| Theresa May (and the 'three Brexiteers') is a new entry this year|
Theresa May became the UK Prime Minister on July 13 2016 and, given the scale of the challenge that Brexit poses, she faces perhaps the most difficult tenure of any UK premier since the Second World War.
May took over when her predecessor, David Cameron, stepped down after the EU referendum vote did not go in the direction he had hoped. Cameron has been included in the Global Tax 50 numerous times, having used the UK's 2013 presidency of the G8 to bring tax transparency to the forefront of the international agenda, the effects of which are being felt today through the success of initiatives including the BEPS Project and the automatic exchange of information.
Cameron aside, Brexit raises a multitude of questions that have remained unanswered since the June 23 vote. Businesses are still asking what Brexit could mean for them, how they will operate in an independent Britain and what the implications will be for their taxes, but so far, the only solid statement that May has given is that "Brexit means Brexit" and that Article 50 of the Lisbon Treaty will be triggered by March 2017.
While May supported remaining in the EU before becoming Prime Minister, she has been clear that she will carry out the will of the people. As such, she appointed the Brexit-supporting trio Boris Johnson, Liam Fox and David Davis to important roles of foreign secretary, trade secretary and newly-created post 'Brexit secretary', respectively.
David Davis holds the most crucial role and will be Britain's lead negotiator during the process – though he will defer to May on some key issues. Fox will play a key role in negotiating new trade deals with every country in the world – all apart from the EU if the UK remains in the single market. As trade deals are negotiated with the EU as a whole, the UK faces the mammoth task of concluding deals with all its trading partners around the world in just two years.
One question that takes precedence over others, even before negotiations have begun, is whether the UK will remain in the European single market. This would mean a greater degree of harmonisation with the EU on a wide range of issues and negate any need for the UK or EU to charge tariffs on each other's imports and exports. It would also mean that the UK would remain in the Customs Union, which would be a huge relief for businesses that trade goods cross-border and would prevent a likely overhaul of excise duties.
This is where Johnson comes in. He has spent much of the past few months touring EU countries in an attempt to strike a rapport and soften their stances on key issues, namely the trade-off between single market access and immigration.
However, the question of the single market is politically sensitive because of the divide between what politicians and voters want. Numerous reports from within Westminster suggest that May's government sees political survival as its priority, rather than ensuring the best possible Brexit deal for the UK, but the decision over the single market will define how the government's Brexit policy is developed. Many who voted to exit the EU did not think that this would involve leaving the single market.
Brexit means different things to different people, however. For some, it means freedom from EU rules and regulations. For others, it is a chance for Britain to regain some of its colonial glory. For more still, it is a chance to be prosperous. But the focus for those who were leading the campaign to leave – and undeniably a sizeable proportion of those who voted to leave – is immigration. And here lies the issue for May and her government. For the EU, entry to the single market is inseparable from the free movement of people. She finds herself between a rock and a hard place, not just with the public, but within her own party. The Conservative party is torn between its desire to protect business interests and ensure prosperity, and to stay true to their socially conservative base, which wants a clean break from Brussels and a sharp reduction in immigration – which hit record high levels this year.
There is a detachment from reality among much of the UK press and public, only making the government's job more difficult. A significant proportion of the population seems to think that the UK should be able to restrict EU immigration while allowing its own citizens to emigrate at will, and to charge taxes on foreign goods while exporting its own for free.
Although it is frustrating for businesses, and exacerbates the uncertainty Brexit has thrown up, it is also understandable that the government is revealing very little on its negotiating strategy for Brexit. Nevertheless, what is clear is that the EU holds most of the cards.
Leaks and press espionage seem to suggest that the government itself is yet to decide upon its objectives for the negotiations, but feels it is unlikely that it will be able to stay in the single market while gaining control over immigration. A legal challenge going through the Supreme Court may force the government to reveal more of its Brexit strategy to parliament.
The best official source on Brexit matters is perhaps Davis. Speaking in the House of Commons on November 7, he said: "We have been clear, European Union law will be transposed into UK law at the time we leave, providing certainty for workers, businesses and consumers, this will be an Act of Parliament, which we intend to have in place before the end of the Article 50 process."
In December, he went one step further, suggesting that the UK could pay for access to the single market. Within hours, a Conservative colleague had criticised him for suggesting this.
No matter how hard things get, it seems that May and her government – which have enough time to leave the EU before the next election in 2020 – will press ahead with Brexit. To quote Britain's last female Prime Minister Margaret Thatcher, the "lady's not for turning".
© 2019 Euromoney Institutional Investor PLC. For help please see our FAQ.