Theresa May criticised by top economists for trying to ‘have her cake and eat it' with Brexit

The Prime Minister’s speech prompted a chorus of criticism for leaving many questions unanswered

The pound, which had suffered historically unprecedented falls in the aftermath of June’s Brexit vote, jumped on Tuesday (Getty)

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 Organisation 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.”

Already on Tuesday, Ms May’s speech prompted a chorus of criticism for leaving many questions unanswered and conjuring up an unrealistic image of Britain outside the bloc.

Immediately after she spoke, Adam Marshall, the head of the British Chambers of Commerce, said that while businesses now have a clearer sense of the Prime Minister's top-line priorities, “they will come away from her speech knowing little more about the likely outcome of the Brexit negotiations than they did yesterday.”

“We learned nothing new today that adds any colour to our economic outlook for Brexit,” he said.

Nonetheless, investors appeared to cheer Ms May’s comments, at least in the short term.

The pound, which had suffered historically unprecedented falls in the aftermath of June’s Brexit vote, jumped on Tuesday helping it to chalk up its biggest single-day increase since 1998. On Wednesday it gave back some of those gains, but remained resilient.

The FTSE 100 benchmark stock index was steady too.