negotiating process from a rational process aimed at maximising mutual economic advantage to a political process required to keep domestic political oppositions at bay. Instead of trying to resolve differences, negotiators will be instructed to see the negotiations as a war between competing national interests where any concessions could be construed as a sign of weakness at home. The resignation of the UK ambassador to the EU, Sir Ivan Rogers, may be an early straw in the wind that this will indeed be the case.

In effectively declaring war on everything the EU stands for, May has just simplified what could have been a difficult and complex negotiation for the EU. Indeed it is difficult to see why the process should take the full two years:  The UK will simply leave the EU lock, stock and barrel although some transitional administrative mechanisms may be agreed. Sterling devaluation and UK corporate tax reductions will place EU economies at a clear competitive disadvantage.  The EU will have no choice but to impose swinging import tariffs in return.

If the UK wants to replace Ireland, the Netherlands and Luxembourg  as the low corporate tax havens in Europe it will have to do so without easy access to EU markets. A trade war will probably result.  It is also clear from May’s remarks, that almost no consideration has been given to the Peace process in N. Ireland, or to hard won improvements in the relationship between the UK and Ireland as a whole. Perhaps the UK hopes to use Ireland’s desperation in this regard as a Trojan Horse in which to undermine the collective EU resolve. I suspect she will not succeed in this regard, and her decision to ignore Irish concerns will haunt the UK for generations to come.

It’s war.

And what did you hear, my blue-eyed son?

And what did you hear, my darling young one?

I heard the sound of a thunder that roared out a warnin’

Heard the roar of a wave that could drown the whole world

Heard one hundred drummers whose hands were a-blazin’

Heard ten thousand whisperin’ and nobody listenin’

Heard one person starve, I heard many people laughin’

Heard the song of a poet who died in the gutter

Heard the sound of a clown who cried in the alley

And it’s a hard, and it’s a hard, it’s a hard, it’s a hard

It’s a hard rain’s a-gonna fall

– Bob Dylan