March 02, 2018
What will Theresa May say?
The answer to the question is: we don't know. It is quite possible that the speech is still being written now - on Friday morning. What we do know is that the speech has been subject of yet another row in the British cabinet. The real absurdity of this disagreement is that it pitches against one another two views which are equally unacceptable to the EU. There are those like Philip Hammond who want convergence with the EU, and others like Boris Johnson, who want as much independence as possible. As we keep on pointing out, all of this matters only for domestic political consumption. The EU will only offer EEA membership, a customs union treaty, or ordinary third-country status, but the latter option is now severely hindered by the EU's insistence that Northern Ireland stays in the customs union. The only relevant UK debate is the one on Anna Soubry's amendment to keep the UK in a customs union with the EU. If she gets majority support, that will change the course of Brexit. If not, we will end up with a Canada-type agreement at best, and no deal at worst.
The FT reports that May's speech will set out five tests for Brexit:
- taking back control of money, laws, and borders;
- enduring solutions;
- job protection;
- creation of an “outward looking” Britain;
- strengthening the UK.
There is nothing in this that would suggest May has changed her mind on the customs union. This is a hard-Brexit agenda. The EU has already rejected May's stated policy of managed divergence and mutual recognition - concepts totally alien to the EU. Michel Barnier said this week that that there can be no mutual recognition without the rule of EU law. There can be no free trade deal with the same benefits as the single market. Donald Tusk even went further than merely pointing out the inconsistency of the UK position. He said he was not happy with May's red lines - of exiting the customs union and the single market. This is in contrast to what he and his colleagues said last year when they welcomed the clarity of May's Article 50 letter. The Irish question has clearly also intruded into the EU's agenda.
What concerns us is that the EU is now effectively determining single market and customs union membership as the sole Brexit option to which it can agree politically, which we think is a counter-productive position as it drives many political fence-sitters in Britain towards the hard-Brexit camp.
One of those is Nick Timothy, May's former political adviser, who has been instrumental in devising a political Brexit strategy that straddles the gap of extreme Brexit and Remain positions in the Conservative Party and in the country at large. He writes in his Daily Telegraph column that the UK is offering a relationship based on free trade, further devolution in Northern Ireland, and efficient pre-registration systems for customs checks, which would minimise trade disruption.
"Yet Brussels has laughed off Britain’s proposals because they want to deny the plausibility of any solution that does not bind the UK to the EU’s rules and regulations. They want us locked into a customs union and the single market, so they can maintain trade with us while exerting control over our economy."