'A better future': May's arguments for Brexit deal – and the reality

At the start of five days of debate that the prime minister said would “set the course” for the country for decades to come, Theresa May made a series of claims about the deal she struck with Brussels that will be put to a vote in parliament on 11 December.

Here are the main pillars of the argument May made in the House of Commons at the start of the debate, and analysis of whether they stand up.

A better future

May said there could be a “better future outside the EU”. But according to Treasury figures, the UK economy will be at best up to 3.9% smaller after 15 years under her Brexit plan, compared with staying in the EU, on an analysis that presumes a generous outcome in trade negotiations but also assumes there are no other major changes to the economic context.

Independent trade policy

May said it was “clear we will have an independent trade policy, and the government would be able to negotiate trade deals around the rest of the world” during the transition period after Brexit.

The government’s ability to negotiate, let alone bring into force, trade deals with the rest of the world will be trammelled for years to come, and potentially permanently. During the transition period – whether it is 21 months long or closer to four years – the UK will in effect act as an EU member state but without any representation in the EU’s decision-making institutions. No new deals could come into force. It will also be extremely difficult to negotiate deals with the likes of Donald Trump’s administration as Britain’s relationship with the EU’s customs territory will not be settled.

If the two sides do not negotiate a new trade relationship that can avoid a hard border on the island of Ireland by the end of the transition period, the backstop solution in the withdrawal agreement will come into force. That foresees a customs union that will bind the UK to apply the EU’s external tariff to all goods imported from the rest of the world. The UK would not be able to offer tariff reductions on imports, the central purpose of trade deals.

The political declaration envisages the EU and the UK building on the single customs territory when it comes to its permanent trading relationship. Unless the EU completely U-turns and accepts a British proposal made last year for a complicated dual-tariff system, in which the UK can have an independent trade policy and enjoy the benefits of a customs union, the areas in which the UK will go its own way will therefore be limited to services, intellectual property, public procurement, data and possibly regulatory barriers to trade in goods.

Control over money

May said the UK would have control over its money. As an EU member state, the UK contributes around £13bn to the bloc’s budget. Under the terms struck with Brussels, it will continue to send billions to the EU after Brexit, although the total cost to the taxpayers cannot be determined due to the vagaries of the political declaration on the future trade and security relationship.

The UK has said in the withdrawal agreement that it will pay between £34bn and £39bn to Brussels in instalments that will only come to an end in 2064. That covers commitments made by the UK as a member state, including pensions for EU officials. It also includes money owed under the EU budget ending December 2020, when the 21-month transition period envisioned in the agreement also comes to a finish.

Should the UK extend the transition period for “up to one or two years”, many billions more will be paid up until 2022. The UK has said in the political declaration accompanying the withdrawal agreement that the British government will be open in its future relationship to making “appropriate” financial contributions to EU programmes covering science and innovation, youth, culture and education, overseas development, external action, defence capabilities, civil protection and space.

No renegotiation

May said the UK had been in a “vigorous” fight in settling the terms of the withdrawal agreement and reopening the text would allow EU member states to harden the terms against British interests.

France is among those EU nations who were not happy with the outcome of the negotiations over the all-UK customs union backstop. It wanted tighter commitments about a level playing field, tying the UK into EU regulations, and a guarantee on fishing rights in British waters after Brexit. The European commission shares May’s analysis that tinkering now could lead to the deal unravelling as EU countries push forward their own interests.

No Canada or Norway

May said the government had pushed the EU into accepting that the UK needed a relationship different to those with Canada and Norway. The EU had always said it was willing to go beyond the free-trade deal struck with Canada. The deal agreed by May provides for a spectrum of results. There is the potential for closer terms than in both the Canada and Norway deals in the fields of security and foreign policy, although the UK failed to secure a continuation of the relationship enjoyed as an EU member state. The political declaration on the future relationship suggests the flow of trade can also be easier than that enjoyed by Canada, but there is no suggestion that the frictionless trade demanded by May can be achieved.

Control of laws

May said the UK would be “taking control of our laws”. But far from taking back control, the UK will lose its place in all decision-making institutions in Brussels, including its MEPs, while agreeing that it will accept and enforce all EU regulations until up to as late as December 2022.

Should a trade deal not be in place by the end of the transition period, the backstop customs union will come into force. Under its terms, the UK has agreed it would have to stay in “dynamic alignment” with the EU on state aid rules, preventing anti-competitive subsidies for British businesses.

The UK will have to put into British law three EU directives on tax: exchange of tax information, country-by-country reporting on investment firms and the EU’s taxation code of conduct. It has also committed that it will not regress on its social, environmental and labour regulations after Brexit. Under the backstop, Northern Ireland will stay under single market regulations. The UK could theoretically diverge, but the government has said it will not do so.


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