17. January 2017

Compromise? What compromise? PM’s Brexit speech analysis

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Theresa May has now made explicit what she has been implying for the last six months.

May stated that the UK would leave the Single Market and form a new relationship with the Customs’ Union. She had previously declared the end of free movement would be a red line, that the UK was leaving the jurisdiction of the European Court, and that she had set up a new government department to instigate new trade deals. So none of this was surprising. But once stated starkly there will be little wriggle room in these fundamental areas. No doubt that is one of several reasons why she had been reluctant to make the speech in the first place.

Number 10 was still putting finishing touches to the speech this weekend, treating it with the same sweaty assiduousness as the annual party conference address.

Leaders want as much wriggle room as possible as they contemplate a mountainous negotiation. May has a little less now.

Given her previous declarations, the UK’s departure from the Single Market was inevitable. She made clearer than before that the UK would leave the Customs Union. She declared that “I do not want us to be bound by the common external tariff”. In one form or another, that means the UK will be outside the Customs Union. But she added carefully that she hoped the UK would be an associate member, always a conveniently vague term when applied to any institutions. To a limited extent, she is clearly still listening and keeping some options open in a way that may be welcomed by businesses keen to smooth the pathway to the exit door.

What if her hopes are not met? At the end of her speech she echoed her Chancellor, Philip Hammond, by warning that if the EU sought to punish the UK as it makes a clean break, Britain will retaliate – potentially by lowering taxes to attract new businesses and  imposing punitive tariffs. Having no deal is better than a bad deal, she threatened.

There was additional detail about what she hoped would be a more harmonious route towards a deal. May clarified a little what she meant by transitional arrangements after the two-year Article 50 deadline had passed. She insisted that all details of the departure would have been agreed by the time of the deadline, but implementation might extend over a longer period of time in order that businesses can fully prepare. Parliament would get a vote on the deal in advance of formal agreement with the EU, the first time she has made such a pledge. This was unavoidable, but it does add another layer of unpredictability. There is no majority in Parliament for a hard Brexit. May is calculating that, in the end, MPs and Peers will not block the outcome of a negotiation that was triggered by a referendum. There is no guarantee her calculation will prove to be correct – and that way, chaos may lie.

More immediately, there were as many questions raised by her speech as answered. She will seek “the greatest possible access to the single market”. What will that mean? She cannot specify because the meaning, if it takes any form at all, will depend on the rest of the EU. She will negotiate the “freest possible” trade agreement with the EU. How free will that be? She cannot say because she does not know. But, unsurprisingly, she seeks to have her cake and eat it at this stage – an accurate summary of the Government’s position famously scribbled down by an aide and then photographed after a ministerial meeting late last year.

May cannot be blamed for starting out with such a position. Who would concede before the negotiations begin? But one of many reasons why she was initially reluctant to lay out her position at this stage is that the context is unreal. She has not triggered Article 50. The EU – collectively and separately in the form of every member expressing a view  – has yet to engage formally or fully. May hinted at the challenge to come when she spoke of her attempts to get a quick agreement that UK nationals living abroad and EU nationals living in the UK would not have to leave. She explained there was a lot of agreement but resistance from a few member states. That was enough to slow the process down, to the frustration of employers. There are likely to be examples of resistance when the negotiation begins. This is the starting point when May is free to explain what she hopes will happen. She noted almost as an aside during her speech that there will have to be compromises. That is an understatement.

Still there is a degree of clarity about the immediate future. She does have a plan, and it is closer to hard Brexit than the soft alternative. Parliament will trigger Article 50 if the Supreme Court insists that it has a vote, as is probable later this week.

Then the difficult sequence begins. May referred politely to Cameron’s negotiation at the start of the year. He found it arduous and at times sleeplessly exhausting, visiting capital after capital to negotiate his puny deal. May faces the same prospect in relation to Brexit, a deal ten thousand times more complicated and one that every EU member must sign up to.

Number 10 found preparations for today’s speech a draining challenge. This was the easy bit.

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