theresa may brexit speech

May confirms break from single market and customs union

Theresa May has set out her vision for a “clean Brexit” and dismissed any prospect of a deal which would allow the UK to hang on to some aspects of EU membership. Speaking to diplomats and journalists in London, the prime minister said Britain wanted “a new and equal partnership” with its continental allies, not “partial membership of the EU, associate membership of the EU, or anything that leaves us half-in, half-out”.

She tried to reassure Britain’s foreign partners that the vote to leave was not an inward turn or a rejection of shared values. The UK will continue to work with Europe, she said, “to make sure we are all safer, more secure and more prosperous”. It is not in the UK’s interest for the EU to fail, she added, and Britain remains a global, outward-looking country.

But the long-awaited speech confirmed, as had been divined from previous announcements, that the UK is heading for a so-called “hard Brexit”. Under the negotiating strategy Mrs May set out, Britain will leave the single market, remove itself from the jurisdiction of the European Court of Justice and take control of its borders to reduce immigration. Other important aspects include:

  • Leave the single market but seek the best possible access via a free trade agreement
  • Effectively leave the customs union and instead seek to strike a “customs agreement” or become an “associate member”
  • Guarantee rights of EU nationals in Britain and of British nationals in the EU
  • Stop making “vast contributions” to the EU budget, although the door was left open to some contributions for “specific programmes”
  • Provide certainty to businesses on regulation and ensure a smooth transition
  • Continue sharing policing and intelligence information with European partners
  • Retain the “soft border” between Northern Ireland and the republic
  • Put the final deal to a vote of both houses of parliament

Plenty of this was expected. For example, leaving the single market became inevitable last October when Mrs May committed to take control of Britain’s borders and remove the country from the jurisdiction of the ECJ. These demands were red lines for a European establishment which, wary of teetering dominoes across the continent, was determined not to give the UK any special treatment which might encourage others to follow suit.

The most significant news from a trade perspective, therefore, is over the customs union, which until now Mrs May had said little about publicly. Broadly speaking, the customs union is a free trade agreement for goods only, while the single market adds people, services and investment into the bargain. It’s possible to be a member of the former without the latter, but doing so would proscribe the ability to strike trade deals with new countries.

So Mrs May has rejected the idea of Britain remaining a member of two of the union’s main components: the common commercial policy and the common external tariff. But she added, rather ambiguously, that she still wants to have a “customs agreement” with the EU, which could involve “becoming an associate member in some way” or “remaining a signatory to some elements of it”.

The feasibility of this demand is open to question. And it may quickly become clear that reducing Britain’s commitment to the customs union is incompatible with keeping the soft border between Northern Ireland and the republic. This, and many other questions besides, will define the months ahead. But for now, today’s speech is the clearest plan we could have hoped for from Theresa May.

Written by Nick Reading, Senior Account Manager (@NickReading1)


Back to blog