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Pound Drops after Theresa May’s Hard Brexit Statement

  • January 10th, 2017
  • Author: Aspasia Stephanou
Pound Drops after Theresa May’s Hard Brexit Statement

The Tory minister, Justine Greening, might have mistaken Article 50 for “Article 52” during her interview on The Andrew Marr Show (BBC One), but such a gaffe hasn’t gone unnoticed, particularly, after Theresa May’s Sky interview with Sophy Ridge on Sunday, which did nothing to calm Brexit uncertainty and fears. At a time when the Tory government needs to be clear about its Brexit plans, the slightest slip of the tongue might trigger further insecurity as UK citizens feel less and less sure about the strength of the government’s Brexit arguments. With the Sterling sliding on Monday morning to a 10-week low (9 January), after May’s suggestion that we’ll be heading for a full-blown Brexit, little effort is made by the Tories to explain what a cold-hearted break from the EU might actually feel or look like. 

Sunday TV interview

Brexit might be a subject that’s been flogged to death, but it seems that whenever it is conjured by Brexit seers and politicians, it sends the pound lower. The PM, who was interviewed by Sophy Ridge on Sky News on Sunday, reiterated her stance on immigration control and on getting the best possible deal for the UK. This has now become her very familiar Brexit gospel that is beginning to wear out. Labour’s shadow Brexit Secretary Keir Starmer criticised her lack of clear objectives by saying: "What we got today were bits of half sentences that the Prime Minister has been using for the last six months." And Liberal Democrat leader Tim Farron called her plans “reckless.”

But, her rigid point that “leaving the EU does not mean retaining bits of membership” was puzzlingly contradicted by her statement that she "wants the best possible deal for trading with and operating within the single European market." But, how her comments that “We’re leaving. We’re coming out. We’re not going to be a member of the EU any longer” reconcile with access to the single market, is only a madman’s guess. 

However, the pound fell after her remarks on not keeping “bits” of the EU since they showed her government’s intention to prioritise immigration control over single market access. Farron said that, her “reckless plans to leave the single market would deal a huge blow to jobs, investment and the public finances, meaning less funding for services like the overstretched NHS.”

The irony that May is missing in all this is the fact that since her Tory conference, she has been preaching about a “country that works for everyone”, but she rejects any possibility of including “everyone” in her privileged circle of Brexit decisions. If she is going to deliver on the vote of the British people, as she repeatedly claims, then she also needs to inform this British people of how she is going to use their vote and in what way their everyday rights and privileges will be irrevocably changed or removed. Her words might be performed in her recognisable affected style, but people are now seeking for substance, and not to be reminded that “Brexit means Brexit.”

Theresa May’s speech on social reform (9 January)

On Monday, May talked about her notion of a “shared society” and her plan to reform the mental health services and reduce the stigma around mental illness. During the Q&A section, the Sun’s Tom Newton Dunn asked May whether the markets’ interpretation of her heading for a hard Brexit was wrong. She claimed that she isn’t heading for a hard Brexit and that she doesn’t accept the term:

Well, I’m tempted to say the people who are getting it wrong are those who print things saying I’m talking about a hard Brexit, [that] it’s absolutely inevitable it’s a hard Brexit. I don’t accept the terms hard or soft Brexit. What we are doing is going to get an ambitious, good, the best possible deal for the United Kingdom in terms of trading with, and operating within, the single European market. But it will be a new relationship because we won’t be members of the EU any longer. We will be outside the European Union, and therefore we will be negotiating a new relationship across not just trading but other areas with the European Union.

The UK will retain its access to the single market, but at which cost? If you already had access to the single market, why would you sacrifice that access in order to strike another deal that would probably be costlier? The legal expert David Allen, writing in the FT, expressed the point playfully by referring to the animated children’s TV series characters, the Clangers. He said: “Even an extra-terrestrial race such as the Clangers would have access to the single market if they condescended to trade their soup and blue string pudding surpluses with mere earthlings. The question is on what terms that access is given.”

The German chancellor Angela Merkel has replied to May’s recent Brexit ambitions with another well-known fact, one which May has been ignoring. Merkel reminded the UK that “access to the single market can only be possible on the condition of respecting the four basic freedoms. Otherwise one has to talk about limits (of access).”

May has signalled that what matters most to her is controlling immigration, and she has no intention to yield to the EU’s demands for free movement. Ironically, her talk today focused on social injustices, racial discrimination, and young people’s difficulties. First, Brexit will exacerbate all these injustices and inequalities. By building what she calls a “shared society”, a term that remains as vague as the phrase “Brexit means Brexit,” she claims she will help, not the poorest and most disadvantaged, but those who feel they’ve been left behind by globalisation and mainstream politicians. In the end, with soft or hard Brexit, the ones at the bottom of society will be left behind by May’s politics. Second, controlling immigration means losing access to the single market. Which also means, the UK has limited choices. Yes, the US President-elect is interested to retain close ties with the UK and reduce the economic impact of Brexit, but if we trade only with the most powerful, English-speaking allies, how do we remain open and competitive? Is closing our borders, the best possible way to be British in the twenty-first century?

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