UK wants reciprocal markets deal with EU
Britain and the EU should reach a deal allowing reciprocal access to each other’s markets-though London cannot compromise on regaining immigration control, finance minister Philip Hammond said yesterday.
London and Brussels should not fight against each other’s red lines but work in the space in between to find an agreement on Brexit, the chancellor of the Exchequer told Germany’s Welt am Sonntag newspaper. Hammond said Britain had not taken a firm position on post-Brexit EU immigration, but the message from the June referendum vote to leave the bloc was: “we must control our immigration policy”.
He said European Union citizens would be free to travel to Britain and do business therebut the debate was over the right to work, settle and set up business.
“Clearly we need people to come and work in our economy to keep it functioning,” he said. But as for having no control, “that has to stop”. British Prime Minister Theresa May is to set out details of the government’s Brexit negotiating strategy tomorrow.
Hammond said Britain wanted market access without Brussels politics. “We are optimistic that we will be able to reach an agreement that gives reciprocal access to each other’s markets. The logic is there,” he said. He hinted that London was ready to push through aggressive cuts to business taxes to ensure British-based firms remained competitive in the face of EU tariffs.
Hammond hoped Britain would remain “in the mainstream of European economic and social thinking”, but said it would have to change course “if we are forced”. “The British people are not going to lie down and say, too bad,” he said. “If we have no access to the European market, if we are closed off”, then short-term economic damage could follow, but Britain would then be forced to change its model “to regain competitiveness”. Britain plans to hand in its two-year notice before April. Hammond said he was expecting to start “substantive negotiations” in the following months.
“We are ambitious to do this as quickly as possible,” he said, and “move seamlessly” to the new arrangement in 2019, though there could be an “interim period” before it kicks in.
In a thinly veiled threat that Britain could use its corporate tax as a form of leverage in Brexit negotiations, Hammond told Welt am Sonntag he hoped Britain would remain a European-style economy with corresponding tax and regulation systems.
“But if we are forced to be something different, then we will have to become something different,” Hammond said when asked directly about Britain’s plans to lower corporate tax. “If we have no access to the European market, if we are closed off, if Britain were to leave the European Union without an agreement on market access, then we could suffer from economic damage at least in the short-term,” he said. “In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness,” Hammond said. “We will change our model, and we will come back, and we will be competitively engaged.”
German Chancellor Angela Merkel has said the EU must consider limiting Britain’s access to its market if London fails to accept the bloc’s ‘four freedoms’ in Brexit negotiations.
The EU’s single market emerged from the 1992 Maastricht Treaty on European integration. This enshrines the EU’s “four freedoms” - of movement of goods, capital, people, and services. British Prime Minister Theresa May has repeatedly said she will not reveal her Brexit negotiating strategy before triggering Article 50 of the EU’s Lisbon Treaty, a step expected by the end of March. May has said she wants Britain to regain control over immigration, restore its sovereignty and also establish the best possible trading relations with the EU.
But senior EU leaders have warned Britain there could be no “cherry picking”, and Merkel has urged the 27 remaining EU states not to allow themselves to be divided. Hammond said in the interview Britain had not taken a firm position yet on what form of immigration controls it wants.
“But we are aware that the message from the referendum is that we must control our immigration policy,” he added. Hammond said Britain did not want to close its doors completely to EU citizens who wanted to work in the UK. “Clearly we need people to come and work in our economy to keep it functioning,” Hammond said. “But we must have overall control.” — Agencies