Dazed Tory and Labour MPs plot next moves post-Brexit

Feelings were still raw on both sides of Parliament on Monday as MPs met for the first time since the EU referendum.

Conservatives plotted the first steps in their leadership election, and Labour MPs were in open revolt against leader Jeremy Corbyn. Still, as the smoke from last week's conflagration began to clear, the blurred outlines of Britain's likely negotiating position began to emerge.

The Leave campaign was deliberately vague about its hoped-for relationship between Britain and the EU after Brexit.

Since the vote, however, some of its leading figures have made clear that they want to retain access to the European single market, although they have yet to explain how they might do so.

Boris Johnson, the favourite to succeed David Cameron as prime minister, said he wants Britain to retain access to the single market. He claims this ambition was compatible with introducing controls on immigration from the EU.

Single market

Taking questions from MPs, Cameron also stressed the importance of access to the single market, though he said that negotiations would be a matter for his successor.

Throughout the campaign, the Remain side claimed that an arrangement with the EU such as Norway’s, which has full access to the single market, involved an obligation to accept free movement of people.

In fact, this is not entirely true. Article 112 of the European Economic Area Agreement allows for an “emergency brake” on immigration in certain circumstances.

“If serious economic, societal or environmental difficulties of a sectorial or regional nature liable to persist are arising, a Contracting Party may unilaterally take appropriate measures,” the article says.

A protocol to the agreement allows Liechtenstein, another EEA member, to impose further restrictions on EU immigration.

As Derek Scally reports from Berlin, a spokesman for chancellor Angela Merkel has ruled out informal negotiation with Britain before the activation of Article 50, the EU treaty measure which starts up to two years of formal talks.

Cameron has made clear that it will be for his successor to trigger Article 50. In the meantime, a British government taskforce will begin work on formulating its negotiating position.

The nature of that negotiating mandate could be influenced by the Conservative leadership contest, particularly if Johnson is challenged from the right by another Leave campaigner.

More restrictions

A bidding war between leadership candidates could push the incoming prime minister into promising a more restrictive immigration policy than is compatible with full access to the single market.

Johnson's allies are seeking support from senior Conservatives who opposed Brexit for a "unity ticket". But a number of other Leave backers, including former defence secretary Liam Fox, are considering a challenge.

Meanwhile, the tumult in Labour raises the prospect of the party over-interpreting the referendum outcome by embracing anti-immigration policies in an effort to head off the threat from Ukip in some English constituencies.

A further complication lies in the likelihood of an early general election after a new prime minister takes office, with both the Conservatives and Labour looking over their shoulders at Ukip.

While Britain’s political parties are preoccupied with their internal affairs over the next few months, the uncertainty about the future relationship with the EU will be reflected in the financial markets.

Citizens from other EU countries living in Britain are anxious about their future, not least because the days since the referendum have seen an unprecedented wave of xenophobic attacks, including the daubing of racist graffiti on a Polish community centre in Hammersmith.