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[2nd day]

Part of European Union (Notification of Withdrawal) Bill – in the House of Commons at 1:06 pm on 1st February 2017.

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Photo of George Osborne George Osborne Conservative, Tatton 1:06 pm, 1st February 2017

I wish to make some progress, and I want others to have a chance to speak, so I will not take interventions.

There is a mandate to leave the European Union, but that was the only question asked of the British people in the referendum. We cannot assume that the British public gave a set of answers to the questions we now face as a Parliament. Indeed, those questions are now entrusted to us as we approach the negotiations.

I call them negotiations but I do not think they are going to resemble the negotiations that we currently read about in the media. The truth is that although Britain is seeking the maximum possible access to the single market for goods and for services, and we hope that the fact we have a trade deficit and a very important financial centre will count in our favour, the Government have chosen—and I respect this decision—not to make the economy the priority in this negotiation. They have prioritised immigration control, which was a clear message from the referendum campaign, and removing European Court of Justice jurisdiction from the UK and, in that sense, asserting parliamentary sovereignty, although I would point out that Parliament can choose to leave the EU, as indeed we are choosing to do in the coming days.

So we are not prioritising the economy, although we hope for the best possible arrangement, and the European Union is not prioritising it either in these negotiations. Having spent the past couple of weeks in Berlin and in Paris talking to some French and German political leaders, it is clear to me that although they understand that Britain is a very important market for their businesses, their priority is to maintain the integrity of the remaining 27 members of the European Union; they are not interested in a long and complex hybrid agreement with the UK. Therefore, both sides are heading for a clean break from the EU for the UK.

The only thing I think the negotiation will come down to in the end is how that break is achieved. The Prime Minister, in her speech of a couple of weeks ago, made it clear that Britain is seeking a transition agreement, and that is obvious because it is simply not possible for this Parliament to introduce all the domestic legislation that is going to be required to replicate the arrangements we currently have with the EU, even with the great repeal Act. We will also need to have some kind of bridge to the free trade agreement that we seek with the EU. At the same time, the EU needs from us financial commitments that it believes we entered into to pay for European projects that were undertaken while we were a member. In practice, that means the negotiation will be a trade-off, as all divorces are, between access and money. We will try to scale down our payments to the EU, while scaling down our commitment to EU rules and access, until we reach that free trade agreement which we hope to negotiate.