Thomas J. Reid is Managing Partner of Davis Polk & Wardwell LLP. This post is based on a Davis Polk memorandum. Additional posts on the legal and financial impact of Brexit are available here.
As we go to press, the UK cabinet is finally beginning the serious business of drawing up its “blueprint for Brexit”: the objectives and principles that should govern the future relationship with the EU and which will therefore drive the negotiated terms of exit. There are already reported to be tensions within Whitehall. Treasury officials, understandably, view continued access to the single market as critical for the financial sector. Others view the “European Economic Area” (“EEA”) model as unrealistic, especially if Brexiteers’ requirements for controls on immigration are to be delivered. It appears, for the moment, that priority will likely be given to immigration controls rather than market access, although the Prime Minister has made clear that the UK will seek a unique trading relationship with the EU rather than any “off the shelf” model. The real challenge for the UK negotiating team, if and when it resolves its internal differences, is whether EU governments will have the time or inclination to negotiate such a bespoke deal for the UK.