Top economists and strategists have warned that Theresa May’s vision of Brexit lacks credibility and clarity, a day after the Prime Minister delivered an agenda-setting speech on Britain’s future outside the EU.
In her speech in London on Tuesday, Ms May confirmed that Britain will leave the EU’s single market to regain control of immigration policy and said that she wants to renegotiate the UK’s customs agreement and seek a transition period to phase in changes all while remaining a “best friend” to the bloc.
“One might expect a successful negotiating strategy to have ambitious objectives and a credible fall back position,” Malcom Barr, an economist at JP Morgan, wrote in a note. “May certainly has the former. But we doubt the Prime Minister has the latter,” he added.
In the note to clients—entitled ‘Brexit: Mayday!”— Mr Barr also wrote that the notion that the UK can simply “fall back” to World Trade Organization rules as an alternative, is, in his view, “very dangerous.”
Jim Reid, the head of global fundamental credit strategy at Deutsche Bank, described her speech as an “upbeat attempt at balancing a harder Brexit than the market would like with a commitment to being an open global player.”
“It was a great speech in theory but a lot depends on the goodwill of EU member states for her to get her wishes of a comprehensive free trade agreement in goods and services with the continent,” Mr Reid said. “Even with such goodwill, it seems optimistic that this could get done within two years.”
Strategists at Unicredit said that the speech showed that Ms May “wants to have her cake and eat it.”
“While Theresa May does not want to be bound by the rules of the single market and the customs union, she still wants access to it,” they wrote in their morning note to clients.
“With EU leaders reiterating that there will be no cherry-picking, many questions about the future relationship between the UK and the EU remain open.