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Brexit

UK PM Theresa May to confirm ‘hard Brexit’ from EU single market in keynote speech

May is due to make a long-awaited speech on Tuesday detailing her plan for upcoming Brexit negotiations, in which she will set out her 12 negotiating objectives

PUBLISHED : Tuesday, 17 January, 2017, 11:22am
UPDATED : Tuesday, 17 January, 2017, 11:34pm

Britain’s Prime Minister Theresa May is expected to use the most important speech of her premiership to confirm that Britain will be leaving the single market while insisting that it wants to remain “the best friend” to European partners.

In remarks that critics will cite as evidence that the government is pursuing a “hard Brexit”, the prime minister will set out 12 key priorities for the EU negotiations, with no compromise over the ability to control borders and regain sovereignty.

Speaking Tuesday evening Hong Kong time to an audience at Lancaster House, Westminster, including ambassadors from across the world, May will stress her ambition to reach out beyond the continent to build new trading relationships in a move that suggests the UK will also leave the customs union.

However, the prime minister is likely to restate an argument that she does not see it as an either/or choice and say that whatever final deal on trade and customs duties is struck, lorries will be able to pass through Dover and other ports unhindered, despite warnings from others on the issue.

“We seek a new and equal partnership – between an independent, self-governing, global Britain and our friends and allies in the EU. Not partial membership of the European Union, associate membership of the European Union or anything that leaves us half-in, half-out,” May is expected to say.

“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. The United Kingdom is leaving the European Union. My job is to get the right deal for Britain as we do.”

Advisers know the speech could have an impact on the value on sterling by confirming that the UK cannot stay in the single market, but May will say that British voters backed Brexit “with their eyes open”.

In a speech that will delight Eurosceptic backbenchers, she will avoid talking about soft or hard options, but instead promise a clean break from the EU.

The priorities include control over immigration and removing Britain from the jurisdiction of the European court of justice plus securing the rights of EU citizens in Britain, committing to retain worker’s rights, building a strong trading relationship with the EU and rest of the world, making Britain an attractive place for investors and students, and preserving the union.

May will say that these negotiating priorities will be driven by four underlying principles: “certainty and clarity; a stronger Britain; a fairer Britain; and a truly global Britain”.

The prime minister will attempt to offer a more positive vision of the situation to other European countries.

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“Our vote to leave the European Union was no rejection of the values we share. The decision to leave the EU represents no desire to become more distant to you, our friends and neighbours. We will continue to be reliable partners, willing allies and close friends,” she will say.

“We want to buy your goods, sell you ours, trade with you as freely as possible and work with one another to make sure we are all safer, more secure and more prosperous through continued friendship.”

May’s words, which sources say have had significant input from the foreign secretary, Boris Johnson, and Brexit secretary, David Davis, is likely to be cheered by MPs who support Brexit. Staff in Downing Street are also said to be positive about the speech, which is expected to be long and detailed.

However, many of May’s opponents, including some within the Conservative party, will despair at the lack of compromise on migration and sovereignty that will mean Britain has no choice but to leave the European single market.

Whitehall sources suggested that May had been urged to take a harder stance over Brexit by cabinet colleagues who have argued that a rerun of the referendum would result in an even more emphatic victory for Brexit, in the region of 60 -40 per cent. They believe the fact that the predicted economic downturn has not materialised means that voters are increasingly warming to the idea of Britain’s clean break.

May was given an economic boost before the speech when the International Monetary Fund, which had warned during the referendum campaign of a negative impact from a Brexit vote, upgraded its outlook for the British economy this year.

The IMF said it expected the UK to grow by 1.5 per cent, up from a previous forecast of 1.1 per cent. However, the Washington-based institution cut its forecast for 2018, from 1.7 per cent to 1.4 per cent, owing to uncertainty over Britain’s “unsettled” exit terms.

Investors displayed unease on the eve of May’s speech, with the FTSE 100 index ending a record 14-day winning streak on Monday. The pound dipped below $1.20 at one point as it fell to a three-month low, reflecting concerns that the prime minister would confirm plans for a hard Brexit.

The prospect of losing single-market access alarms many in Britain’s huge financial services sector, which relies on an ability to do business seamlessly across the 28-nation bloc.

It also worries the many foreign firms that use London not only as a financial hub but as an entry point into the EU.

“We now have to assume May will prioritise immigration controls, and the price to pay will be to exit the single market,” said Neil Wilson, senior market analyst at ETX Capital.

“That could send the pound a lot lower still, perhaps towards $1.10 in the coming weeks.”

May won endorsement from US president-elect Donald Trump over her Brexit course but sterling plunged on Monday on fears that Britain could be on a collision course with its EU allies.

The Sterling plunged to US$1.1986, its lowest level since October’s “flash crash” that had sent it to a 31-year low of $1.1841, in morning trading.

But the pound recovered to above $1.20 after Trump’s comment in an interview with The Times of London that a US-UK trade deal could be done “very quickly” once he takes office this week.

May says she will invoke Article 50 of the EU’s key treat by March 31, to formally begin a two-year process of negotiating Britain’s departure.

But she has until now refused to reveal details about the government’s goals or negotiating strategy, arguing that to do so would weaken Britain’s hand.

Some details have now begun to emerge.

British Treasury chief Philip Hammond fueled speculation that Britain will play hardball in Brexit negotiations, telling the German newspaper Welt am Sonntag that the UK hoped to retain single-market access but would be willing to “change our economic model to regain competitiveness” if that was cut off.

Opposition Labour Party leader Jeremy Corbyn accused Hammond of threatening a “trade war with Europe” and seeking to turn Britain into a tax haven.

May spokeswoman Helen Bower said the prime minister and Hammond both want Britain “to remain in the mainstream of a recognisable European-style taxation system.”

“But if we are forced to do something different because we can’t get the right deal, then we stand ready to do so,” she said.

Tim Bale, professor of politics at Queen Mary, University of London, said that May was well advised to use her speech to bring clarity about Britain’s intentions — even if many people won’t like the message.

“I think ruling out membership of the single market ... is in some ways the clarity people are looking for,” Bale said.

“Yet were she to do that, it would be a massive blow to many sectors of the economy. But if that’s really what she’s going to do, and it’s not simply a negotiating stance on her part, it might be better to do it sooner rather than later.”

Additional reporting by Associated Press and Agence France-Presse