At last, Theresa May has injected a dose of realism into the government’s position on Brexit. In her speech on Friday, the prime minister’s red lines blurred. Now she speaks of hard facts and trade-offs and an unavoidable truth: UK access to European markets will be curtailed and even then will come at a price.
Mrs May is finally reckoning with the consequences of her Lancaster House speech last year, where she pledged that the UK would be outside the EU single market and most likely the customs union as well. Within those constraints, a weakened prime minister is seeking to blunt Brexit’s hardest edges.
Three former prime ministers declared this week that the UK is on the wrong course. The Financial Times agrees that whatever deal is struck will be inferior to the present arrangements. Parliament must also take a view on the final agreement between the UK and the EU27.
However, Mrs May’s speech has smoothed the path toward a transition deal and negotiations on the future relationship. This will be welcome to business in desperate need of certainty.
Mrs May committed to remaining part of some EU regulatory agencies — including chemicals, aviation and medicine — and recognised that the UK would have to pay for the privilege. However, she sent mixed signals about the role of the European Court of Justice in settling disputes.
A certain amount of rule taking — or if you prefer, surrender of sovereignty — is inevitable if a close relationship with the bloc is to be maintained. This is an inconvenient truth that nativists invoking betrayal and vassalage cannot obscure.
Mrs May has also abandoned empty threats of a race to the bottom on regulation. The UK’s rules on goods will be at least as strong as the EU’s. Alignment is a necessary compromise to minimise friction at the UK border and protect trade with its most important partner. But customs and tariff barriers are still on the horizon after Brexit.
Mrs May hopes that a “customs partnership” could be the solution to the dilemmas surrounding the EU rules of origin and supply chains. It looks fantastically complex and Brussels has shown scant enthusiasm.
Her second option is a “streamlined” customs arrangement that leans heavily on unspecified technological solutions. This is unlikely to be any more popular with the EU side. Mrs May has done little to solve the problem of friction at borders — not least the sensitive border on the island of Ireland. This may be understandable, but the UK will have to offer much more.
On services, Mrs May again expressed the hope that the UK and the EU can have separate regulatory regimes with “the same regulatory outcomes”. This is “managed divergence” which, again, the EU has ruled out. More clarity is needed on financial services, because each sector requires different treatment.
The vagueness that persists in many of the government’s proposals invariably provokes accusations that the UK is still cherry-picking, refusing to accept the consequences of leaving the club. Mrs May is vulnerable on this count. Whatever the protestations, the UK is still likely to end up with a Canada-style free trade deal.
In a political sense, however, progress has been made. For months, the Brexit hardliners have called the tune. Mrs May has stopped dancing. She has adopted a more realistic attitude. A public rebuff from Brussels will only encourage those who want no deal. With little more than a year to go to Brexit day, it is incumbent on all sides to reach a sensible arrangement.