Monday

27th Mar 2017

Britain to issue EU ultimatum on Tuesday

  • May invited the other 27 EU ambassadors to hear her speech (Photo: Reuters)

Theresa May aims to tell the EU that she is prepared to quit the single market if she does not get her way in Brexit talks, with one option being to turn the UK into a tax haven.

The British leader is to issue the ultimatum at a speech in Lancaster House, a London mansion, to ambassadors from the other 27 EU states on Tuesday (17 January), The Sunday Times, a British newspaper, reported, citing Downing Street sources.

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  • Hammond (r) had voted to remain in the EU (Photo: Reuters)

She will say that Britain must “respect the result” of the Brexit referendum, in which people called for limits on EU immigration and for restoration of British sovereignty over EU institutions.

“The overwhelming majority of people - however they voted - say we need to get on and make Brexit happen,” she will say.

“Business isn’t calling to reverse the result, but planning to make a success of it. And the House of Commons has voted overwhelmingly for us to get on with it too”, she will say.

She is also expected to make friendlier remarks, saying the UK and the EU should aim for a “strong new partnership”, and that the Leave and Remain camps in British society should end “division and the language associated with it”.

“The victors have the responsibility to act magnanimously. The losers have the responsibility to respect the legitimacy of the result,” she will say.

A Downing Street source said London expects currency traders to make a “market correction” after May speaks out.

The Sunday Times report itself prompted the value of sterling to fall further against the dollar on Monday.

EU leaders have said that the UK cannot suspend freedom of movement for European workers and retain full access to trade perks.

But even Britain’s pro-EU ministers are lining up behind May to take a tough line when Brexit negotiations begin at the end of March.

Tax-haven UK

Speaking to Welt am Sonntag, a German newspaper, on Sunday, the British finance chief, Philip Hammond, indicated that the UK could turn itself into a tax haven to compete with the EU for international commerce if Brexit talks do not end well.

When asked by the newspaper if the UK could become “the tax haven of Europe”, he said that if Britain was “closed off” from the EU market, then “we will do whatever we have to do”.

“The British people are not going to lie down and say: ‘Too bad. We’ve been wounded.’ We will change our model”, he said.

“Most of us who had voted remain would like the UK to remain a recognisably European-style economy, with European-style taxation systems, European-style regulation systems etc. I personally hope we will be able to remain in the mainstream of European economic and social thinking. But if we are forced to be something different, then we will have to become something different”, he said.

David Davis, the Brexit minister, also issued a threat against the EU.

“We don’t want the EU to fail, we want it to prosper politically and economically,” he wrote in The Sunday Times.

“If it proves necessary, we have said we will consider time for implementation of new arrangements,” he added, however.

The British opposition leader, Jeremy Corbyn, reacted to the Sunday Times report by telling the BBC that May was heading for a “trade war” with the EU and by saying Hammond wanted to turn the UK into a “bargain-basement economy”.

Immigration

May’s Northern Ireland minister, James Brokenshire, told the same BBC show that May would not compromise on EU immigration, however.

“We take a very stark message from the referendum that freedom of movement, as it exists today, cannot continue,” he said.

Hammond also told the German newspaper that unchecked EU immigration had to “stop”.

He said that chancellor Angela Merkel had lost control of migration policy after 1 million asylum seekers arrived in Germany last year.

“At the moment, we [the UK] don’t have any control, not any more than Germany does”, he said.

Theresa May outlines 'hard Brexit'

The British prime minister confirms that the UK will leave the single market when it leaves the EU and will seek a new trade deal.

Column / Brexit Briefing

What’s the price of failing to prepare?

Theresa May is the strongest and most vulnerable prime minister in living memory. That may seem like a contradiction in terms for a leader who, if not obviously likable, is seen as highly competent.

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