LONDON – British Prime Minister Theresa May is leading the United Kingdom toward a very “hard” Brexit in 2019 – and potentially off a cliff, if the UK leaves the European Union without an exit or trade deal. In her January 17 speech, May outlined her objectives for negotiating with the EU, and made it clear that she will prioritize hardline Brexiteers’ demands over the country’s economic interests.
It isn’t surprising that May would choose a Brexit variant whereby Britain leaves both the EU’s single market and its customs union: she knows little, and cares even less, about economics. Her ultimate objective is to survive as Prime Minister, and she believes that controlling immigration – a longtime personal obsession – will endear her to “Leave” voters, and that ending the European Court of Justice’s jurisdiction in Britain will pacify the nationalists in her Conservative Party.
This stance rules out continued membership in the single market. Until now, Brexiteers had denied the existence of any political tradeoff between rejecting free movement and maintaining free trade with the EU. As Foreign Secretary Boris Johnson fatuously claimed, Britons could have their cake and eat it. May has now belatedly admitted that this is impossible.
Economically, this is a lose-lose proposition for the UK, which will now forego the benefits of free exchange with the rest of the EU, as well as the contributions of hard-working, tax-paying EU migrants. UK-based services providers, notably financial firms, will lose the “passporting” privileges that allow them to operate freely within the EU.