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Nine Point Nitty-Gritty From May’s Brexit Speech

By 27th January 2017 No Comments
Theresa May Brexit

May’s Brexit speech – the nine-point nitty-gritty

Theresa May’s Brexit speech may now be out in the open, but what have we learnt from the content? We have taken the time to break it down into key points so let’s take a look at the nine-point nitty-gritty.

1. The single market

The Prime Minister made it clear that she does not intend for Britain to remain in the single market; her two priorities are keeping EU immigration under control and pulling away from the jurisdiction of the EU Court of Justice. With these in mind, they do not lie well with remaining in the single market. Her plan instead is for Britain to have “the greatest possible access to it through a new, comprehensive, bold and ambitious free trade agreement”. This may include such things as “elements of current single market arrangements in certain areas”, such as the ability for the City of London to dispense financial services across borders.

2. The customs union

We all know that the customs union represents the common trading area of the EU with goods coming in from outside of the area being subject to a tariff and goods within it circulating freely. Any country that remains part of the customs union is not able to negotiate its own trade deals, which is why many felt that Britain would leave it. However, on this point, May was not absolutely clear. Whilst she does not want Britain to be stuck with having to abide by the common commercial policy or external tariff she does want tariff-free trade with Europe, with cross-border trade being “as frictionless as possible”, which would mean Britain having an EU customs agreement or somehow becoming an associate member of the customs union: “I have an open mind on how we do it,” said May. The result may be the government looking for deals across certain key sectors; for example, the automotive industry would not do well if customs checks were imposed. Exchanging simple VAT clearance forms requirements for up to 50 data elements, such as hs code product classification, would be time-consuming for every business and to be avoided if possible.

3. Parliamentary involvement and Article 50

May is still set on Britain leaving the UK by the end of March, even though this was not part of her speech. This may be delayed if the Supreme Court decides that parliament should vote on the Article 50 notification to the EU, with elections in Northern Ireland possibly also delaying. In relation to this, she stated: “I can confirm today that the government will put the final deal that is agreed between the UK and the EU to a vote in both Houses of Parliament before it comes into force.”

4. EU immigration

Controlling Britain’s borders is a priority for May. She still wishes to bring in “the brightest and best to study and work in Britain”, but said, “we will get control over number of people coming to Britain from the EU.” She also added: “You cannot control immigration overall when there is free movement from Europe … Brexit must mean control of the number of people coming to Britain from Europe.” Not keen on the idea of a point-based system, it could be that work visas will be introduced but this is still open to discussion.

5. Transitional arrangements

Businesses in Britain are looking for some kind of transitional arrangement to be put in place in order to avoid the UK leaving at the end of the two-year Article 50 divorce discussions with no future liaison negotiated. Referring to a future relationship, May repeated that it was “in no one’s interests to have a cliff-edge” which is why she is seeking a properly phased system of implementation. However, this does not mean that she wishes to have a long-term transitional period during which EU rules would apply. May referred to this option as being “permanent political purgatory” and said that she wanted “nothing that leaves us half-in, half-out”. Her plan is to reach agreement on the relationship going forward within two years of the Article 50 divorce discussions, followed by a “phased process of implementation” that would vary according to the topic under discussion i.e. immigration controls, customs arrangements, financial services etc.

6. Status of EU citizens in UK/UK citizens on the continent

So what is to happen to the 3 million EU citizens living the UK? May is looking to guarantee the rights of both groups as soon as possible. She has already told EU leaders that “we could give people the certainty they want straight away, and reach such a deal now”, but not all were in favour (the EU-27 has refused to discuss under its rule of no negotiation before notification). May reiterated that she wishes “everyone to know that it remains an important priority for Britain – and for many other member states – to resolve this challenge as soon as possible.”

7. The EU budget

Ministers and officials have stated that payment may have to be made into the EU’s budget in order to be a part of any future trade deals negotiated between the government and the EU. May’s only reference to this was to say “because we will no longer be members of the single market … the days of Britain making vast contributions to the European Union every year will end.” There may be “some specific European programmes in which we might want to participate. If so, and this will be for us to decide, it is reasonable that we should make an appropriate contribution.”

8. The EEA option

The European Economic Area (EEA) is an extension of the internal market, comprising 28 member states and members of the European Free Trade Association (EftaFTA ). Britain could become a member by joining Efta, which would provide it with single market membership. This would involve making a financial contribution and accepting the main principles of the EU’s internal market. However, this does not seem likely, with May stating: “We do not seek to adopt a model already enjoyed by other countries.” She further mentioned that Britain would not be looking for “partial membership of the European Union, or associate membership of the European Union.”

9. Ireland and the union

May is set on maintaining the pre-EU common travel area between Britain and Ireland and wishes to refrain from a “hard border” between established between Northern Ireland and the Republic.
She is also keen to preserve the United Kingdom in its present state, referring to the union between England, Scotland and Wales as valuable. “It is only by coming together as one great union of nations and people that we can make the most of opportunities ahead,” she said.

In general, May kept a positive tone, stating that: “I want us to be … the best friend and neighbour to our European partners.” She also made it very clear that “no deal for Britain is better than a bad deal for Britain”, referring to the Chancellor’s statement that if Britain does not get what it wants, it may well become a low-tax rival, commenting that the government was “free to change the basis of Britain’s economic model”.

To summarise, May did much to clarify some of her Brexit objectives but there is still a great deal to be negotiated as we have no idea how far the EU 27 will be prepared to negotiate.