Despite the UK political situation being somewhat scrambled, with Theresa May’s failure to achieve a majority in the general election. The prospect of a “soft Brexit” is seemingly back on the agenda.
The Prime Minister had high hopes to win a mandate that would strengthen her hand on the EU negotiating table. But the prospect of the UK leaving the talks without a deal in place, an outcome known as “hard Brexit” appear to have diminished after her Conservative Party lost its parliamentary majority on 8 June.
So, what would a so-called “soft Brexit” mean?
Access to the Single Market
- A soft Brexit would likely see the UK have a Norway-style membership of the European Economic Area (EEA).
- This would allow the UK almost full access to the Single Market while also letting it make deals without the rest of the EU.
- Goods and services would be traded with the remaining EU states on a tariff-free basis and financial firms would keep their “passporting” rights to sell services and operate branches in the EU.
- This would mean that British firms could do cross-border business in any part of the bloc.
Remaining in EU customs union
- A “softened” departure would also probably see the UK remain within the EU customs union, meaning exports would not be subject to border checks.
- The customs union facilitates free trade between EU states by ensuring that they all charge the same import duties to countries outside the union.
- The 27-nation bloc also agree not to impose tariffs on goods travelling between countries in the union.
- Remaining in in the customs union would help avoid the risk of increased tariffs which lead to rising prices.
- It will also prevent Britain from having to trade on standard tariffs under World Trade Organisation rules.
Accepting the ‘four freedoms’
- Remaining part of the Single Market would require the UK to make payments into EU budgets and accept the “four freedoms” of movement of goods, services, capital and people.
- This would mean continued free access for European nationals to work and settle in the UK.
- As a result, the Conservative Party “manifesto commitment to bring immigration down to the “tens of thousands” per year would be highly unlikely.
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