Pivoting from a European to a Global orientation she promoted self-determination through free trade, sovereign law-making and taking back control of UK borders.
Acknowledging obligations to the EU she promised rigour without tarrying, and will trigger Article 50 by March 2017 at the latest. A ‘Great Repeal' bill will pave the way, protecting existing rights in full, with any future roll back of regulation on a case by case basis. She was emphatic in her commitment to protect workers’ rights.
Prime Minister Theresa May at the
Conservative Party conference
A unique agreement
Her opening Brexit gambit was to define any new agreement as precisely that, new and unique. She affirmed a strong commitment to ‘open’ markets, promoting peace and prosperity, and hinted at the EU’s need of Britain in defence.
The coming period will be used to thrash out objectives and goals with a growing confidence in negotiating as an independent country. She went on to strongly affirm her Unionist credentials and respect for Parliament, in the context of a determination to govern and to lead.
Brexit will not be defined by an historic EU relationship, but by placing the EU in the context of Britain’s future as a fully independent and sovereign country.
Any deal will encourage close cooperation arrangements around law enforcement, counter terrorism and free trade, but not at any price.
Recent business deals and trade overtures from Canada, China and Singapore were all cited, and the PM announced that talks with Australia and New Zealand are already underway.
The speech certainly addressed Brexiteer worries about rowing back from the referendum result, but did not signal a clear negotiating position, leaving delegates still guessing.
Will the deal be tariff free, a take it or leave it agreement, or something much more nuanced. Clearly freedom of movement must feature in some way given its status as a major pillar of the Lisbon treaty.
So what might a Brexit negotiation look like?
Some clues have been given – the starting position implied points to a “Free Enterprise Brexit”, a unilateral declaration of Free Trade intent. This wouldn’t affect services which are generally free of tariffs but would affect taxes on imports if the free trade offer was not immediately reciprocated. In other words, we won’t tax you, but don’t tax us.
Sceptics may characterise this as hubris, but they would be mistaken, given Germany’s largest export is motor cars, and its largest passenger car market by volume is not the US, or China, but Britain. Germany’s top three trading partners are the US, France and the UK, and other prominent EU nations have reasons to want to safeguard their relationship with Britain, not least Poland, with 630,000 nationals generating over $1.2bn in remittances according to the World Bank.
Immigration will be the most contentious area and the reason the UK is likely to reassure EU citizens they will be able to stay. The UK will want to access talent from the EU both for high value knowledge and seasonal workers. It is this area that looks the most testing and the hard line being taken by both sides in public pronouncements will have to soften if a deal is to be reached.
The EU have flexed immigration policy when it suits them with the accommodation of a Swiss points system for employment purposes under review. The continuing flows of economic migrants may yet unseat leaders in France and Germany as elections loom in 2017. No doubt Theresa May would prefer the stability afforded by Mrs Merkel at the helm and will press on.
UK based banks provide around a quarter of bank financing for European SMEs, and a weakened Deutsche bank, together with Eurozone banking issues, will deter any significant EU balance sheet expansion. London should make its case as Europe’s leading banking centre, contributing to stability, jobs and growth.
Mrs May appears to be a cautious and careful incrementalist, patiently building her position step by rational step. She has probably done enough to head off concerns for the moment, but keeping her position under wraps throughout the talks looks like an heroic aspiration. She will certainly be harried by the media every step of the way.
What does all this mean for Jersey given our constitutional and economic ties?
We are still in a good place. As an industry we have offered help to our UK counterparts in understanding the process and challenges of establishing third country status. Our team are working with the CBI, the CityUK and the International Regulatory and Strategy Group.
If the UK is successful in achieving tariff free entry into European markets it will still have to convince European regulatory authorities that the activity of UK firms poses no threat to EU investors. Given our approved EU status and ESMA passport readiness we are well placed to help.
Jersey’s “neutral positon” continues to gives us certainty, during and post Brexit. There was a time when the concept of being a “third country” to the EU, as Jersey is, wasn’t widely understood beyond our markets. Not so any longer.
We have strong ties with the UK and separately with the rest of the EU. By being a centre for international finance and facilitating significant investment flows for these markets, Jersey contributes substantially to their employment, tax revenues and economy. If anything, there should be more demand for Jersey’s services as the UK and the EU bloc part company.
For some time, Jersey’s finance sector has been doing business further afield, in locations like the Middle East, Greater China, India and Africa. So successful has this strategy been that three quarters of our business now comes from outside the UK. This diversification adds to our strength and resilience as a centre.
To safeguard the future health of our finance industry the Island is actively developing future legislation, products and infrastructure. Examples of this are the future of banking initiative, plans to launch new funds products, and investment in Fintech.
The Brexit journey will surely see a few bumps in the road ahead, but we are well placed and actively engaged. These are all reasons to be positively certain about our future.