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In ‘Brexit’ Speech, Theresa May Outlines a Clean Break for U.K. In ‘Brexit’ Speech, Theresa May Outlines a Clean Break for U.K.
(about 2 hours later)
LONDON — In a speech that holds the potential to define Britain’s relations with its neighbors for decades to come, Prime Minister Theresa May on Tuesday charted a course toward a clean break with the European Union after more than four decades of integration with the Continent. LONDON — In a speech that could define Britain’s relations with its neighbors for decades to come, Prime Minister Theresa May on Tuesday charted a course toward a clean break with the European Union, calling for the country to abandon the single market after more than four decades of integration with the Continent.
Mrs. May emphasized Britain’s determination to regain control of migration from the European Union and rejected the supremacy of the European Court of Justice, even at the risk of losing unfettered access to the single market and its nearly 500 million consumers. Mrs. May emphasized Britain’s determination to regain control of migration from the European Union and rejected the supremacy of the European Court of Justice, even at the risk of losing unfettered access to the single market, but she also said she wanted to procure tariff-free trade with the bloc and to keep parts of its customs union.
The long-awaited speech was a shift for Mrs. May, who had dropped heavy hints about her thinking but had refused to outline publicly how Britain would leave the bloc after voters supported a withdrawal in a June referendum.
After months of stressing that there was no “binary divide” over Britain’s membership of the single market, she explicitly ruled out staying a member, arguing that it was impossible for a Britain that controlled its borders and set all of its laws.
“Let me be clear,” she said, adding that any agreement would be sent to both houses of Parliament for approval, “What I am proposing cannot mean remaining in the single market.”“Let me be clear,” she said, adding that any agreement would be sent to both houses of Parliament for approval, “What I am proposing cannot mean remaining in the single market.”
The long-awaited speech was a shift for Mrs. May, who had dropped heavy hints about her thinking but had refused to outline publicly how Britain will leave the bloc after voters supported a withdrawal in a June referendum. The speech appealed for a new relationship with Continental Europe, with Mrs. May saying she wanted “a new and equal partnership — between an independent, self-governing, global Britain and our friends and allies in the E.U.”
Mrs. May struck a diplomatic note, including an appeal for a new partnership with Continental Europe, but she made clear that controlling its borders and setting its own laws were Britain’s priority. “Not partial membership of the European Union, associate membership of the European Union, or anything that leaves us half-in, half-out,” she added. “We do not seek to adopt a model already enjoyed by other countries. We do not seek to hold on to bits of membership as we leave.”
“We seek a new and equal partnership — between an independent, self-governing, global Britain and our friends and allies in the E.U.,” Mrs. May was to say, according to excerpts from her speech released by her office. Nevertheless, she warned that if Britain were locked out of European markets, it would feel free to cut corporate taxes and change its economic model to remain competitive.
“Not partial membership of the European Union, associate membership of the European Union, or anything that leaves us half in, half out,” she said. Mrs. May’s intervention represents an opening gambit in a hugely complex negotiation. “The United Kingdom is leaving the European Union,” she said. “My job is to get the right deal for Britain as we do.”
As such, her intervention represented an opening gambit in a hugely complex negotiation, and it defined the broad objectives, but not the details, of British withdrawal. “The United Kingdom is leaving the European Union, and my job is to get the right deal for Britain as we do,” she said. Reaction from opponents of a British departure from the bloc — commonly known as Brexit — was swift and harsh. “Theresa May has confirmed Britain is heading for a hard Brexit,” said Tim Farron, the leader of the centrist Liberal Democrats. “She claimed people voted to leave the single market. They didn’t. She has made the choice to do massive damage to the British economy.”
Tim Farron, the leader of the centrist Liberal Democrats, accused Mrs. May even before the speech of taking Britain toward “a destructive, hard Brexit” with consequences that “will be felt by millions of people through higher prices, greater instability and rising fuel costs.” Jeremy Corbyn, the leader of the Labour Party, focused on the Conservative Party promise to cut corporate taxes to attract businesses, on the Irish model, which the chancellor of the Exchequer, Philip Hammond, proposed on Sunday.
His party on Tuesday pointed to the impact of the slump in the value of the pound, which helped push up inflation in December last year to 1.6 percent, its highest rate since July 2014. “Theresa May has made clear that she is determined to use Brexit to turn Britain into a bargain-basement tax haven on the shores of Europe,” Mr. Corbyn said. “She makes out this is a negotiating threat to the 27 E.U. countries, but it’s actually a threat to the British people’s jobs, services and living standards.”
The response from European leaders was more muted. Frank-Walter Steinmeier, the German foreign minister, welcomed the fact that Mrs. May “finally has given a little more clarity over the British plans,” and he called on the 27 other member countries to unite to preserve the single market.
Even before the speech, Mr. Farron had accused Mrs. May of taking Britain toward “a destructive, hard Brexit,” with consequences that “will be felt by millions of people through higher prices, greater instability and rising fuel costs.”
His party pointed on Tuesday to the impact of the slump in the value of the pound, which helped push up inflation in December to 1.6 percent, its highest rate since July 2014.
While currency markets had been jittery in recent days in anticipation of the speech, the pound rallied by as much as 1.5 percent after Mrs. May began talking, suggesting her remarks — leaked to British news outlets over the weekend — had already been accounted for.
Mrs. May’s speech, delivered in the grand surroundings of Lancaster House in London, was the most closely watched statement on European policy since January 2013, when the prime minister at the time, David Cameron, promised to hold a referendum on European Union membership.Mrs. May’s speech, delivered in the grand surroundings of Lancaster House in London, was the most closely watched statement on European policy since January 2013, when the prime minister at the time, David Cameron, promised to hold a referendum on European Union membership.
Currency markets have been jittery in recent days, pushing the pound marginally lower amid fears that Mrs. May would convey the message that politics may prove a bigger consideration than economics in the withdrawal talks. Instead, the pound rose as much as 1 percent against the dollar during her speech. Mrs. May, who came to power after the referendum, has promised to begin the two-year negotiation process on British withdrawal by the end of March, putting the country on course to leave the European Union in 2019.
Mrs. May, who came to power after the referendum, has promised to initiate a two-year negotiation on a British withdrawal — commonly known as Brexit — by the end of March, putting the country on course to leave the European Union in early 2019. The prospect that Britain would remain part of the single market had been fading since October, when Mrs. May told the Conservative Party conference that she would insist on complete control of migration from European Union countries and on release from the rulings of the European Court of Justice.
The prospect that Britain would remain part of the single market has been fading since Mrs. May demanded complete control of migration from the European Union and release from the European Court of Justice while speaking at the Conservative Party convention in October. That stance is generally regarded as incompatible with membership of the European Union’s single market, which has made the free movement of people — as well as goods, capital and services — one of its bedrock principles, and which relies on the court to arbitrate.
That stance, as she acknowledged, is incompatible with membership in the European Union’s single market, which has made the free movement of people — as well as goods, capital and services — one of its bedrock principles, and which relies on the court to arbitrate. But despite her pledge that she did not want to be “half-in, half-out” of the European Union, that seemed to be exactly the model Mrs. May favored regarding its customs union, which eliminates tariffs between European Union countries and some other neighbors that participate.
The extent to which Mrs. May would be willing to compromise to maintain membership in the customs union — which eliminates tariffs between European Union countries and some other near neighbors that participate — was less clear. However, membership of the customs union limits the ability of member countries to strike individual free-trade deals with non-European nations, another of Mrs. May’s major objectives.
Membership in the customs union limits the ability of member countries to strike individual free-trade deals with non-European nations. On Tuesday, she said she hoped to strike deals around the globe and to keep tariff-free access to European markets, though it seemed unlikely that European leaders would go along with such a plan.
Supporters of a British departure from the bloc have argued that leaving will provide new trading opportunities. Mrs. May echoed that idea in her speech on Tuesday and called for a “country that gets out into the world to build relationships with old friends and new allies alike.” Supporters of Britain’s departure from the European Union have argued that leaving will provide new trading opportunities. Mrs. May echoed that idea in her speech, calling for a “country that gets out into the world to build relationships with old friends and new allies alike.”
Ideally, Britain would like to have its cake and eat it, in the memorable phrase of the foreign secretary, Boris Johnson. In other words, Britain would reject what it dislikes about the bloc, such as freedom of movement, but keep trade unencumbered as it tries to get the best possible trading deal consistent with its other objectives. Her ability to accomplish her objectives will still depend on the willingness of the 27 other European Union nations, as well as the European Parliament, which would have to agree to any new trade deal.
But that is unlikely to be acceptable to the remaining European Union nations. Although Britain will almost certainly leave the single market, it will then try to maintain some of its privileges through a deep trade and cooperation agreement with the European Union. Another crucial issue is whether Britain will be able to negotiate a transitional agreement to avoid a sudden change in the rules for business — the so-called cliff edge — in 2019, with the possible introduction of tariffs under rules laid down by the World Trade Organization. Mrs. May said she would seek to avoid this by phasing in the new rules but added that she wanted to avoid “permanent political purgatory.”
Its ability to accomplish that would still depend on the willingness of the 27 other European Union nations, as well as the European Parliament, which would have to vote on any new trade deal.
“Unless May does a complete U-turn from here, any hope of full single market access for post-E.U. Britain is more or less out of the question,” Kallum Pickering, senior Britain economist at Berenberg Bank in London, wrote in an analysis.
Although Mr. Pickering wrote that “an exit from the E.U. customs union is likely, too,” he expected Britain and the European Union to agree to a deal in which “the U.K. maintains a good level of access to the E.U.’s goods markets and limited access to the less developed services markets.”
“Crucially, we expect the U.K. to lose its E.U. financial services passport,” Mr. Pickering wrote, referring to a system that allows banks based in Britain to offer financial services throughout the European Union. “This follows from the U.K. raising some modest barriers to migration from the E.U.”
Another crucial issue is whether Britain will negotiate a transitional agreement to avoid a sudden change in the rules for business — the so-called cliff edge — in 2019, with the possible introduction of tariffs under rules laid down by the World Trade Organization.
There is some menace underlining the evolving British negotiating position. In an interview published on Sunday in the German newspaper Die Welt, Philip Hammond, the chancellor of the Exchequer, warned that Britain might cut corporate taxes in order to lure businesses, undercutting neighbor nations, if it were locked out of the European market.
Many European Union countries have backed taking a hard line against Britain to send a message to any other member states that might consider leaving.
Supporters of a withdrawal have been encouraged, however, by reports that other countries in the bloc have recognized that they might suffer if there were a complete rupture and they were denied access to London’s large financial services sector.
But British businesses remain nervous.
“The practicalities of a disorderly crash-landing need to be understood,” Carolyn Fairbairn, director general of the Confederation of British Industry, a business lobby group, said in an interview with The Guardian. “We have had conversations with some of the proponents of just walking away and we will again talk to them about what we see from our members about the consequences of that.”