Saturday 21 July 2018

Leak nudges UK Prime Minister Theresa May towards a softer Brexit

Prime Minister Theresa May has struggled to make an optimistic case for leaving the single market and customs union
Prime Minister Theresa May has struggled to make an optimistic case for leaving the single market and customs union

Neil Unmack

The British government's latest leak will nudge the country towards a softer Brexit. State papers reportedly show the country will lose in every scenario after it leaves the EU. The upshot looks like a less abrupt schism rather than a wholesale U-turn.

The paper, reported by 'Buzzfeed', will sharpen the debate over how the UK leaves the European Union. It chronicles three scenarios: a soft Brexit whereby the UK stays in the single market and preserves existing supply chains and market access; a hard one featuring only a trade deal on goods; and no deal at all.

The three scenarios would mean lower growth of 2pc, 5pc and 8pc respectively over 15 years relative to current forecasts.

Those scenarios exclude the "deep and special" relationship that the UK hopes to strike, which assumes a deal on both goods and services. Yet the implication remains grim: even if she can get such a deal, UK growth would still suffer a hit of anywhere between 2 and 5pc.

The papers will fuel tensions within the Conservative Party and government. The party is split between ardent Brexiteers who advocate merely a trade deal with Europe, and those arguing for closer regulatory alignment, or even membership of the single market.

Brexiteers will see it as an attempt to stop withdrawal by a Europhile civil service.

That still looks unlikely. Public opinion is not easily swayed by technical reports. And the conclusions of the government paper are not radically different to other negative reports done by third parties.

Yet it may help shape the kind of Brexit that happens.

Theresa May will increasingly struggle to make an optimistic case for leaving the single market and customs union if her own analysis rubbishes it. It may meanwhile make it easier for the Labour Party to advocate staying closer to Europe.

The report also makes May, who advocates leaving the single market and customs union, vulnerable. Her popularity has fallen and if she falls, her vision of Brexit may also die. (Reuters Breaking Views)

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