Why a slow Brexit would be a political headache for Theresa May
Theresa May was a Remainer. But since she became Prime Minister, Leavers have struggled to fault her. May promised not only to deliver Brexit but to secure control of free movement and end the legal supremacy of the European Court of Justice.
She did not, quite deliberately, rule out continued EU budget contributions. Rather than lavishing money on the NHS and schools, the UK is likely to maintain payments in return for single market access. But the Brexiteers are more pragmatic on this point than many assume. Nigel Farage himself stated a week after the referendum: “There can be compromises with the EU, including on a possible British contribution to the EU budget”.
An exception is the possibility of a transitional Brexit deal. Cabinet ministers, such as Philip Hammond, Amber Rudd and Damian Green, have long regarded an agreement as essential to avoid what May recently called a “cliff-edge”. Few regard the UK as capable of negotiating a new trade agreement in the two years following the triggering of Article 50. Without an interim deal, Britain would be forced to revert to World Trade Organisation rules, imposing an average tariff of 5.3 per cent on exporters (an outcome that a leaked Treasury paper warned would deliver an annual £66bn hit to the economy).
During his Treasury select committee appearance yesterday, Hammond publicly stated his support for a transitional agreement: “There is, I think, an emerging view among businesses, among regulators, among thoughtful politicians, as well as a universal view among civil servants on both sides of the English channel that having a longer period to manage the adjustment between where we are now as full members of the EU and where we get to in the future as a result of negotiations would be generally helpful”.
In response, Leavers have revolted. A transitional deal would mean continued free movement and EU legal supremacy. The UK would not formally leave until the 2020s. Brexiteers fear that there would be nothing so permanent as “temporary” single market membership. “Half Brexit is where they’re going,” Farage said. “I think they’re going to fudge and give us a Norwegian-type deal.”
Peter Lilley, one of the original Tory “bastards” (who have recently regrouped), told the Today programme: “If by the transitional deal the chancellor means a period of implementation of different processes that would be absolutely normal in any new arrangements. If there’s any suggestion that we have a temporary agreement followed by a permanent agreement, then that can’t be what the chancellor was saying because it would take as long to negotiate a temporary agreement as it would a permanent agreement.”
May, who No.10 says has made no decision on an interim deal, should also be worried by the voters’ view. A significant number regard the current pace of Brexit as too slow (frequently asking why Article 50 was not triggered immediately). In advance of a 2020 general election, an interim deal would provide Ukip with the target it needs. A “slow Brexit” would reduce the economic pain of withdrawal. But it could increase the political pain.