Theresa May must be ready to walk away from the EU

Telegraph View
The President of the European Council Donald Tusk speaks during a press conference on March 31, 2017 in St Julians Malta.  - AFP

The UK must be prepared to walk away from the Brexit negotiations without a deal. This week, Theresa May made a perfectly reasonable, even conciliatory, opening gambit to the EU. The EU has replied with insults and threats to the future of Gibraltar. If its goal is to tie us up in ridiculous distractions for two years, and even dictate the kind of economy that we will have after leaving, then Mrs May must make it clear that Britain would rather walk than talk.

If the EU insists on punishing, humiliating, dictating and denying the UK the very economic freedoms it has been fighting for, then Britain must say goodbye.

Readers will recall that the country has been here before. In 2016 David Cameron tried to negotiate a new relationship with the EU that he could sell to the voters. The EU gave him almost nothing to work with. That was partly because it did not believe that the UK would ever vote to leave – and even now that Britain has voted to do just that, they still cannot believe we will actually go. How else to explain their first missteps in the Brexit process?

To begin with, the EU has tried to sabotage the UK’s timetable. There will be no parallel talks over withdrawal and trade, it says, and the first matter of business is settling a 60 billion euro debt it has pulled out of thin air. The EU knows that Britain wants to move beyond discussing withdrawal as soon as possible to move on to talking about trade, so its goal is obviously to try to get us to settle fast on unfavourable terms.

Should it accomplish that, the EU also says that any agreement struck on trade must come with a commitment by the UK not to slash taxes and regulation. This is outrageous. The EU is effectively saying that even if Britain leaves, Brussels will retain the right to dictate its economic strategy – even though tax policy is an individual matter for its own member states. Of course the EU generally hates low taxes; it has long pressured Ireland, for instance, to raise its corporation rate. But the UK absolutely cannot swallow such a demand. The whole point of leaving the EU is to regain sovereignty and liberate the economy. Surrendering to EU diktat would be the moral equivalent of winning a war only to lose the peace.

Brexit | Donald Tusk’s key points

Better to walk away. Life on the outside of the customs union would not be so bad. Britain already trades with most countries through World Trade Organisation rules: our largest single investor is the United States. The UK would suddenly be free to write trade deals with the US, Australia, New Zealand, Canada, India, Qatar and a host of other nations who have already signalled interest. Moreover, quitting the customs union would necessitate embracing the very approach to tax and regulation that the EU so fears – an approach that could make Britain a far richer country in the long run.

Research shows that the top 100 most expensive EU regulations cost this country £27.4 billion a year. Many of these laws should be reviewed and removed. The moment will come to look again at expensive data protection rules, the working time directive, the length of time it takes to license products, climate change commitments that raise household bills, environmental impact assessments – the list goes on.

Brexit | The European Union’s core negotiation principles

And although the Government has, rightly, decided to transfer EU law to the UK in order to smooth the Brexit process, it can still set a marker for future reform. There is nothing to stop the Treasury reducing public spending and cutting taxes before 2019. It should certainly not repeat the mistake of raising National Insurance for the self-employed or introducing onerous regulations of its own, such as Making Tax Digital. The dreadful revaluation of business rates comes into effect today and businesses will receive no compensation as of yet and do not even know if they will be eligible for it in the future. Britain cannot afford to shoot itself in the foot.

When it comes to Brexit negotiations, the Prime Minister’s tone has been correct: fair but firm. Britain does not want to damage the EU; the Government has stated that it wants cooperation and good neighbourliness. But if the EU insists on punishing, humiliating, dictating and denying the UK the very economic freedoms it has been fighting for, then Britain must say goodbye. The rest of the world is waiting – and it glitters with untapped potential.