18th January 2017

Brexit. That abstract thing that’s gobbled up half of Britain’s word cloud since last year’s EU referendum. Would it, like an egg, be hard or soft? Could it, like teeth, be clean? Or was it going to be, in the words of Prime Minister Theresa May, patriotic – red, white and blue?

For nigh-on seven months, speculation has run rampant.

Until now. The Prime Minister’s speech this week set out, for the first time, the Government’s key priorities in the negotiations with the EU that lie ahead.

And it appears we’re going for a clean Brexit.

What does clean Brexit mean?

The greatest point of contention over Britain’s EU exit has been continued membership of the European Single Market.

The Single Market, launched in 1993, seeks to enshrine the EU’s four freedoms – freedom of movement for goods, capital, services and people. Regulations have been harmonised, believed to help exports if countries’ standards are equivalent. Tariffs have been cut, so members can’t discriminate against one another’s products. And the right to live and work in member countries has been established, reasoned to boost competitiveness.

Because a country can be both a Single Market member and outside the EU at once, provided they participate in the European Economic Area (EEA) like Norway, debate had raged whether this was appropriate for Britain.

Soft Brexit proponents argue in favour. Those for hard and clean Brexit, which we now know includes the Government, argue against.

So, why is the Government cool towards Single Market membership?

European leaders, notably including German Chancellor Angela Merkel, have stated the Single Market’s four freedoms are non-negotiable. In other words, that a country can’t pick and mix which freedoms it would observe, and remain in the Single Market.

But because an unambiguous message – sent by Leave voters – was that immigration should be controlled, the Government is not inclined to uphold freedom of movement.

Something had to give. And it seems to have been the Government. It’s accepted that controlled immigration and Single Market membership are incompatible, and is choosing the former over the latter.

What will the economic impact be?

The Government is aiming to negotiate a Free Trade Agreement with the EU that will emulate many aspects of Britain’s existing Single Market membership. Tariffs will be kept low, or non-existent, while maximum freedom will be sought for British firms to operate within the EU and EU firms to operate within Britain.

We must await the final shape of that deal. Theresa May has indicated her willingness to walk away if her demands aren’t met. But it is likely that, if it accomplishes the Government’s aims, it will avoid the worst aspects of Britain simply defaulting to World Trade Organisation (WTO) rules. These include British exports subject to tariffs, and long customs delays at ports and airports.

There are other potential benefits. The EU’s regulations won’t apply to the whole British economy, just those elements that export to it. And we won’t have to pay a membership fee.

Because Britain won’t be a full member of the EU’s Customs Union, we’ll be free to negotiate our own free trade deals. And its Common External Tariff, which imposes duties on goods from outside the EU, will no longer apply. New Zealand lamb and St. Lucian bananas, Ethiopian coffee and Canadian maple syrup will become cheaper.

And these changes won’t be implemented overnight. The Prime Minister clarified that, as far as possible, they will be phased in. Business will not confront a ‘cliff edge’ in which they’ll endure a sudden and fundamental change of circumstances.

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Please Note: This article was edited on 21/02/2018 to reflect Khaos Control Cloud’s updated process re: trials.