The Sunday Times reported that by saying she’s willing to quit the European Union’s single market for goods and services to regain control of Britain’s borders and laws, U.K. Prime Minister Theresa May will this week signal plans for a “hard Brexit’’.
Without saying how it obtained the information, the Sunday Times said that May will escape the jurisdiction of the European Court of Justice, strike commercial deals with other countries and prepare to withdraw from tariff-free trade with the region in return for the ability to curb immigration in a speech scheduled for Tuesday in London.
May is prioritizing social issues over the needs of the economy and this is what is likely to alarm investors, bankers and company executives who will fret by her printing such a blueprint for Brexit. The newspaper predicts the pound to be sent lower as government officials reportedly told the Times that they expect her speech to cause a “market correction”. On concern about her intentions, the pound fell last week to its lowest level against the dollar since October.
May will declare in her speech that having divided over Brexit, voters are now uniting behind making it a success, the prime minister’s office said in a separate statement.
“The overwhelming majority of people — however they voted — say we need to get on and make Brexit happen,” May will say. “So the country is coming together.”
the Sunday Times said, citing Brexit Secretary David Davis that May will seek a transitional phase between splitting from the EU and the beginning of a new trading relationship to avoid fallout from the breakup and grant businesses some certainty over the outlook.
“We don’t want the EU to fail, we want it to prosper politically and economically, and we need to persuade our allies that a strong new partnership with the U.K. will help the EU to do that,’’ Davis wrote in the newspaper. “If it proves necessary, we have said we will consider time for implementation of new arrangements.’’
May is under mounting pressure at home and abroad to detail her strategy seven months after 52 percent of voters chose to quit the EU against 48 percent who wanted to remain. May’s government must deliver its road map by the middle of February, said the panel of British lawmakers charged with scrutinizing Brexit in a report released on Saturday.
Leaving the EU’s single market and customs union creates risks making it costlier and more complicated for British exporters to trade with their biggest market in the intervening time till such a time that May ultimately manages to line up a new free-trade partnership with the bloc. To ensure they maintain access to it, banks might be forced to carry out their threats to move jobs from London to the continent by such a stance.
The line that they won’t allow May to “cherry pick’’ the best parts of EU membership without accepting the responsibilities, including allowing free movement of labor is being steadfastly held by leaders from the EU’s 27 other states including German Chancellor Angela Merkel.
With net migration to the U.K. from the EU reaching 189,000 in the year ended June, that requirement has become a pressure point in the U.K. She views June’s referendum as a call from voters to slash that number, May has repeatedly indicated.
(Adapted from Bloomberg)