Macron Offer on Brexit Deal Highlights May's Difficult Choices

EghtesadOnline: French President Emmanuel Macron offered U.K. Prime Minister Theresa May the possibility of a Brexit deal that covered financial services, even as he set out options that make clear how difficult it will be for her to satisfy both business and her Conservative Party.

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22 January 2018

In a BBC interview on Sunday, Macron said that May’s stated positions made “full access” to the European Union’s single market impossible. He said what was on offer was “something perhaps between this full access and a trade agreement.” However, he did seem to shift position a little, by suggesting financial services could be included if May were also prepared to give ground.

May’s capacity to do so is extremely limited, though. While business is urging her to go for a deal that keeps Britain close to the EU -- the Confederation of British Industry suggests a customs union -- Euroskeptics in her party and Cabinet reject that, according to Bloomberg.

Be Bolder

Beyond Brexit, Tory lawmakers were expressing increasing frustration with May’s government, openly calling on her to be bolder in tackling questions about housing, the National Health Service, and care for the elderly. The Sunday Times reported that Foreign Secretary Boris Johnson was demanding extra money for health care to go part of the way toward honoring a pledge he made during the Brexit referendum campaign.

Sarah Wollaston, the Conservative chair of Parliament’s Health Committee, said on Twitter Sunday that May’s response to questions about health-service funding lacked “ambition.” Her colleague Johnny Mercer weighed in as well. “This is THE ISSUE of our generation,” he wrote. That was two days after another Tory, Nick Boles, accused May of “timidity” and leading a government that “constantly disappoints.”

Although all three Tories are known to be independent-minded, none of them belong to the group of pro-Brexit rebels that’s been the most persistent problem for Conservative leaders. But there, too, trouble was brewing. Jacob Rees-Mogg, the new leader of the Tory Euroskeptic grouping, called for Britain to leave the EU single market in March 2019.

Softer Stance?

In this context, Macron’s intervention was a mixed blessing. The French have been among the most hard-line nations within the EU in resisting giving May her way. On Sunday, that seemed to shift.

Macron has, unwittingly or not, softened France’s position on future relationship, Charles Grant, director of the Center for European Reform, said on Twitter. “U.K. can have a deal that is between full access” to a single market and a trade accord, and this can include financial services, he said.

But in setting out the options facing Britain, Macron also made it clear that there will have to be trade-offs. He told the BBC’s “The Andrew Marr Show” that because Britain voted to leave the EU, it had to leave the single market. Asked whether financial services could be included in a deal, he said, “It depends on what you’re ready to put on the table in terms of precondition.”

May’s problem there is that there’s little her party will allow her to put on the table. A survey of Tory lawmakers published Monday showed that three quarters were opposed to the continuing free movement of EU citizens to the U.K. during May’s proposed transition period, and 63 percent opposed the European Court of Justice having jurisdiction at that point.

Business Lobbying

The opinion of lawmakers seemed to be hardening, too. A survey in December 2016 -- before the 2017 election, which changed the make-up of the parliamentary party -- found 44 percent saying Britain couldn’t stay in the EU single market after Brexit. That’s now up to 76 percent. The poll of 105 lawmakers from all parties was conducted on behalf of The UK in a Changing Europe, an independent research group based at King’s College, London.

Meanwhile, business lobbying groups are also applying pressure. In a speech on Monday, CBI Director General Carolyn Fairbairn will urge May to make her position clear and to look at a customs union with the EU. May has rejected this because it would stop Britain striking trade deals with other nations.

“There may come a day when the opportunity to fully set independent trade policies outweighs the value of a customs union with the EU,” Fairbairn will say in the speech, according to her office. “A day when investing time in fast-growing economies elsewhere eclipses the value of frictionless trade in Europe. But that day hasn’t yet arrived.”

Elusive Middle Ground

Johnson on Sunday said the CBI position “makes no sense.”

“Staying in the customs union means effectively staying in the EU: the EU is a customs union,” Johnson wrote on Twitter. “It means no new free trade deals, no new export opportunities, and no leading role in the” World Trade Organization.

The difficulty for May is finding a course that satisfies those in her party such as Rees-Mogg -- who want a maximum Brexit -- but doesn’t damage the economy. And while Rees-Mogg speaks for some Tory lawmakers, he doesn’t speak for all.

Former minister Ed Vaizey, speaking on ITV’s “Peston on Sunday,” was asked about the possibility that trade deals outside the EU could compensate for lost trade from Brexit. “If we were worried about trade, we would have stayed in the European Union,” he laughed.