British prime minister Theresa May has been quick to shake her latest nickname, “Theresa Maybe.” She’d garnered it for her wishy-washy guidance on what the UK’s future outside of the European Union would like, as she made it clear that the government wouldn’t be giving a running commentary on negotiations. This has made businesses and investors nervous and the pound dropped to lows from the 1980s against the dollar.
Today (Jan. 17), in one of her biggest speeches since becoming prime minister, May succumbed to some of the pressure and laid out a 12-point list of objectives for Brexit. Here’s what we know:
Britain is leaving the EU single market
The single market is an ambitious agreement between EU nations that allows for the free movement of goods, workers, services, and capital around the bloc, without any tariffs. It’s all-for-one or nothing. Though Brexit was the option selected by just 52% of voters, May said it was a clear message that the British people wanted control over immigration from the EU. In order to end the free movement of people, the UK can’t and won’t be part of the single market, she said.
The UK will take back control over immigration and lawmaking from the EU
That’s the flip side of leaving the single market and a win for Brexiteers who put immigration at the center of their campaign.
The UK wants a new relationship with the Customs Union
At the moment, the UK and other EU nations trade collectively with the rest of the world. Customs union nations agree to apply the same tariffs to goods from outside the union. As part of May’s plan for a “global Britain” that will seek trade agreements with countries all over the world, the UK’s membership to the customs union will no longer work. May wants the UK to be able to arrange its own trade deals with the rest of the world, setting its own terms. She’s hopeful the US is at the top of that list (paywall).
Britain doesn’t plan to jump off a Brexit cliff
Unravelling the UK’s relationship is one (very time consuming) thing. Setting up new agreements is a different matter. Businesses are worried that there will be a gap between the old and new agreements, where it will be unclear what rules they should work under. May promised that the government will avoid a “disruptive cliff-edge” and instead have an agreement about the future UK-EU relationship by the time the two-year exit period ends, with additional agreements to be phased in.
The UK will be sending a lot less money to the EU
How much money the UK sends to the EU was a major source of contention during the Brexit campaign. Those who wanted to leave claimed—falsely—that the UK sends over £350 million ($433 million) a week. It’s less than this because the UK gets a rebate, but the amount is still substantial. In 2015, the UK contributed £12.9 billion to the EU budget. May said today that “the days of Britain making vast contributions to the European Union every year will end.” However, contributions will still be made on an ad hoc basis for specific European programs.
British parliament will get to vote on the final deal
A big piece of news from the speech is that both Houses of Parliament will get to vote on the new UK-EU deal before it gets put into action. The government is currently going through the UK courts to get legal clarity on how much autonomy it has over the Brexit process and how much say parliament should have. The pound rallied on the announcement of the vote, as traders hope that this can limit any excesses suggested by Brexiteers.
May wants to ensure the rights of UK nationals living abroad and EU nationals in the UK
May suggested the UK will ensure that the lives of people caught in the middle of all this aren’t completely disrupted—although there are already stories of people having their right to stay threatened.
There are still a lot of unknowns
May said she wants to trigger Article 50, which begins the two-year timeframe of exiting the EU, by the end of March. The EU has already said they won’t start negotiating until then and so details of whats to come are expectedly scant. May’s speech did, however, remove some of the uncertainty about the government’s approach. Among the unknowns:
- What will replace the Single Market membership. May said she wants the “the greatest possible access to [the single market] through a new, comprehensive, bold and ambitious Free Trade Agreement.” The key word is “possible,” because the greatest access would be membership—i.e. what the UK already has.
- What the new customs agreement will look like. May said she still wants “tariff-free trade with Europe and cross-border trade there to be as frictionless as possible.” This could mean a completely new customs agreement or becoming an associate member of the Customs Union. There are bits of the agreement she likes but the EU probably won’t like the idea of May having her cake and eating it too.
- What will happen to the financial city. Part of the reason London is an international financial center is because it acts as a gateway into Europe. Brexit threatens the fluid flow of capital from the city to the continent, and there was no word from May specifically addressing this.
- What the other 27 members of the EU want. At the end of the day the UK is up against 27 other countries, each of which will all have their own goals in these negotiations. May has said that “no deal was better than a bad deal” with the EU, but ultimately the EU countries are probably holding more of the cards.