Theresa May is not “bluffing” when she threatens to take the UK out of the European Union without a deal, a senior cabinet minister has said.
Liam Fox, the international trade secretary, said the prime minister was ready to walk away without an agreement as part of her commitment to deliver a “people’s Brexit”.
The government is committed to its policy of “no deal is better than a bad deal”, he added, telling the EU it needs to “understand that and believe it”.
His warning comes as cabinet ministers battle for control of the Brexit process ahead of a key meeting at Chequers next month.
The “away day” of the cabinet’s Brexit sub-committee is designed to resolve a number of major differences between senior ministers on issues such as the single market, customs union and the Northern Ireland border.
Discussions are likely to include how much the UK should compromise in order to avoid crashing out of the EU without a deal.
Mr Fox told the BBC: “The prime minister has always said that nothing is agreed until everything is agreed and that no deal would be better than a bad deal. I think it’s essential as we enter the next phase of the negotiations that the European Union understands that and believes it.
He added: “If we were to leave, the economic impact on a number of European countries would be severe. Countries like Ireland, countries like the Netherlands, countries like Belgium – would really feel the impact of that and that cannot be what the European Union 27 actually want to see.
“This ultimately has to be about an economic and a people’s Brexit, not a bureaucrat’s Brexit.
“I think our negotiating partners would not be wise if they believed that the prime minister was bluffing.”
Brexit talks: Top issues facing UK on leaving EU
1/7 Customs union
A key point in the negotiations remains Britain’s access to, or withdrawal from, the EU customs union. Since the referendum there has been hot debate over the meaning of Brexit: would it entail a full withdrawal from the existing agreement, known as hard Brexit, or the soft version in which we would remain part of a common customs area for most goods, as Turkey does? No 10 has so far insisted that “Brexit means Brexit” and that Britain will be leaving the customs union, but may be inclined to change its position once the potential risks to the UK’s economic outlook become clearer.
2/7 Northern Ireland-Irish border
Though progress was made last year, there has still been no solid agreement on whether there should be a hard border between Northern Ireland and the Republic of Ireland. To ensure borderless travel on the island, the countries must be in regulatory alignment and therefore adhere to the same rules as the customs union. In December, the Conservative Party’s coalition partners, the DUP, refused a draft agreement that would place the UK/EU border in the Irish Sea due to its potential to undermine the union. May has promised that would not be the case and has suggested that a “specific solution” would need to be found.
3/7 Transition period
Despite protests from a small number of Conservative MPs, the Government and the EU are largely in agreement that a transitional period is needed after Brexit. The talks, however, have reached an impasse. Though May has agreed that the UK will continue to contribute to the EU budget until 2021, the PM wants to be able to select which laws made during this time the UK will have to adhere to. Chief negotiator Michel Barnier (seen here with EU Minister David Davis) has said the UK must adopt all of the laws passed during the transition, without any input from British ministers or MEPs.
4/7 Rights of EU citizens living the UK
The Prime Minister has promised EU citizens already living in the UK the right to live and work here after Brexit, but the rights of those who arrive after Brexit day remains unclear. May insists that those who arrive during the transition period should not be allowed to stay, whereas the EU believe the cut-off point should be later.
5/7 Future trade agreement (with the EU)
Despite this being a key issue in negotiations, the Government has yet to lay out exactly what it wants from a trade deal with the EU. Infighting within the Cabinet has prevented a solid position from being reached, with some MPs content that “no deal is better than a bad deal” while others rally behind single market access. The EU has already confirmed that access to the single market would be impossible without the UK remaining in the customs union.
6/7 Future trade agreements (internationally)
The Government has already begun trying to woo foreign leaders into prospective trade agreements, with various high profile state visits to China, India and Canada for May, and the now infamous invitation to US President Donald Trump to visit London. However the UK cannot make trade agreements with another country while it is still a member of the EU, and the potential loss of trade with the world’s major powers is a source of anxiety for the PM. The EU has said the UK cannot secure trade deals during the transition period.
7/7 Financial services
Banks in the UK will be hit hard regardless of the Brexit outcome. The EU has refused to give British banks passporting rights to trade within the EU, dashing hopes of a special City deal. However according to new reports Germany has suggested allowing trade on the condition that the UK continues paying into the EU budget even after the transition period.
Mr Fox was backed by Boris Johnson, the foreign secretary, and David Davis, the Brexit secretary, in a round of media appearances by Brexiteer cabinet ministers.
Asked about the prospect of leaving without a deal, Mr Davis told The Express: “We don’t want to do that, never have. The best option is leaving with a good deal but you’ve got to be able to walk away from the table.
He also dismissed accusations the government had not properly prepared for Brexit, saying: “There’s lots going on, we haven’t made it public for very simple reasons.
“This is a careful process, it is not designed to scare the horses to worry people, it is designed to get the work done.”
And writing in The Sun, Mr Johnson said: “Across the country I find people who – whatever they voted two years ago – just want us to get on and do it.
“They don’t want a half-hearted Brexit. They don’t want some sort of hopeless compromise, some perpetual pushme-pullyou arrangement in which we stay half-in and half-out in a political no man’s land – with no more ministers round the table in Brussels and yet forced to obey EU laws.
“They don’t want some bog roll Brexit, soft, yielding and seemingly infinitely long.
“They want this Government to fulfil the mandate of the people and de
Airbus CEO warns the company could leave the UK in the event of no deal Brexit.”
However, in a sign of ongoing cabinet divisions ahead of the crunch meeting at Chequers, business secretary Greg Clark, who backed Remain, warned about the economic risks of ending freedom of movement.
He said: “I completely understand when companies say that they rely on efficient mobility as it currently stands, raising concerns that restricting people’s ability to travel at short notice would be as damaging to our economy as frictions and disruption at our borders.”
His comments came after leading businesses said growing uncertainty over Brexit risked thousands of UK jobs being moved abroad.
Airbus said it was considering cutting thousands of jobs in the UK as it starts to “press the button on crisis actions” over Brexit concerns.
Katherine Bennett, the company’s senior vice president in the UK, said: “We don’t deal in idle threats. We seriously believe a no-deal Brexit would be catastrophic.”
And Juergen Maier, chief executive of Siemens UK, said the language used by Mr Johnson and other Brexiteers was “incredibly unhelpful”.
He told BBC Radio 4’s Today: “I think the realities are setting in and I think it is time to get away from slogans, ‘full British Brexit’, ‘going into combat with Europe’.
“It’s all incredibly unhelpful and what we need to do now is to get closer with our European partners and work out what a realistic, pragmatic Brexit is that works for both sides, the EU and ourselves.”