Theresa May leverages UK tax haven threat in Brexit speech

By Jessica Tasman-Jones

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Jan 17, 2017

Prime Minister Theresa May has threatened to transform the UK into a tax haven if the European Union negotiates a bad deal for Brexit, as she confirms the country will leave the single market.

In a speech at midday, May outlined 12 objectives for a Brexit deal, including that the UK would not remain a member of the Customs Markets Union, but would negotiate the elements of it that benefit the UK.

May concluded her speech with a warning shot to the EU arguing that a bad deal for the UK would be an act of “calamitous self harm” and “not the act of a friend”.

She also hinted that she would be willing to embrace highly favourable tax policies to lure business from Europe.

“No deal for Britain is better than a bad deal for Britain,” she warned. “We would have the freedom to set the competitive tax rates and embrace the polices that would attract the world’s best companies and biggest investors to Britain. If we were excluded from the Single Market we would be free to change the basis for the UK’s economic model.”

Parliament would get a chance to vote on the deal and the UK would seek a phased implementation period, May confirmed.

May adds that the negotiations will be driven by four key principles.

“We will provide as much certainty and clarity as we can at every stage. And we will take this opportunity to make Britain stronger, to make Britain fairer, and to build a more global Britain too,” May says.

The pound rose 1.74 per cent at $1.2251.

Investor fallout

DeVere Group chief executive Nigel Green says May’s speech, combined with today’s sharp rise in inflation, mean investors should invest more internationally and added that the confirmation of a so-called “hard Brexit” signal several years of uncertainty ahead.

“The markets detest uncertainty. As such, investors should take precautions against a potential fall in the value of UK assets and avoid firms dependent upon UK-only earnings.

“Investors can achieve this by increasing exposure to non-UK investments, such as international stocks, bonds and property.”

May said it was in the UK’s best interests for the EU to remain together, in contrast to comments US president-elect Donald Trump made earlier this week.

Regarding immigration, May said the UK would regain control of its borders by leaving the Single Market, but that it would seek to attract the “best and brightest” from the European Union following its exit.

May said that the UK would continue to build on its strength in science and innovation through collaborations with EU universities and highlighted areas such as clean technologies, medical developments and space travel as areas that would benefit from continuing this relationship.

May’s 12 objectives for Brexit:

  • We will provide certainty wherever we can.
  • Leaving the European Union will mean that our laws will be made in Westminster, Edinburgh, Cardiff and Belfast.
  • A stronger Britain demands that we strengthen the precious union between the four nations of the United Kingdom.
  • We will deliver a practical solution that allows the maintenance of the Common Travel Area with the Republic of Ireland.
  • Brexit must mean control of the number of people who come to Britain from Europe.
  • We want to guarantee rights of EU citizens living in Britain & rights of British nationals in other member states, as early as we can.
  • Not only will the government protect the rights of workers set out in European legislation, we will build on them.
  • We will pursue a bold and ambitious Free Trade Agreement with the European Union.
  • It is time for Britain to get out into the world and rediscover its role as a great, global, trading nation.
  • We will welcome agreement to continue to collaborate with our European partners on major science, research and technology initiatives.
  • We will continue to work closely with our European allies in foreign and defence policy even as we leave the EU itself.
  • We believe a phased process of implementation will be in the interests of Britain, the EU institutions and member states.
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