global trading hub and then see the threat through.

The verdict
Mrs May does not favour this course. But officials on both sides are fearful it could
happen anyway. Derrick Wyatt QC, a scholar of EU law, told parliament of huge risks
if politicians blood is up and unilateral measures are taken.
But some advocate a fast break-up especially if it lets Britain rework its rules and tax
system to attract global business and new lines of business for the City. Crispin Blunt,
chair of the Commons foreign affairs committee, described falling back on to minimal
World Trade Organisation trading terms as a perfectly sound bottom line for the UK in
the negotiations.
David Davis, Brexit minister, has confidently predicted Britain will be able to establish a
big trade area 10 times the size of the EU in time for an exit in 2019.
EU officials recognise that the threat of a British light-touch business haven off the
shores of continental Europe could lead the bloc to make concessions on trade. But
while the economics may work for the City, the rest of the countrys economy could
suffer without a substantive trade deal with the UKs biggest market.
Clean break
The scenario
Relations between Britain and the EU are strained but solid enough to arrange a tariff
transition, agree trade terms and ratify the deal in the European Parliament and 38
national and regional assemblies.
The assumptions
This assumes that the price for a deep UK-EU association agreement is too high to meet
because of issues related to sovereignty or immigration but that the political will
remains to agree favourable trading arrangements.
British financial services would lose their EU passport to sell products and raise funds
throughout the single market and have only limited access in specific areas.
Rather than full single market access, Mr Davis has stressed the need to keep tariff
free trade, something he believes the EU will offer. They depend as much on us, more
on us actually, than we do on them, he said at the weekend.
Political goodwill on both sides would be required to see through a multiyear wait for
ratification, and near continuous further negotiations to cope with changes in UK or EU
market rules.

The verdict
This scenario accommodates two political red lines: Britains need for immigration
controls and the EUs allegiance to free movement and the single markets founding
principles. But that political space comes at an economic cost.
Focusing on a trade deal would curb how Britain can sell itself in the world economy. If
the UK shows too much competitive independence from the EU either in regulation
or tax it would risk trade access terms and the ratification of any deal.
Companies would also face years of uncertainty while the politics plays out. If it takes a
decade or more to sort this out and get clarity on trade, some businesses will ask some
serious questions, said Adam Marshall of the British Chambers of Commerce, adding
that some would see the upside of quickly cutting loose and at least having certainty.
Transition arrangements are possible. EU officials have looked at a model where the two
sides mutually agree to not raise goods tariffs while a trade deal is completed. Services
would be more vulnerable.
My sense of the outcome, when you look at the politics and all the variables, is a
relatively modest trade deal, said Pascal Lamy, who has been both EU trade
commissioner and head of the WTO.
The big questions is whether they win [over] the British people once they think about
that and if it is genuinely in the interests of the UK.
Amicable transition
The scenario
Talks are difficult but amicable; disruption is minimised; changes are phased. Britain
remains part of the EU single market, but on adjusted terms.
The assumptions
Brexit Britain is satisfied with more control over some policy areas, such as agriculture.
Crucially, the EU allows an emergency brake that could restrict the inflow of EU
migrant workers in overloaded job sectors. In return, the UK forgoes almost all its
influence on EU rules that it must follow. The financial services passport remains, but
its value is eroded over time. Britain still contributes to the EU budget, but pays slightly
less.
The verdict
This is the preferred continuity option for big business and the City of London. There
are two big potential flaws. The first concerns limitations to free movement. Britain
must win concessions not only from pro-migration eastern Europe, but from France and
the Netherlands, which do not want to set a precedent for anti-EU populists.
The second issue is whether this would be enough for Britain. Some EU officials think
compromise is possible, but only on carefully limited migration curbs. And the UK

would be a rule-taker on the single market, obliged to follow EU laws on everything

from financial services to digital policy. Mr Vimont reckons losing the right to set rules
would be an impossible sell for the British prime minister control of free movement is
regained.
It is the worst of both worlds, he said. Britain has been a member state. Contrary to
Norway or Switzerland, it has tasted the other life. That makes a difference.