Brexit terms explained: What you need to know

Theresa May is set to reveal more details about her strategy for leaving the EU in a major speech on Tuesday.

The Prime Minister is expected to announce the UK is prepared to leave the single market, the customs union and the European Court of Justice.

Here’s a glossary of some of the key terms you’re likely to hear in the next few days.

:: Single market

An association of countries trading with each other without restrictions or tariffs.

The European single market came into effect in 1993. It accounts for 25% of global GDP and is Britain’s biggest trading partner. Currently, 45% of the UK’s exports are to the EU while 50% of imports are from the EU.

Access to the single market is based on countries signing up to the core principle of the free movement of goods, people, services and capital.

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:: Customs union

A group of states that have agreed to charge the same import duties as each other and usually to allow free trade between themselves. The customs union reduces administrative and financial trade barriers such as customs checks and charges and boosts economic cooperation.

The advantages of leaving the customs union are that Britain would not have to pay contributions to Brussels – in 2015 it paid £13bn into the EU, according to the Treasury – and would not have to sign up to the free movement rule.

The Government would also be able to negotiate free trade deals with non-EU countries.

The disadvantages are that though the UK could still trade with EU countries, it would face tariffs and vice-versa which could push up the cost of goods and services. The UK will also have to negotiate new trading deals with the EU which all member countries would have to agree to.

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:: European Economic Area

The area that provides the free movement of people, services and capital within the European single market.

Membership is open to member states of either the EU or the European Free Trade Association (EFTA).

EFTA states which are party to the European Economic Area Agreement participate in the EU’s internal market without being members of the EU.

However, they must adopt most EU legislation concerning the single market except on laws concerning agriculture and fisheries.

:: European Court of Justice

This is the judicial institution of the EU. It deals with disputes between parties and ensures that European law is interpreted and applied in the same way in every member state.

It has been argued that leaving the EU would mean human rights encapsulated by the European Court of Human Rights would be adversely affected on matters such as employment rights.

Brexiters say it interferes with British justice and that the UK is already bound by common law which makes provisions for fundamental rights. They also point out that the UK is signed up to European Convention of Human Rights, which existed long before the EU and is entirely independent of it.

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:: World Trade Organisation

The global organisation that deals with rules of trade between nations.

WTO agreements are negotiated and signed by most of the world’s trading nations. Britain joined the WTO as a member of the EU and it is expected that it would have to negotiate new and updated terms of its membership.

This could be a long process because the UK would need all the other WTO members to agree on these terms. The Treasury has also warned that this so-called hard Brexit option could cut the UK’s GDP by 9.5% and trigger a loss of tax revenues of £66bn a year under WTO rules.

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