What would be the difference between hard and soft Brexit?
Theresa May wants to begin the process of leaving the European Union in March this year.
That’s when the Prime Minister says she plans formally to tell our EU partners that the UK wants to quit, in line with a process set out in article 50 of the Lisbon Treaty.
We won’t leave straight away. There will be up to two years of negotiations.
But it does mean that the the UK needs to decide what exactly it hopes to achieve from those talks – and what sort of relationship it wants to have with the EU once we are no longer a member.
And Mrs May’s self-imposed deadline is now just two months away.
Two key issues are likely to be trade and immigration. Will we still be free to trade with the EU without restrictions and tariffs, or not?
And will people from EU countries be free to move to the UK, and vice versa, as they are now?
The different options are often described as “hard Brexit” and “soft Brexit”.
There’s no clear definition for either of these terms. But here’s what they might mean in practice.
* Taking the UK entirely out of “freedom of movement”, the current arrangements which allow people from any EU country to move to any other part of the EU.
* This is likely to mean leaving the EU single market, which currently allows UK firms to trade across the EU without restrictions.
* The UK could sign a new free trade deal with the EU, but EU nations may be reluctant to agree to anything if freedom of movement is not included.
* Until a new trade deal is signed, the UK would still be able to trade with the EU under rules set out by the World Trade Organisation (WTO). This would probably mean British exporters had to pay a tariff on some goods exported to the EU.
* Critics of “hard Brexit” say trading under WTO rules would provide little protection for British firms, because in practice EU countries would be free to discriminate in favour of EU firms when awarding contracts.
People of Sunderland talk about Brexit 6 months on from vote
* In principle, the UK could leave the EU but continue to be part of the single market, ensuring British-made goods can be exported to Europe without tariffs.
* However, this would probably mean the UK continues to be part of EU freedom of movement arrangements, which Theresa May’s government is unlikely to agree to.
* The UK could agree to a limited free movement scheme. For example, it could agree that EU workers who already have a job offer in certain sectors of the economy where the UK suffers from a labour shortage have an automatic right to come and work in the UK.
* This could make it easier to agree a deal giving the UK continued access to the single market.
* Alternatively, limited freedom of movement could make it easier for the UK to negotiate a new comprehensive trade deal with the EU, similar perhaps to the Comprehensive Economic and Trade Agreement which will eliminate nearly all tariffs between the EU and Canada.
* The Canada trade deal has taken eight months to negotiate. But a UK deal could be easier as it might be based largely on existing arrangements.
* As well as the question of tariffs, there are also what are known as “non-tariff barriers”. These include rules on labelling, testing and safety standards of products imported into the EU. The UK could agree to abide by EU rules on these issues even once it quits, making continued trade easier.