Denis Staunton: Britain inches towards reality of Brexit

Theresa May’s latest Brexit speech fell far short of a detailed negotiating position but it was an important moment in Britain’s internal debate as the prime minister made a strong case for a soft Brexit. She did so while respecting Brexiteer sensitivities, stressing that parliament could choose to put more distance between Britain and the European Union at any time after Brexit, but implying that it would have to be crazy to do so.

At Lancaster House a year ago, the prime minister laid down her red lines, promising to leave the single market, the customs union and the jurisdiction of the European Court of Justice (ECJ). In Florence last autumn, she made the financial offer that unlocked the first phase of negotiations and led to December’s joint report with the EU.

At London’s Mansion House on Friday, May acknowledged that Britain faced hard choices about its future relationship with the EU and that leaving the single market would affect British business. She has claimed in the past that Britain could have the “exact same benefits” in trade with the EU after Brexit as it does now. On Friday she admitted that “life is going to be different. In certain ways, our access to each other’s markets will be less than it is now.”

She also acknowledged that, even after Britain leaves the jurisdiction of the ECJ, it will still be affected by the court’s rulings, not least because the ECJ determines whether agreements the EU has struck are legal under the EU’s own law. She said that if Britain entered into a free-trade agreement with the EU it would have to make binding commitments to ensure fair competition, possibly by adhering to the EU’s rules on competition and state aid.

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Regulatory regime

After Brexit, parliament would be able to decide by how much Britain’s regulatory regime should diverge from the EU’s. But she suggested that regulations for goods were likely to remain the same, partly because most EU regulations are themselves determined by international standards. Even on the free movement of people, May called for discussions on how British and European citizens could continue to live and work in each other’s countries.

She said Britain wanted to see how it could remain part of EU agencies governing the chemicals, medicines and aerospace industries, and accepted that such membership would mean paying a fee and abiding by the ECJ rules that governed them.

Before she can start negotiating Britain’s future economic relationship with the EU, the prime minister must agree the terms of a transition arrangement after Brexit. And before the EU will agree to that, Britain must sign off on a legal text embodying the joint report agreed last December.

When the European Commission published its draft legal text this week, May said no British prime minister could agree to it, a position endorsed by Labour. The problem surrounds "Option C", the last-resort option for avoiding a hard Border, full regulatory alignment between North and South. The joint report also included a promise that Britain would do nothing to create a new barrier between Northern Ireland and the rest of the United Kingdom, but that is missing from the commission's text.

The EU believes the commitment is an internal UK matter but its absence has made the draft text unacceptable to the British side, and above all to May’s allies in the DUP.

In her speech on Friday, May said she had agreed with Taoiseach Leo Varadkar that British, Irish and EU officials should start working together to find a solution to the Border issue. Government sources in Dublin insist that such discussions must be based on a new proposal from Britain but on Friday, May simply rehearsed the proposals her government put forward last August.

She said nobody should doubt her commitment to the joint report and Downing Street sources said that included every word of Option C. EU governments are expected to approve the commission’s draft legal text over the next week or so, after which Britain may present its own proposal to restore a guarantee that there should be no border in the Irish Sea.

Lukewarm reaction

The initial EU reaction to May’s speech was lukewarm, with some politicians accusing her of continuing to be vague and trying to have her cake and eat it. Opposition parties in Britain were dismissive too but the response from both wings of her own party was broadly positive.

For pro-European Conservatives, the prime minister’s admission that there was a cost to diverging from European standards was a welcome blast of reality in the government’s Brexit policy. And they were encouraged by her argument in favour of remaining close to the EU where possible after Brexit.

For Brexiteers, her repeated invocations of the sovereignty of parliament were a sufficient assurance that the prime minister has not yet slipped their leash. And her formal adherence to the government’s official red lines on the single market, the customs union and the ECJ were more important than her support for voluntary regulatory alignment.

A week that began with Labour leader Jeremy Corbyn’s call for a permanent customs union with the EU has ended with the prime minister spelling out the hard choices around Brexit for the first time. Neither intervention guarantees plain sailing for Britain’s departure from the EU but both have narrowed the gap between the British debate about Brexit and its reality.

Denis Staunton is London Editor