Brexit speech: Six issues that Theresa May didn’t settle for us
Praised for providing clarity, the prime minister still left key questions unanswered
Theresa May has, to some extent, clarified what kind of relationship Britain wants with the EU, but the prime minister has also left some big questions open. Here’s what we still don’t know.
1. What sort of deal does Britain actually want?
While ruling out a Swiss model or Norway-style membership of the European Economic Area, May’s stated desire for separation with the “greatest possible access” doesn’t reveal much.
Effectively, she said Britain wants to quit the single market and seek some form of bespoke customs agreement with the bloc, but the latter is little more than a wish list – and the soundings from Europe don’t bode well.
In response to May’s speech, German chancellor Angela Merkel made it clear that there could be no “cherry-picking” with Britain enjoying the benefits of the single market without its obligations.
Guy Verhofstadt, the European Parliament’s chief Brexit negotiator, went further, saying “we shall never accept a situation in which it is better to be outside the European Union”. All of which leaves us in the dark as to where Britain will be in 2019.
2. Could a deal be done within the two-year timeline?
May’s stated intention of negotiating a UK-EU trade deal within two years of triggering article 50, the formal exit mechanism, has been roundly dismissed as “impossible” by several senior European figures.
Jean-Claude Piris, the head of the European Council’s legal service from 1988-2010 and a principal architect of the Maastricht and Lisbon treaties , said a deal could take up to 10 years, and only if there was goodwill on both sides. Sir Ivan Rogers, the Former UK ambassador to the EU, said as much before he was hung out to dry by Brexiteers and later resigned.
However, the British government insists it is not beholden to any EU insistence on the timetable, though it concedes that a post-exit implementation phase is likely to stretch out the departure, perhaps until 2021. Either way, there is still no clarity on this issue.
Listen to the Business Podcast
3. Can we expect the resumption of tariffs on Irish exports to the UK?
The big worry in Ireland centres on the prospect of tariffs on Irish goods crossing the Border into the UK in the absence of a tariff-free trade deal. May has stated that Britain wants to leave the customs union so it can negotiate its own trade deals with non-EU countries, albeit while retaining free trade in some areas, such as car manufacturing.
This would be a totally novel arrangement and not one that currently exists. Whether such a deal can be brokered remains subject to negotiations.
Nissan was persuaded to stay in the UK with a promise of no tariffs or “bureaucratic impediments” after Brexit, but it’s unclear how the British government made such a pledge in advance of a deal, and whether it will do a series of sector-by-sector deals.
Ireland’s €11 billion food and drink industry is the most exposed of any sector to Brexit, but guaranteeing free trade on agriculture doesn’t seem to be high on the UK’s negotiating agenda.
4. Are we likely to revert to hard Border in Ireland?
In her speech, the prime minister restated her commitment to avoiding a return to “the Borders of the past” in Ireland, while Downing Street said the UK would seek to make any customs controls as unintrusive as possible.
She also identified the Common Travel Area with the Republic as one of the UK’s 12 key objectives in the Brexit negotiations.
“So we will work to deliver a practical solution that allows the maintenance of the Common Travel Area with the Republic, while protecting the integrity of the UK’s immigration system,” she said.
Like everything in the Brexit equation, it will come down to whether Britain’s expressed aim can be squared with Europe’s.
5. Can Remainers still oppose the deal?
The answer to this one is a tad clearer, but not fully. In her speech, May committed to give parliament a vote on the final Brexit deal.
If rejected, it is unclear whether Britain could pursue an alternative deal or simply default to higher tariffs under the aegis of World Trade Organisation rules. That would mean 10 per cent, 13 per cent and up to 40 per cent tariffs on cars, clothes and meat.
6. What about Ireland’s Brexit bonanza?
The commitment to a hard Brexit should have struck fear into many businesses as the guarantee of tariff-free access to the single market now looks more uncertain than ever. All of which makes the stock market reaction and sterling’s appreciation hard to understand.
However, such a scenario, in theory, favours alternative access points to the EU, such as Ireland, and seemingly consolidates the State’s position as one of the main European tech hubs.
However, May’s warning to Brussels that any attempt to inflict a punitive outcome on the UK would be an “act of calamitous self-harm” seems to suggest Britain would retaliate by slashing taxes to attract companies from elsewhere.
Such a move would almost certainly entail a sizeable cut to the UK’s headline rate of corporation tax, which would have major implications here.