The U.K. will need a completely new trading relationship with the European Union after its withdrawal, Prime Minister Theresa May said, as the pound fell on fears she’ll pull the country out of the single market.
“It will be a new relationship because we won’t be members of the EU any longer,” May told reporters on Monday after setting out her vision for social reform in a speech in London. “We will be outside the European Union and therefore we will be negotiating a new relationship across not just trading but other areas with the European Union.”
As May’s self-imposed March 31 deadline for triggering Brexit approaches, markets are following her every word for signals on what shape it will take. Sterling slid on Monday to its lowest against the dollar since late October after the premier told Sky News television on Sunday that Brexit isn’t “about keeping bits of membership” of the EU. The pound was 1.2 percent lower at $1.2141 at 2:00 p.m. in London.
In a sign of the U.K.’s shifting priorities, Foreign Secretary Boris Johnson was in Washington on Monday for meetings with Republican House Speaker Paul Ryan and a trio of senators, a day after becoming the first cabinet minister to meet with members of President-elect Donald Trump’s incoming administration. May has said she wants to strengthen trade ties with other parts of the world after Brexit and has sought to build a relationship with Trump after a frosty start.
“The single market is a component part of the European Union, and it’s been a bad deal for the United Kingdom in the last 12 years,” Richard Tice, co-chairman of Leave Means Leave, a group campaigning for a clean break with the EU, said on Monday in a BBC Radio interview. “The sooner we leave it, the better and the sooner we can do our own trade deals with countries around the world, and it’s really good to hear that Boris Johnson is in America, then the better.”
Liberal Democrat leader Tim Farron, whose party is seeking to avert Brexit and has called for a new referendum on the deal that May negotiates, warned that the prime minister risks damaging the economy with its divorce strategy.
“Every time Theresa May opens her mouth on Brexit the pound falls further,” Farron said in a statement. “It’s clear this government is taking us towards a destructive hard Brexit that would hurt jobs, increase prices and blow a hole in the budget.”
May said her remarks are being overinterpreted and told reporters that her comments on Sunday were “what I’ve been saying for the past few months.”
“I’m tempted to say that the people who are getting it wrong are those who print things saying ‘I am talking about a hard Brexit; it’s absolutely inevitable that it’s a hard Brexit.’ I don’t accept the terms hard and soft Brexit,” May said on Monday. “What we are doing is going to get an ambitious, good, best possible deal in terms of trading with and operating within the single European market.”
January 9th, 2017: Bloomberg