Prime Minister Theresa May wants to align Britain with EU rules for trade in goods after Brexit, reports said Thursday, setting up a showdown with eurosceptics on the eve of a crucial cabinet meeting intended to finally settle the issue.
The proposals were leaked as carmaker Jaguar Land Rover became the latest firm to warn that new trade barriers with Europe could imperil thousands of jobs and billions of pounds in investment.
May will gather her warring ministers at her country retreat on Friday to finally agree on what they want from the future relationship with the EU, amid warnings time is running out to agree a deal with Brussels.
But eurosceptics in her Conservative party responded with outrage to leaked papers suggesting she wants to keep a ‘common rulebook for all goods including agri-food’.
‘This is not Brexit,’ tweeted one MP, while another said it would leave Britain ‘out of Europe but still run by Europe’.
Earlier, reports suggested that Brexit Secretary David Davis warned May her proposal for new customs arrangements was ‘unworkable’ and would not be accepted by the EU.
The European Union itself has also said again and again that Britain cannot ‘cherry-pick’ bits of EU membership it likes.
There is less than nine months before Britain leaves the bloc, and just weeks before May’s self-imposed deadline of October to reach a deal, but negotiations have all but stopped.
Meeting German Chancellor Angela Merkel in Berlin, May said her ministers would decide on Friday on ‘a substantial way forward which will enable the pace and intensity of the negotiations to increase’.
European leaders have warned that she is running out of time, while businesses have also increased their warnings in recent weeks about the need to avoid new trade barriers.
Airbus, BMW and Siemens have warned in recent weeks that they could pull investment, and Jaguar Land Rover added its voice on Thursday.
‘We urgently need greater certainty to continue to invest heavily in the UK and safeguard our suppliers, customers and 40,000 British-based employees,’ chief executive Ralf Speth said.
US deal in jeopardy
May has repeatedly promised to leave the EU’s customs union and single market, which would free Britain to build its own trading regime and allow it to control migration from the bloc.
But the move risks severe disruption to business, as well as the return of border checks between Northern Ireland and EU member Ireland – something she has pledged to avoid.
Earlier details of May’s plan suggested that technology would allow Britain to both set its own tariffs on goods coming into the bloc and maintain those of the EU – ‘the best of both worlds’, as one source said.
But the leaked document suggests she would also propose ‘ongoing harmonisation with EU rules on goods’ which would make external deals – notably with the United States, the big prize of eurosceptics – more difficult.
‘What’s the point if we can’t free trade with global giants?’ asked one Conservative MP.
May has sought to balance the rival factions of her party ever since taking power after the June 2016 referendum.
But with the EU and businesses now stepping up preparations for the possibility that the talks collapse, she has been forced to decide.
Extend the talks?
If cabinet agrees to her plan on Friday, the government intends to publish a detailed blueprint of what it wants from the wider future relationship with the EU next week.
But it then has only weeks to agree an outline deal by October, to allow it to be ratified by the British and European parliaments by Brexit.
Austrian Chancellor Sebastian Kurz, whose country holds the EU presidency, raised the possibility of extending the Brexit talks.
‘Our goal is that we reach an agreement with the UK,’ he said on Thursday.
‘But if that’s not possible, we have to avoid a hard Brexit. So our goal is clear, but if not, I think it’s good to keep negotiating.’
During the cabinet meeting on Friday, eurosceptics are likely to press their case but so too will those, like Finance Minister Philip Hammond, who fear the economic risks.
Jaguar Land Rover’s Speth said a ‘bad Brexit’ deal that reimposes barriers between Britain and its biggest trading partners ‘would cost Jaguar Land Rover more than £1.2 billion ($1.6 billion, 1.3 billion euros) profit each year’.
‘As a result, we would have to drastically adjust our spending profile,’ he warned, noting that JLR plans to invest £80 billion in the next five years.
‘This would be in jeopardy should we be faced with the wrong outcome.’