In front of a crowd of diplomats at London’s Lancaster House, prime minister Theresa May outlined her Brexit priorities.
The speech and its contents had been kept under wraps but many were worried she used the speech, on 17 January, to signal a “hard Brexit”.
Up for debate was the future of the UK in the EU single market, free trade deals across the world and whether we would continue to be bound by rulings from the European Court of Justice.
Industry reacts to May’s Brexit speech
UK housebuilder shares rallied today after prime minister Theresa May outlined her plans for the UK’s exit from the EU, which included leaving the single market.
Every FTSE 350 housebuilder saw a rise in its share price, with Taylor Wimpey leading the pack at a 2.9% rise at the time of writing.
Barratt Developments and Persimmon, the other two FTSE 100 housebuilders, also saw a rise of more than 2%.
The UK prime minister confirmed her “hard Brexit” stance going into the negotiations with the European Union, saying the country will leave the single market and the customs union. May did, however, commit the UK to “thinking globally”, stressing the importance of welcoming global talent.
She also said she will aim to deliver a free trade agreement with the EU and a transition deal to phase in any changes.
Jeremy Blackburn, head of policy at the RICS, said that although investors welcome having a clearer idea of what Brexit will mean, the industry’s success will depend on the details the government ends up negotiating. “While this clarity is undoubtedly welcome, one thing is clear, a loss of access to the EU’s skilled workforce has the potential to slowly bring the UK’s property and construction sector to a standstill.
“That means unless alternative plans are put in place, we won’t be able to deliver the thousands of homes needed to solve our housing crisis or create the infrastructure needed to enable our cities to compete on a global stage. Potentially, an embarrassing situation for a government set to publish both its housing white paper and industrial strategy.
Miles Gibson, head of UK research at CBRE, said: “Businesses will be pleased about the PM’s acceptance that a transitional period will be required, but overall the decision to reject full membership of the customs union will make many in the industry even more nervous.
“All eyes will now turn to the contents of the proposed free trade agreement, and in particular how that deals with the UK’s financial services sector.”
The pound also rose 0.7% to £1.23 during the prime minister’s speech – a 2.2% rise from yesterday when the currency hit a 31-year low against the dollar at less than $1.20.
Melanie Leech, chief executive, British Property Federation: “We are pleased to see that the government is focused on ensuring as much certainty as possible, which will support our industry to drive forward much needed growth across the UK.
“It is also positive to see that the prime minister wants to guarantee the rights of EU nationals living in Britain as this will form part of the country’s ability to retain the highest calibre of global talent, but future supply needs to be guaranteed.”
James Roberts, chief economist at Knight Frank: “In recent months the UK, and London in particular, has seen inflows of overseas capital targeting commercial real estate. The people behind this money are mostly from outside the EU, and are thinking far beyond Brexit. They believe in the UK’s long-term fundamentals as a business location, and consider the recent fall in the pound as an opportunity to buy at a discount.
“This new international capital is less concerned over single market access, and will take comfort from talk of new trade agreements with growth economies elsewhere in the world. After all, that is where much of this money originates from. For commercial property the initial referendum shock back in July 2016 has now passed over, with certain sub-markets like offices in London’s tech districts showing signs of moving into the next cyclical upturn.”
Richard Garner, head of the commercial agency at Daniel Watney: “Regardless of the deal with the UK settles with the EU, London is likely to remain one of the world’s best places to live and work. However the prime minister’s announcement today that she intends to leave the EU customs union, which could see UK firms trading with Europe subject to tariffs, is potentially worrying.
“The impact on the London office market will be profound if European customers have to pay extra to access UK financial services. It is of urgent importance that the prime minister secures a deal which doesn’t see the City pay the price for Brexit.”
Mark Farmer, chief executive of Cast: ““Brexit has the potential to further accelerate decline in what is already a shrinking construction workforce, so securing the rights of EU migrant construction workers already here in Britain is essential. If not, we could see the size of the labour pool reduce dramatically in London and across the country. This could lead to critical shortages of workers for large infrastructure projects such as HS2 and Hinkley Point, as well as further reducing the sector’s capacity to deliver the government’s housing targets.”
May’s Brexit speech as it happened
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■ 12.30pm: “A punitive deal from the EU would hurt itself, she warns. It’s in everyone’s best interest to reach a good deal.” ■ 12.28pm: “Britain wants to be a good friend and neighbour in every way to the European Union,” May assures.
Specifically mentioned potential loss of 'access' for European firms to financial markets of City of London. https://t.co/gYoUkHNwQv— Graham Shone (@GShoneEG) January 17, 2017
■ 12.25pm: May will not reveal more than she thinks she has to in the UK’s negotiation with the EU.■ 12.23pm: May: “This is not a game, or a time for opposition for opposition’s sake. It’s vital we maintain our discipline.” ■ 12.19pm: May: “I want us to have a common customs agreement with the EU – open mind on how we do it, removing as many barriers to trade as possible.” ■ 12.12pm: Membership in the single market is effectively membership in the EU.
■ 12.11pm: The UK will not be a member of the single market, May confirms.■ 12.10pm: The UK will fight for workers’ rights, both European and British. “It’s the right and fair thing to do.” ■ 12.09pm: May: “We will want immigration from Europe, but the message is clear. Brexit must mean control of the people coming into the UK” ■ 12.06pm: UK laws will be based on EU laws: “The same rules will apply the day after Brexit as the day before.”
■ 12.05pm: Theresa May confirms there will be a vote in parliamentary on the deal to leave the EU.
■ 11.59am: Diversity playing a big role in May’s speech: May tells Europe its citizens will still be welcome in the UK. “We are not leaving Europe.”
■ 11.53am: “I want this United Kingdom to emerge stronger, fairer and more outward looking than ever before” – Theresa May, outlining her Brexit plans.