Sputnik: So there were reports that during her recent trip to China, British Prime Minister Theresa May refused to rule out the option of remaining in some kind of customs union with the EU after Brexit, what has changed in the short time since then?
Panicos Demetriades: Well I think it's a play on words in some sense because I think they always wanted to be able to strike deals with countries from outside the EU, that was very clear. However at the same time, they always wanted to in effect keep in the single market without immigration, which is cherry picking. So, I don't think they changed frankly. I think they've just come back to what they said from the beginning.
Clearly this is all continuing the uncertainty. We're now about nineteen months after the referendum, and it's not clear what we want and it's not clear what the EU will accept. Frankly, we're looking at second and third best solutions at best.
Sputnik: It was widely speculated that senior Conservative Eurosceptics would try to topple the PM if she joined pro-EU cabinet ministers in calling for an ongoing customs union arrangement in some form. Do you think her restated commitment to leaving is an attempt to keep subversives at bay?
Panicos Demetriades: Yes. Unfortunately from the very beginning, even before the vote, Brexit has been much more about internal Tory politics than what is good for the country. So clearly she has a very thin majority, she has very little control, and she's a weak leader. I have no doubt that she's trying to basically survive as well as at the same time negotiate. But on this particular issue, on the customs union, I felt that she really wasn't obviously in favour of a customs union. Clearly she's keen to remain in control, and to remain in charge of the Tory party and the country. There has been dissent, but I'm not sure the extent to which this is just miscommunication. I don't think they want to topple her because I think toppling her might really result in a new election, and I'm not sure they'd win then.
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There's a Labour party that's got its own problems, the Liberal Democrats who're trying to stop Brexit, which I think in my book is very sensible. I think any sensible political party should be doing that. So it's a lot of internal politics that are going on and it's not very clear what is happening. It also remains to be seen how Europe will respond to all of this.
Sputnik: We've seen more divisions emerge recently in the Conservative party over Brexit, with some officials contradicting one another on what any post-Brexit customs union arrangement might or might not look like, in what direction do you see negotiations with the EU going if this turmoil continues?
Panicos Demetriades: Well unfortunately they're not going very far. As I said, it's been nineteen months and there has been very little progress so far. Largely, this is because there's so much friction within the Conservative party they are not in an agreement with each other, and therefore they are in a very difficult position to negotiate. Also, they are coming up with things that are sometimes, often actually, not feasible and not even understanding that there is another side to this, and that is Europe. What they are proposing, sometimes, is really not acceptable to Europe. They just want their cake and to be able to eat it. They want to have control and they want to have full trade and a deep trade arrangement with the EU and I'm not sure that's possible. Frankly, it's shambolic and it is very very sad because it's continuing all the uncertainty that we as economists had warned well before the referendum there will be a lot of uncertainty with this.
The uncertainty itself would impact negatively and this is what we are seeing. We are seeing a country that is really going backwards instead of forwards.
The views expressed in this article are solely those of the speaker and do not necessarily reflect the official position of Sputnik.
