Macron Sets Out U.K.'s Brexit Options as Businesses Lean on May

(Bloomberg) -- French President Emmanuel Macron set out the Brexit options facing U.K. Prime Minister Theresa May, as business groups continued to press her to seek a close relationship with the European Union and some of her lawmakers pushed for maximum distance from the bloc.

In a BBC interview Sunday, Macron said that May’s stated positions made “full access” to the EU’s single market impossible. He said what was on offer was “something perhaps between this full access and a trade agreement.” He did seem to shift position a little, by holding out the possibility that a deal could cover aspects of financial services, “but it depends on what you’re ready to put on the table in terms of precondition.”

“I think he has -- unwittingly or not -- softened France’s position on future relationship,” Charles Grant, director of the Center for European Reform, said on Twitter. “U.K. can have a deal that is between full access to single market and a trade accord and this can include financial services.”

May has so far avoided defining exactly what kind of deal she wants from the EU, and her Cabinet has yet to agree a position. The pressures on the prime minister were clear on Sunday, when the Confederation of British Industry said she should seek to stay in a customs union with the EU, while Jacob Rees-Mogg, leader of the Conservative Party’s Euroskeptic lawmakers, called for Britain to leave the single market in March 2019.

‘Deeper Relations’

Macron told the BBC’s “The Andrew Marr Show” that because Britain voted to leave the EU, it had to leave the single market. However, he said, “you can have some deeper relations and some others. For instance, we have a deeper relation with Norway than the one we have with Canada.”

The French leader made clear that it was up to the remaining EU governments to agree on a negotiating position, and that “cooking a deal” was then the job of negotiator Michel Barnier. And he said the summary of his own philosophy was “no cherry-picking in the single market.” But the Center for European Reform’s Grant thought Macron had left the door open for some kind of deal -- though “less good than today” -- on financial services.

CBI Director General Carolyn Fairbairn on Monday in a speech will urge May to make her position clear, and to look at a customs union with the EU. May has rejected this, as it would stop Britain striking trade deals with other nations.

Trade Policies

“There may come a day when the opportunity to fully set independent trade policies outweighs the value of a customs union with the EU,” Fairbairn will say in the speech, according to her office. “A day when investing time in fast-growing economies elsewhere eclipses the value of frictionless trade in Europe. But that day hasn’t yet arrived.”

Foreign Secretary Boris Johnson on Sunday said the CBI position “makes no sense.”

“Staying in the customs union means effectively staying in the EU: the EU is a customs union,” Johnson wrote on Twitter. “It means no new free trade deals, no new export opportunities, and no leading role in the WTO.”

The difficulty for May is finding a course that satisfies those in her party like Rees-Mogg --who want a maximum Brexit -- but doesn’t damage the economy. But while Rees-Mogg speaks for some Tory lawmakers, he doesn’t speak for all.

Former minister Ed Vaizey, speaking to ITV’s “Peston on Sunday,” was asked about the possibility that trade deals outside the EU could compensate for lost trade from Brexit. “If we were worried about trade, we would have stayed in the European Union,” he laughed.

To contact the reporter on this story: Robert Hutton in London at rhutton1@bloomberg.net.

To contact the editors responsible for this story: Flavia Krause-Jackson at fjackson@bloomberg.net, Steve Geimann, Niveditha Ravi

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