Restricting Immigration Will Be At The Heart of Brexit Deal banner


Restricting Immigration Will Be At The Heart of Brexit Deal

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On the last day of the summer, Prime Minister, Theresa May and her new Cabinet met at her Buckinghamshire country home to brainstorm Brexit.

Following the meeting, two points were made clear:

  1. MPs will not be given a vote before the government triggers article 50, beginning the two-year countdown to a British exit; and
  2. Immigration control is a non-negotiable part of Brexit.

It was concluded by the MPs that Britain was not interested in a ‘off the shelf’ solution when it comes to leaving the EU, it wants a bespoke deal.

Any optimistic thoughts that the government would not trigger Article 50, or at least be flexible on the issue of free movement, have apparently been laid to rest.

According to experts, restricting the freedom of EU nationals’ right to enter the UK to work and study will mean the end of our access to the single market.

So if this is how it is going to be, how will the country survive the economic earthquake Brexit is predicted to cause?

A Canada-style deal?

Refusing to bend on Immigration control will mean that a Norwegian or Swiss style trade deal with the EU will be off the cards. Instead, Britain is more likely to be offered and have to negotiate on a deal similar to the one Brussels recently concluded with Canada, known as the Comprehensive and Economic Trade Agreement (CETA).

Under this agreement, the EU and Canada have agreed to scrap 100% of tariff lines on industrial and fisheries products – nearly all of them upon entry the CETA coming into force, and the rest after transition periods of up to seven years. As regards agricultural products, the EU and Canada will eliminate 93.8% and 91.7% of tariff lines respectively – again, nearly all of them on the day CETA enters into force and the rest after seven years.

The deal also includes reciprocal arrangements for public procurement. As a member of the EU, UK companies can currently bid for any public procurement contracts offered by a member state. This is worth hundreds of millions of pounds a year to the British economy, so keeping some sort of public procurement deal is extremely important.

However, some agricultural products are not part of the deal and therefore, if such an agreement was to be adopted by the UK, this would leave British farmers exposed to tariffs for some exports.

Outside the EU’s customs union, a CETA style deal would mean UK exports would need to comply with extra bureaucratic customs checks, which could raise costs particularly for those firms with complex supply chains. Furthermore, the UK would no longer have a say over the setting of EU regulations and product standards.

But the biggest downside of CETA is that it would not include free movement of services. Britain is no longer a manufacturing powerhouse, rather it is a world leader in selling services, especially financial. The services sector makes up 78 percent of the British economy, and the financial services sector specifically counts for 8 to 10 percent. Britain is one of the three most important global hubs for financial services, along with New York and Tokyo.

Options for the City

The two factors that have driven Britain’s growth as a financial services hub is its low regulatory environment and access to customers across Europe thanks to passporting rights. This has made London the destination of choice not only for European firms, but also for non-European firms looking to sell to customers anywhere in the European Union. American firms in particular have seen London as the gateway to Europe and concentrated their European activities there.

If we leave the EU and refuse to accept free movement, it is likely that we will lose those crucial passporting rights, meaning financial institutions may decide to move their operations onto the continent.

The financial sector will have to reposition itself, and some believe that Brexit actually offers the City a golden opportunity to become the ‘Singapore of Europe’ a less regulated offshore centre. The UK already has a growing presence as a base for offshore renminbi trading and in April unseated Singapore as the second-largest clearing centre for the currency after Hong Kong.

This week’s European Commission Ruling regarding Apples back taxes owed to Ireland further strengthens the option for Britain to become a low-tax financial haven for big business.

But is this good for Britain? Writing in the Guardian, Martin Kettle stated, “a re-embrace of City bankers and an even more sumptuous welcome mat to global corporations would be disastrous for the Tories. A decent opposition would make hay with it. It would make a mockery of the claim that Britain should be “a country that works for everyone”. This claim has been central to May’s political positioning ever since the referendum (and indeed long before that).”

Concluding comments

It now seems all but certain that Article 50 will be triggered sometime in 2017 and Theresa May will not concede on allowing free movement to continue.

EU nationals living in the UK may wish to continue to apply for permanent residence and British Citizenship. Although the application process may seem daunting, our Immigration solicitors can assist you.

OTS Solicitors is a fully regulated, highly regarded law firm, based in the centre of London. Our Immigration lawyers are considered to be some of the best Immigration experts in the UK. We are regularly called on by the media to make comments on developments in Immigration law. To make an appointment with one of our Immigration solicitors in relation to obtaining a UK permanent residence Card or British Citizenship, please phone us on 0203 959 9123.

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