Yesterday, UK Prime Minister Theresa May delivered a much-anticipated speech outlining her government’s objectives in the upcoming Brexit negotiations with the European Union, responding to concerns that the UK doesn’t have a clear negotiating strategy or a firm handle on its objectives.
It was the clearest sign yet that the UK is heading for a “hard Brexit,” or what May termed a “clean Brexit.”
The prime minister asserted that the UK will:
- leave the EU Single Market, customs union, and court system and instead negotiate a new free trade agreement with the EU;
- seek a transition period for companies and lawmakers to adjust to the new reality, but not an “unlimited transitional status;”
- limit immigration from the EU; and
- continue security cooperation and intelligence sharing with the EU even after the exit.
May also acknowledged that the British Parliament will vote on the final terms of the agreement and underlined that Britain would rather leave with no deal than accept one deemed against its national interests.
Broadly speaking, the speech was not a surprise, but May’s assertions, if they come to fruition, could have lasting impacts on those who depend on an integrated European market, including the hundreds of U.S. companies who have invested $600 billion into the UK and employ well over one million British workers. Her acknowledgement of the need for a transitional period may alleviate some concerns about a sudden change in the terms of UK-EU trade.
Importantly, the prime minister encouraged future cooperation with the EU and emphasized that Britain wants the bloc to succeed. At the same time, she argued that an attempt by Brussels to “make an example out of Britain” by offering a bad deal could be more painful for the rest of Europe than for the UK.
May emphasized her desire for the UK to seek trade agreements with other global partners, including the United States. Many analysts argue that the UK will need to finish its negotiations for exiting the EU as well as re-align its WTO commitments before the timing is right to finalize a new trade agreement with Washington. But the American business community will be eager to sustain and strengthen its close relationship with the UK, and such an agreement could be a useful vehicle to accomplish those objectives.
The British pound rallied yesterday, a positive sign in the wake of the government’s move to offer more clarity, and markets were bolstered by the news that Parliament will vote on the ultimate agreement.
We, too, welcome the prime minister’s guidance on the UK’s overarching objectives, and look forward to additional clarity in the weeks ahead about this uniquely complex undertaking. The U.S. Chamber is committed to working closely with UK and EU officials to support a mutually acceptable outcome that includes a suitably long transitional period in order to minimize disruptions to transatlantic trade and investment.