Reaction to Theresa May’s speech on Brexit at the Conservative Party conference interpreted it as implying a “hard Brexit”. But, as she herself pointed out, “hard exit” and “soft exit” are terms that mean different things to different people. As she begins to put flesh on the bones of her approach, it’s probably time to start talking specifics.
Firstly, the prime minister announced that the government proposes to import the so-called acquis of EU law wholesale into UK law. In other words, from a regulatory perspective, the UK will (at least initially) feel no different after Brexit than it did before. This is by far the quickest exit route, though it runs the clear risk of infuriating those Eurosceptic politicians who vowed to scrap “petty” and “interfering” EU legislation.
But it has the clear advantage of allowing Parliament to unpick EU law at its leisure, and thus may provide opportunities for the property industry to secure improvements to the law as it affects us. It’s the path of least resistance, and means least change for businesses and individuals – which, perhaps, will allow more time for property markets to adjust.
There were other signs, too, that ministers are trying to reduce the bumpiness of the Brexit process. It was emphasised that existing workers’ rights would be protected. And David Davis added that the rights of EU citizens already in the UK would be “100% protected”, provided that the rights of British citizens elsewhere in the EU were protected. This implies that ministers are increasingly confident that the immigration debate is about the inflow of migrants, not the stock of those already here.
Finally, ministers emphasised that the UK does want a fresh free trade deal with the EU after exit, for both goods and services. This was immediately interpreted as meaning that the UK would not be in the single market, and therefore presaged a “harder” exit. But businesses will take some comfort from the clear indication that the government will indeed seek a deal, and the PM’s recognition that the UK’s financial services industry is of strategic value to the UK economy provides some hope that the so-called “passporting” arrangements will be high on her list to protect.
There was also plenty of tough talk on immigration. Quite how ministers are going to reconcile new migration controls with the desire to have “maximum access” to EU markets remains to be seen.
Furthermore, the proposed March 2017 timing of the Article 50 notice is earlier than some expected, and poses some challenges. Firstly, because there will be little time to quietly pre-cook the outlines of an agreement with the French and German governments, and secondly, because specifying the date so precisely arguably implies that the government intends to quit the EU whether there is a good deal on offer by 2019 or not.
So, while the early decision to import the acquis is probably helpful to the property industry, it leaves some big questions unanswered. The entirely understandable desire of the government not to give a running commentary on negotiations could leave us guessing for some time, though, to be fair to May, she has said that this does not mean no commentary at all.
We cannot be sure about the labour market consequences in most sectors, nor can we rule out new regulatory barriers to trade in key sectors such as financial services. Decision-makers in the industry face a considerable period of uncertainty, but at least we now know when the clock is likely to start ticking.
Miles Gibson is head of UK research at CBRE
