The authoritative source for independent research on UK-EU relations

17 Jan 2017

Relationship with the EU

Statements from director and senior fellows of The UK in a Changing Europe in response to Prime Minister Theresa May’s Brexit speech today

Professor Anand Menon, director The UK in a Changing Europe, said: “Mrs May’s ambition for the UK to be able to enjoy tariff free trade with the EU whilst enjoying the freedom to sign its own trade treaties implies a subtle and complex relationship with the customs union. Her ability to achieve the ambitions she set out will ultimately hinge on what her partners are willing to give her, and whether they can successfully complete the Article 50 negotiations beforehand.

“More broadly, we can now start to think about the substantive impact of Brexit on our country. The Prime Minister stated that she wanted Brexit to result in a Britain that is stronger, fairer and prosperous. But to know if these ambitions are being achieved, we need a framework against which to monitor and measure them. We will be publishing our outline ‘four economic tests for Brexit’ later this month.”

Professor Jonathan Portes, senior fellow The UK in a Changing Europe, said: “Behind Theresa May’s rhetoric, two contradictions remain. First, her rhetorical claim that we can build a truly “global Britain” is incompatible with her top policy priority of reducing immigration from both inside and outside the EU, including skilled workers and students. Second, optimistic references to trade deals with third countries are all very well – but those are a long way off. The civil service is focused on the minutiae of upcoming EU negotiations. Mrs May’s suggestion that we want an “implementation phase” will make that task even more complicated.

“It is welcome that the Prime Minister has fleshed out her vision of what Brexit is. But she didn’t explain how exactly Brexit – or her version of Brexit – will make us stronger and fairer. Will Brexit mean wages start rising again at pre-crisis rates? Will it enable the government to make up some of the massive funding gap facing the NHS? Will it improve opportunity and social mobility for young people? If so, how and when? The next step must be for the government to explain just how its priorities in the negotiations relate to these laudable objectives.”

Professor John Curtice, senior fellow The UK in Changing Europe, said: “In prioritising ending freedom of movement and pulling out of the European Court of Justice, Mrs May is reflecting the two principal concerns of Leave voters in the referendum – immigration and sovereignty. But at the same time she is still trying to deliver what many Leave as well Remain voters also want, which is continued free trade with the EU. The key challenge facing the government, as the Prime Minister herself seemed to recognise, is whether the EU can be persuaded to strike a deal on free trade on anything like the terms and conditions that she has in mind.”

Dr Jo Hunt, senior fellow The UK in a Changing Europe, said: “The Brexit process has put the Union of England, Scotland, Wales and Northern Ireland under strain. A majority in both Scotland and Northern Ireland voted to remain in the EU, and the Parliaments in both Scotland and Wales have expressed a wish to stay in single market. The UK is certainly divided. Though she outlined the opportunities for the devolved administrations to feed into the Government’s position, the Prime Minister restated clearly that foreign affairs is a matter that is reserved to the UK Government, and so for it to ultimately determine.

“The novelty in the speech from a devolved perspective was an explicit acknowledgement that powers returning from Brussels will go not just to Westminster, but some will also be passed to Edinburgh, Cardiff and Belfast. The detail of what goes where still has to be worked out, as will the machinery to enable coordination of decision making, to minimise the creation of obstacles to living and trading across the UK.”

Professor Iain Begg, senior fellow The UK in a Changing Europe, said: “Theresa May has set out ambitious hopes for what she wants from Brexit. If she succeeds in obtaining what she listed in her speech, the risks to the UK economy will be relatively muted, despite the high profile decision to forgo full membership of the single market.

“However, what will others make of it? There must be strong doubts about whether EU countries will be willing to accept her rather odd positon on the customs union.  She wants the UK not to be bound by the EU’s common commercial policy or the common external tariff – cornerstones of any, not just the EU, customs union – yet to have some sort of customs agreement or associate membership. This is wishful thinking and is likely to be seen be others as exemplifying Boris Johnson’s principle of having your cake and eating it.

“She has signalled a huge reduction in the UK contribution to the EU budget. While predictable and probably politically unavoidable after the referendum campaign, it will be damaging to the EU in ways that could well come back to bite UK.

“Her speech has little to say about how she will safeguard the interests of the sectors of the economy – including the City of London, pharmaceuticals and the automobile sector – most reliant on demand from the EU. It is likely, overall to be seen as taking more risks than she needed to in relation to the economy.”

Dr Simon Usherwood, Reader of Politics, at the University of Surrey said: “Firstly, Theresa May still lacks a coherent plan for tackling Brexit. Much of her speech concerned the future shape of British society, rather than Brexit, which shows a lack of focus. For example, the moves to limit immigration and market integration sit uncomfortably with the claims that free trade is positive-sum and that the country has a global future.

“Secondly, May has had to acknowledge that she is not in control of Brexit. The Supreme Court is likely to rule Parliament has to approve Article 50 notification and the EU27 have their opinion on all these points, and will reach their own conclusions about what is and isn’t acceptable.

“Finally, May remains very focused on managing a small audience: namely her party and its backers in the press. Her firm language makes it much harder with the EU27 to find a deal. She may find that some of what she had said today will come back to haunt her in the years to come.”

Dr Angus Armstrong, senior fellow The UK in a Changing Europe, said: “The Prime Minister’s economic ambition is for Britain to emerge stronger and fairer from Brexit. Leaving the single market is unlikely to achieve the former, although the latter will depend on the content of the government’s ‘Modern Industrial Strategy’. While the PM sought to reassure by suggesting a new customs agreement could be reached, without a common external tariff, the policing costs alone will be challenging. Most of our services exports are sold through our foreign affiliates, yet there was no word about future protection of our foreign investments. Both issues are fiendishly complex and it is highly unlikely that they can be concluded in a deep Free Trade Agreement within this time frame.

“According to NIESR’s conservative long term econometric assessment, a Free Trade Agreement is likely to lead to national output (GDP) being just over 2% lower each year after taking account of the reduced budgetary payments to the EU. Each one percentage point is roughly equal to £700 per household per year. Note, this excludes any impact of lower immigration.”

Professor Matthew Goodwin, senior fellow The UK in a Changing Europe said: “Theresa May has confirmed what was fairly obvious in the shadow of the historic vote for Brexit – that Britain is leaving the single market and will prioritise controls over immigration. It should be remembered that not only has our research confirmed that public angst over immigration was a central driver of the Leave vote but also that large majorities of the electorate have supported reductions for much of the past fifty years. In this respect it is clear that identity politics has once again exerted strong influence over the direction of our society.”


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