Theresa May holds a cabinet meeting at the Prime Minister's country retreat Chequers in Buckinghamshire to discuss department-by-department Brexit action plans, Britain August 31, 2016. REUTERS/Stefan Rousseau/Pool
© Reuters

After leaving the EU, Britain will seek a “unique” model that will confirm its place as “one of the great trading nations in the world”, the government declared after ministers met to thrash out what Theresa May’s statement that “Brexit means Brexit” would mean.

The UK would seek “controls on the numbers of people who come to Britain from Europe” but also “a positive outcome for those who wish to trade goods and services”, Mrs May’s spokeswoman said after the cabinet had gathered for its first meeting after the summer break.

But tensions are already growing among ministers about the precise form Brexit will eventually take. The biggest divisions are over the balance between market access — through the EU customs union and the single market — and immigration, which is still at near-record levels.

Mrs May aims to invoke Article 50, the formal mechanism that triggers a negotiation period of up to two years, early in the new year and without a parliamentary vote. She has dismissed the prospect of holding a second referendum and intends to press ahead with Britain’s exit from the EU.

Theresa May: the prime minister says 'Brexit means Brexit' but she will battle to reconcile her colleagues’ competing demands, particularly on the status of the City of London and restrictions on migration
Theresa May: the prime minister says 'Brexit means Brexit' but she will battle to reconcile her colleagues’ competing demands, particularly on the status of the City of London and restrictions on migration © Hannah McKay/PA Wire

The meeting at Chequers was the first chance for ministers to set out their priorities for that negotiation. Before the gathering Mrs May had asked each of them to outline the opportunities Brexit offered for their departments.

Speaking at the start of the all-day meeting, the prime minister said: “We will be looking at the next steps that we need to take, and we will also be looking at the opportunities that are now open to us as we forge a new role for the UK in the world.” She added that “quite a lot of work” had been done by departments over the summer to prepare for the exit negotiations.

Those negotiations would have “two related imperatives: getting the best deal for people at home, and getting the right deal for Britain abroad”, her spokeswoman said.

The cabinet discussed “at length” the importance of making sure Brexit worked for the devolved administrations of Scotland and Wales, as well as for the London mayor’s office. But ministers also affirmed the government’s right to “establish [Brexit] terms and when to trigger Article 50”.

Liam Fox must deliver new trade deals with other parts of the world and wants to quit the EU customs union as he thinks it will give him a freer hand in those negotiations.
Liam Fox must deliver new trade deals with other parts of the world and wants to quit the EU customs union as he thinks it will give him a freer hand in those negotiations. © Dylan Martinez/Reuters

Senior civil servants have been instructed to game a series of scenarios for Brexit, ranging from full access to the single market and limited restrictions in immigration — nicknamed “soft Brexit” — through to a more radical “hard Brexit” option that would mean tough border controls, trade tariffs and even visas for European citizens who wish to holiday in the UK.

Liam Fox, the international trade secretary, has put pressure on Mrs May to pull out of the EU customs union, which allows the free movement of goods with no tariffs but imposes administrative and tariff barriers at its external borders. Under this arrangement, the EU negotiates trade deals and sets the same external tariff for all members.

Mr Fox has argued that the freedoms to be gained by leaving the customs union would outweigh the potential losses. However, the proposal faces scepticism from other departments, including the Treasury.

Philip Hammond: the chancellor's attempts to get the best deal for Britain’s financial sector could mean having to accept some level of freedom of movement in Europe
Philip Hammond: the chancellor's attempts to get the best deal for Britain’s financial sector could mean having to accept some level of freedom of movement in Europe © Luke MacGregor/Bloomberg

Britain’s membership of the single market, which involves tariff-free trade and the free movement of people, is also in question: British officials have reportedly suggested that the financial services industry’s access to the single market should be negotiators’ main priority.

Anna Soubry, the former business minister and Remain campaigner, told the BBC’s Today programme on Wednesday that access to the single market was “absolutely critical to British business, and that means for the benefit of people across the United Kingdom”.

But European leaders have warned that this would involve permitting continued free movement as well as contributions to the EU’s budget. Amber Rudd, the home secretary, is under pressure to end unlimited migration from the EU — one of the main reasons voters backed Brexit and making it harder for her to support such a deal.

Boris Johnson: the foreign secretary must shape Britain's diplomatic relations with EU countries after Brexit, a task made harder because of wounds caused by the referendum
Boris Johnson: the foreign secretary must shape Britain's diplomatic relations with EU countries after Brexit, a task made harder because of wounds caused by the referendum © tefan Rousseau/PA Wire

There is also pressure in the rest of the EU to hold out against British demands for a generous deal to prevent other countries from following it towards the exit. Sigmar Gabriel, Germany’s deputy chancellor, said this week that the bloc could go “down the drain” if other countries saw Britain “keeping the nice things” relating to membership.

Nigel Lawson, the former chancellor and a longstanding Eurosceptic, said on Wednesday that British people had voted in the referendum “to abandon, to get away from, the doctrine of the free movement of people”.

Pressure is growing among Leave campaigners for the government to take swift action to leave the EU while some suspect that Whitehall officials opposed to Brexit will seek to delay it. Lord Lawson told the BBC’s Today programme: “A long period of uncertainty is bad for the economy, bad for British business, and therefore the sooner this is sorted out the better.”

Amber Rudd:  the home secretary is under pressure to cut immigration, which could put her at odds with colleagues over movement rules for EU citizens
Amber Rudd: the home secretary is under pressure to cut immigration, which could put her at odds with colleagues over movement rules for EU citizens © Gonzalo Fuentes/Reuters

One Whitehall aide said greater divisions within the Cabinet were likely to emerge. More detailed discussions would take place next week during the first meeting of the cabinet’s Brexit committee, he added.

Some Eurosceptic ministers are particularly suspicious of the Foreign Office and the Treasury, believing them to be institutionally pro-European.

Conservative MPs were accused of “paranoia” by the union representing top civil servants last week after it was claimed that senior officials were blocking the Brexit process.

David Davis: as the Brexit minister negotiates with 27 other countries he will have to listen to competing voices within government. But he has previously said the UK
David Davis: as the Brexit minister negotiates with 27 other countries he will have to listen to competing voices within government. But he has previously said the UK "can negotiate a free trade area massively larger than the EU" within two years © Gareth Fuller/PA wire

Tensions have also emerged between the three main cabinet ministers with responsibility for different elements of Brexit: Boris Johnson, foreign secretary; David Davis, minister for Brexit; and Mr Fox.

The creation of the new Brexit and trade departments has raised questions about ministerial territory, with the Foreign Office having to cede ground. Mr Fox recently staged a bid to subsume Foreign Office trade officials into his department but was unsuccessful.

Emily Thornberry, Labour’s shadow foreign secretary, responded to No 10’s statement after the Chequers cabinet meeting by saying: “Instead of ‘pushing ahead’ with Article 50, those negotiations should not be triggered until the government has put forward a clear plan about what it is seeking to achieve, how it will go about it, and until the public, parliament, the devolved administrations, London and Gibraltar, have given their approval to that plan. And we will demand that Labour and other opposition parties are consulted on the formulation of that plan.”

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