Yahoo Finance What is Theresa May’s ‘Chequers’ plan for Brexit?
Theresa May’s government unveiled the highly-referenced ‘Chequers’ plan in July, which provided a 100+ page blueprint for its Brexit vision.
In a nutshell, Chequers was considered a “compromise” deal that covered a huge range of areas including the future of UK trade, security, borders, immigration and consumer protection issues.
It’s a plan that has vocal critics both in the UK and the European Union, particularly when it comes to the details on trade and economics. The plan led to the swift resignation of two senior Cabinet ministers.
Here’s an overview of the main things you need to know about the Chequers plan:
Trade: Goods, not services
The Chequers blueprint outlines that the UK would leave the European Union’s Single Market, which allows for the free flow of goods, services, people and investment across the bloc. The UK would also leave the EU’s Customs Union, which is a system that involves putting tariffs on goods from external nations before they’re allowed to come into the bloc.
It wants to forge a new replacement system with the EU that would ensure free trade of goods between both sides, with no new tariffs or extra border checks. The plan “acknowledges that there will be more barriers to the UK’s access to the EU market than is the case today.”
Companies and economists have criticised the plan, saying the new customs arrangements would be very difficult to manage and the framework is half-baked. They also worry that the UK would be forced to continue following all EU regulations on goods.
“No one really believes this could work,” said David Henig, a former UK trade negotiator and director of the European Centre for International Political Economy.
Additionally, the plan acknowledges there’d be new restrictions on trade in services, affecting British sectors including banking, legal and financial services.
The plan for services describes “new arrangements …. that would provide regulatory flexibility” but risks creating two separate systems that no longer work together seamlessly.
“Services is kind of left off as if it’s an afterthought,” said Henig.
Services made up about 80% of the UK economy last year, according to government figures.
Experts worry the focus on goods instead of services would also create huge problems for modern companies that trade in both goods and services across the UK-EU border. For example, under this plan, a UK firm that builds, installs and maintains escalators could encounter problems since it provides a good – an escalator – but could have problems servicing, repairing and maintaining that escalator in the EU.
The border issue
The economic and trade proposals were designed to ensure there is no so-called “hard border” between Northern Ireland (part of the UK) and the Republic of Ireland (which will remain in the EU.) As it stands now, people, goods and even cows can move across the border without any checks, but there are concerns about whether this situation can be maintained after Brexit. The risk of a hard land border between the two sides is a politically explosive issue.
The Chequers plan to allow free trade in goods would help keep that border open.
“In terms of the proposal, it is a reasonably decent attempt to satisfy all sides,” said Dean Turner, an economist at UBS Wealth Management. “[May] knows it is not ideal, but if accepted, it could work. The problem is, it will not be accepted by the EU.”
Related: What is a ‘no-deal’ Brexit?
