UK RETREATS ON DIVORCE DEMANDS

Britain needs to show progress on a reasonable exit plan or risks economic chaos, writes

lawmaker John Redwood, have insisted that Britain owed nothing at all.

Yet, with time running out for Britain before it departs in March 2019, such pledges have collided, brutally, with reality.

Earlier this year, Britain’s chief Brexit negotiator, David Davis, told Parliament he could achieve a trade deal with EU that provided the “exact same benefits” as its current membership in the bloc’s single market and Customs union. He has not repeated that promise recently, probably because European leaders have said repeatedly that Britain cannot possibly enjoy the benefits of membership if it is outside the bloc.

In the meantime, other reversals are quietly underway. Lawmakers were initially told that EU law would cease to apply to Britain in March 2019, when it leaves. Now, the government has accepted that during the sort of “standstill” transition that Britain badly wants, European rules — including new ones — will apply to Britain, as will judgments of the European Court of Justice.

During this standstill transition, which Prime Minister Theresa May suggests could be two years, Britain will also have to accept the free movement of European citizens and will not be able to control migration from the continent — even though immigration was perhaps the argument that proved decisive in the referendum.

Britain’s new pragmatism stands in contrast to some early remarks by May, who insisted that no deal with EU was better than a bad one, implying that she was ready to walk away from the table.

But the reality, analysts and business leaders have been saying with increasing emphasis, is that May desperately needs to show progress on a reasonable departure plan, not a “cliff edge” exit that would potentially throw the economy into chaos. Business leaders have warned that they will be forced to begin shifting operations out of Britain in the new year if nothing further is accomplished.

In London, where the government made no official comment, the about-turn was widely criticised. Labour lawmaker Chris Leslie said the offer would cost £1,000 (RM5,500) for every Briton, a far cry from the £350 million a week that Brexit backers promised that Britain’s exit would bring in. Nigel Farage, the former leader of the pro-Brexit UK Independence Party, said on Twitter that “Christmas has come early for the EU”.

Despite referendum promises of a rosy future, Britain’s economy has sunk from being the fastest-growing among developed nations to the slowest. Investment in critical sectors like the automobile industry has contracted sharply.

Inflation has spiked due a significant fall in the value of the pound since the referendum, putting a squeeze on living standards. Consumer spending is down, with car sales falling for seven consecutive months. According to some estimates, living standards will not return to their 2008 values until 2022 at the earliest.

The gloom was compounded when Britain recently lost the right to host two EU agencies, for medicine and finance, which will relocate to the continent.

May needs to get agreement on starting talks for future trade arrangements at a meeting of European leaders in the middle of this month. That may be possible given her new offer on the divorce, providing that a way forward can be found on the other tricky issue, the border with Ireland.

Even then, Britain is unlikely to achieve the ambitious trade deal with the bloc that it wants, analysts say.

“Although the current focus is on the separation, the next phase of the talks could prove much harder and more acrimonious,” wrote Charles Grant, director of the Centre for European Reform, a research institute, in an analysis.

“EU negotiators think the British government is deluded about the kind of future relationship it can achieve.”