Markets cheer, EU wary as UK PM May signals 'clean Brexit'

AP News
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Posted: Jan 17, 2017 3:43 PM
Markets cheer, EU wary as UK PM May signals 'clean Brexit'

LONDON (AP) — Britain's future outside the European Union became much clearer Tuesday: It's so long to the single market, goodbye to the European Court of Justice and farewell to the freedom of movement for workers.

In a long-awaited speech, Prime Minister Theresa May finally revealed the U.K's hand as it prepares to start EU exit talks. She said the U.K. wants to free itself from EU governance and stop paying millions into its coffers, but still remain friends, allies and tariff-free trading partners with the soon-to-be 27 nation bloc.

"We want to buy your goods and services, sell you ours, trade with you as freely as possible, and work with one another to make sure we are all safer, more secure and more prosperous through continued friendship," May said in a speech to diplomats and dignitaries beneath the gilded paintwork and chandeliers of a Georgian London mansion.

"You will still be welcome in this country as we hope our citizens will be welcome in yours," she said.

Pro-Brexit British politicians praised the speech, and the pound rallied from recent lows as May provided more details of the path ahead for the split with the EU — and vowed that Britain would remain "a great global trading nation" open to business and talent from around the world.

Others called May's vision wildly ambitious, like a divorcing couple who hope to remain best friends, share the kids and keep each other's front door keys.

"This is rather like a divorce rather than 'friends.' And then the question is, divorces can be handled very well or very, very badly," said Tony Travers, director of British government studies at the London School of Economics

Travers said Britain was hoping its friends in the EU will say "let's make it gentle, let's not — as with a bad divorce — give all the money to the lawyers."

In her 40-minute address, May said Britain would leave the EU single market of some 500 million people, but "seek the greatest possible access to it through a new, comprehensive, bold and ambitious free trade agreement."

She said there would be no attempt to cling to bits of EU membership. Britain will "bring an end to the jurisdiction of the European Court of Justice in Britain," May said. It also will impose controls on the number of people coming to Britain from EU member countries, abandoning the bloc's principle of free movement.

May promised for the first time that Britain's Parliament would be able to vote on the final deal reached between Britain and the EU, likely in 2019. However, she didn't say what would happen should lawmakers reject the agreement.

The speech received mixed reactions within the EU, whose leaders largely lament Britain's decision to leave.

German Foreign Minister Frank-Walter Steinmeier said the speech had "created a little bit more clarity about the British plans." French far-right leader Marine Le Pen of the National Front described it as "courageous" and respecting the will of the British people.

European Council President Donald Tusk described it on Twitter as a "sad process, surrealistic times but at least more realistic announcement." He said the 27 other EU nations were "united and ready to negotiate" once Britain formally starts the two-year process of talks by invoking Article 50 of the EU's key treaty.

In his final daily press briefing before the change in U.S. administrations, White House press secretary Josh Earnest called on these "critically important American allies" to engage with each other in a way "that's as transparent as possible."

The British pound rallied in response to the clarity. On Monday, it had approached $1.20, a near 31-year low, amid fears that Britain was headed for an economy-roiling "hard Brexit." But it rose above $1.23 after May outlined her vision of free trade and strong economic ties.

That includes a customs agreement, although May said she had an "open mind" about what relationship the U.K. would have with the EU Customs Union, which currently prevents Britain from striking trade deals with other countries.

In a bid to alleviate fears that Brexit will mean a more insular Britain, May said she wants the country to be "stronger, fairer, more united and more outward-looking than ever before."

May addressed an audience of British civil servants and international diplomats at Lancaster House, frequent venue for international summits — and the site of former Prime Minister Margaret Thatcher's 1988 speech arguing that Britain should join the EU's single market.

Britain is quitting the single market in order to gain control over immigration — a key issue for many voters who backed Brexit. EU leaders say Britain can't stay in the single market without allowing the free movement of people from the bloc into Britain.

May was firm on the immigration question, but softened the message by saying she wants to allow EU citizens already in Britain to stay.

Losing single-market access alarms many in Britain's huge financial services sector, which relies on an ability to do business seamlessly across the 28-nation bloc.

But the financial sector welcomed what it saw as an end to the period of vast uncertainty.

"Businesses will welcome the greater clarity and the ambition to create a more prosperous, open and global Britain, with the freest possible trade between the U.K. and the EU," Carolyn Fairbairn, director-general of the Confederation of British Industry, said.

Others cautioned that ambition is a long way from achievement.

"The key challenge facing the government, as the prime minister herself seemed to recognize, is whether the EU can be persuaded to strike a deal on free trade on anything like the terms and conditions that she has in mind," said John Curtice, senior fellow at the U.K. in a Changing Europe think tank.

May plans to trigger the starting gun for exit talks by March 31. The government insists it will not be delayed even if it loses a Supreme Court case arguing that Parliament must be given a vote first. The court is due to rule this month.

On Tuesday, May offered the EU a deal that she hopes it can't refuse, but her warm words also carried a hint of a threat. She said a "punitive" divorce settlement "would not be the act of a friend."

Should that happen, May said Britain would be free to lower corporate tax rates to "attract the world's best companies and biggest investors to Britain" — while imposing trade barriers on the EU.

Tim Farron, leader of Britain's opposition Liberal Democrats, called May's speech "a mixture of vague fantasies and toothless threats to our nearest neighbors."

"Throwing the gauntlet down against the rest of Europe, the PM is virtually guaranteeing that acrimony rather than compromise will prevail," Farron said.

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Associated Press Writers Josh Lederman in Washington and Sylvia Hui in London contributed to this story.

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Corrects the name of the industry group to Confederation of British Industry.