Britain to Leave EU Single Market

British Prime Minister Theresa confirmed that Britain will leave the EU single market, but will seek to establish a favorable free trade agreement. She stressed that the government is ready to take tax breaks to stay competitive if the EU would insist on punitive tariffs.

Free Trade Deals

The Prime Minister said the government will seek the greatest possible access to European markets. “We do not seek membership of the single market. Instead, we seek the greatest possible access to it through a new, comprehensive, bold and ambitious Free Trade Agreement,” she said.

May also said Britain would aim to establish its own free trade deals with countries far beyond Europe. Earlier, US President-elect Donald Trump also promised to strike a swift bilateral trade agreement with the UK. However, under EU rules Britain cannot sign free trade deals with non-EU countries until it formally leaves the EU, which takes 2 years according to the EU law.

Loosing Free Access to the EU Market

Britain’s huge financial services sector expressed concerns over losing a single-market access, although British government addresses the concerns and relies on the free trade agreements. Similarly, foreign firms that use London as a financial hub or as an entry point into the EU can be affected by losing the free access to the EU market.  

Using Tax Breaks

In her speech, May pointed out that Britain could use tax breaks to stay competitive if the EU insisted on punitive tariffs. Finance Minister Philip Hammond told parliament Britain could get tough if a comprehensive trade agreement with the EU was not forthcoming. He said he hopes that the UK will remain a European-style economy with European-style taxation systems. "But if we are forced to be something different, then we will have to become something different,” he said.

Sources: Reuters, The Hindu, News.com.au, The Guardian
 

 

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