Tuesday will see what is being billed as a major speech about Brexit from UK Prime Minister which is expected to signal a near total rupture of the existing UK-EU relationship, but more on that once we know what she has actually said.
In the lead up to this speech, her chancellor, Philip Hammond, has been making thinly veiled threats that the UK will change its “economic model” if it finds itself excluded from the single market after the UK leaves the EU. This is a baffling statement. The UK would still be able to buy and sell goods within the EU after it leaves – just like any other country that does not have a deal with the EU. On the other hand, it has been made abundantly clear to the UK that it can’t enjoy the privileges of single membership unless it respects the core 4 freedoms of the EU; something it is unilaterally refusing to do.
An apparently belligerent Hammond said that the UK government wound not “lie down” should it be denied access and would “do whatever we have to do” to ensure the UK remains competitive. Not usually known as somebody with his finger on the pulse of the UK economy, even the leader of the opposition Labour party remarked that Hammond’s comments seemed like “a recipe for some kind of trade war with Europe”.
Hammond’s comments were made in an interview with a German newspaper and seem contradictory since he also noted that he hoped the UK would “remain in the mainstream of European economic and social thinking”. He hopes that a reciprocal deal on market access can be arrived at between the UK and the EU. He noted: "But if we are forced to be something different, then we will have to become something different. 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. In this case, we could be forced to change our economic model and we will have to change our model to regain competitiveness. And you can be sure we will do whatever we have to do. The British people are not going to lie down and say, too bad, we've been wounded. We will change our model, and we will come back, and we will be competitively engaged."
Irrespective of what mandate Mrs May and Mr Hammond believe they have been given by 37% of the UK electorate, it is highly unlikely that they will be able to deliver it without the blessing of a parliament which was predominantly “Remain” prior to the vote. As they say, “watch this space”.