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  January 17th, 2017 | Written by

BREAKING NEWS: British PM—Clean Break From the EU

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  • Theresa May: Britain will not remain a member of Europe's single market.
  • UK will seek a free-trade deal with the European Union.
  • Both houses of Parliament must approve any final UK/EU deal.

In a much-awaited speech outlining her policy on the United Kingdom’s future relationship with the European Union, Prime Minister Theresa May emphasized her determination to regain control of migration and of the rule of law.

After more then 40 years of integration with continental Europe, May outlined a plan for a clean break with the EU. That means she is willing to forego free access to the EU’s single market and rejected the notion of an association with the EU such as those enjoyed by Switzerland and Norway.

“Let me be clear,” she said. “What I am proposing cannot mean remaining in the single market. We seek a new and equal partnership — between an independent, self-governing, global Britain and our friends and allies in the EU. Not partial membership of the European Union, associate membership of the European Union, or anything that leaves us half in, half out.”

While Britain will not seek to remain a member of Europe’s single market, it will pursue a free-trade agreement with the European Union. In other pooints made in the speech, she declared that jurisdiction in Britain of the European Court of Justice will come to an end. May also said in her speech, at London’s Lancaster House, that she will submit any final deal for approval to both houses of Parliament.

The British pound fell  in recent days in anticipation of the speech, continuing a trend that began after the Brexit vote last year, one which has pushed the inflation rate in Britain to a recent-year high. Opinions differ, however, on the longer term implications of the UK’s eventual exit from the European Union, a process which could take place tow years from now.

May has hinted at aspects of her policy in earlier speeches. Her demands that Britain would exercise complete control of migration from the European Union and be released from the European Court of Justice, delivered at a Conservative Party convention in October, were seen as incompatible with remaining in the single market.

But May did not address whether the UK would be willing to maintain membership in the customs union—which eliminates tariffs between EU countries and some other European non-EU members.

Members in the customs union are limited from forging free-trade deals with non-European nations, a condition which appears to contradict the spirit of May’s remarks.

Brexit supporters have argued that the move leaving will provide the country with new trading opportunities. That notion was reflected in May’s speech.

Some traders believe Brexit offers opportunities for the UK to strike better trade deals with countries in Asia and the Western Hemisphere. President-elect Donald Trump has lauded Brexit and seems eager to forge a bilateral trade relationship with the UK in a reversal of President Obama’s policy.

The maritime consultants at Drewry believe that container lines will continue to call at UK ports. Volumes are large enough, particularly at ports in the south of England, to justify those calls.

On the other hand, research from a UK think tank wanrs that Brexit will lead to a 4.5-percent fall in GDP by 2030. The same estimates concluded that a complete withdrawal from the EU, as May proposed, would require the UK to grow trade growth with its 10 largest non-EU partners by 37 percent by 2030 to make up for shortfall in trade with EU countries. Since over half of UK exports go to the EU, a sudden exit from the customs union would rock the British economy.

May’s political opposition has also criticized May’s policies saying, in the words of opposition leader Jeremy Corbyn, that May “appears to be leading us in the direction of a sort of bargain basement economy on the shores of Europe where we have low levels of corporate taxation. It seems to me an extremely risky strategy.”

One reason why May is opting for a complete break with the EU is that some good economic news came from the International Monetary Fund on January 16. The IMF announced that its negative post-Brexit outlook for the British economy was a bit off, and that UK trade has actually benefited from the crash of the pound.