What is the difference between hard and soft Brexit? Everything you need to know

Speculation remains over what kind of relationship the UK will develop with our partners after we leave the bloc

Alexandra Sims
Monday 09 July 2018 17:34 BST
Can Brexit be reversed?

Why are we asking this now?

After repeatedly stating that “Brexit means Brexit”, Theresa May has confirmed she will trigger Britain’s exit from the European Union by the end of March 2017, beginning two years of formal negotiations.

But despite this timescale, speculation remains over what kind of relationship the UK will develop with our partners after we leave the bloc.

There are a myriad of possible post-EU arrangements being discussed and, although there are no definitive definitions, they can be loosely categorised as “hard” or “soft” Brexit options.

In her opening speech to the Conservative conference, the Prime Minister unveiled a tougher stance on EU withdrawal than she has previously taken, by seemingly backing a hard Brexit with controls on immigration at its core.

"Let me be clear," said Ms May. "We are not leaving the European Union only to give up control of immigration again. And we are not leaving only to return to the jurisdiction of the European Court of Justice," adding those wanting to do everything possible to preserve access to the single market were looking at Brexit the "wrong way".

So, what is Hard Brexit?

Favoured by ardent Brexiteers, a hard Brexit arrangement would likely see the UK give up full access to the single market and full access of the customs union along with the EU.

The arrangement would prioritise giving Britain full control over its borders, making new trade deals and applying laws within its own territory.

Initially, this would mean the UK would likely fall back on World Trade Organisation (WTO) rules for trade with its former EU partners.

What are the pros and cons?

The International Trade Secretary, Liam Fox, has said a hard approach would benefit the UK by making it a global trading nation. He said that "the UK is a full and founding member of the WTO", during a speech in Geneva last Tuesday,

German business leaders have expressed a similar view. Markus Kerber of the German BDI group told BBC Radio 4's Today programme: "It's better to have a hard Brexit that works than to have a fudge in the middle that has to be renegotiated or doesn't politically work and you have uncertainty lingering on."

A hard Brexit, however, could see British goods and services subject to tariffs, adding 10 per cent, for example, to the cost of exported cars. While sectors such as agriculture could lose protections against cheap imports from abroad.

Leaving the customs union would mean a significant increase in bureaucratic checks on goods passing through ports and airports. And nations such as the US and Australia have said that reaching a new trade agreements with the EU would take priority.

And what is soft Brexit?

This approach would leave the UK's relationship with the EU as close as possible to the existing arrangements, and is preferred by many Remainers.

The UK would no longer be a member of the EU and would not have a seat on the European Council. It would lose its MEPs and its European Commissioner. But, it would keep unfettered access to the European single market.

Goods and services would be traded with the remaining EU states on a tariff-free basis and financial firms would keep their "passporting" rights to sell services and operate branches in the EU. Britain would remain within the EU's customs union, meaning that exports would not be subject to border checks.

National models for this sort of deal include Norway, Iceland and Liechtenstein, which are not members of the EU but have access to the single market by being part of the European Economic Area.

In return, these countries must make payments into EU budgets and accept the "four freedoms" of movement of goods, services, capital and people. They are subject to EU law through the Luxembourg-based EFTA Court. Switzerland has a similar arrangement through a series of regularly updated treaties.

It is likely that a "soft Brexit" deal would insist on Britain observing the "four freedoms", meaning continued free access for European nationals to work and settle in the UK.

What are the pros and cons?

Pro-EU MPs argue that maintaining “proper connections” with the EU’s trading arrangements is a matter of national interest.

Senior Conservative MP Neil Carmichael has said a "harsh Brexit" must be avoided at all costs suggesting it could "damage our economy, damage our capacity as a nation to perform capably in the future and actually damage Europe.”

Kathleen Brooks, director of research at City Index, said a ‘hard Brexit’, is likely to come “at the cost” of a period of economic disruption, which is “likely to be negative for the pound".

Experts warn that London’s position as a financial hub will be dealt a severe blow if the UK left the single market. However, that access is contingent on countries agreeing to let European Union citizens live and work anywhere in the bloc.

Theresa May claimed people who talk about a “trade-off” between controlling immigration and trading with Europe are looking at things the “wrong way”, arguing that soft Brexit is "subverting" democracy and attempting to "kill" the process by "delaying it".

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