THERESA May has maintained an important option on the table to secure a Brexit divorce deal with the European Union which could pressure the bloc into making more concessions to the UK, economist Radhika Rao claimed.
Theresa May has refused to take the possibility of a no deal Brexit off the table as she prepares to present her new divorce deal to MPs after her first draft was rejected in earlier January. Economist Radhika Rao suggested this "negotiating tactic" could help the British Government pressure the European Union into making more concessions to put an end to concerns over the backstop. Brexiteer MPs have urged the Prime Minister to ensure any future deal with the bloc ensures the UK can unilaterally put an end to the backstop as not to be locked into a customs union with Brussels.
Speaking the CNBC on Thursday, Ms Rao said: "If I look at the trade relations, the UK is more dependent on the EU but some of the FTAs that go in the Eurozone go eventually into the UK, so it is a symbiotic relationship.
"To that extent, the EU will also be more concessionary than they probably were in 2016-2017. There are more home-grown problems.
"There’s not going to be a very hard stance but certainly the UK Government, on its part, is keeping it as a negotiating tactic."
The backstop was included in the withdrawal deal as an insurance policy to ensure no hard border is created on the island of Ireland once the UK quits the EU on March 2019.
Brussels has proposed a backstop that would keep Northern Ireland in the EU customs union unless or until an alternative solution to avoid checks is found.
Brexiteers and Northern Irish politicians have already lamented the proposal, suggesting Belfast would be forced to have a separate trading arrangement with the bloc compared to the rest of the UK. The failure to remove the backstop has spurred some pro-Brexit MPs to demand the UK quits the bloc without an arrangement.
Ms Rao insisted a no deal, which MPs have demanded Theresa May take off the table, would be a "risky event" and threaten many businesses.
She continued: "If you see the market-price action, you don’t see much of it into it, so the expectation are they will either rejoin negotiations or the deadline will be extended.
"If a hard Brexit or a no deal Brexit really materialises, that’s certainly a very risky event, businesses are not ready for it – there were just some financial companies or banks which moved their operations.
"You’d have overnight tariffs barriers come up, it’ll be like any other economy vis-a-vis the EU. The UK will have no tariff advantages."
EU officials have constantly warned that Britain risks crashing out of the bloc without an agreement because of the overwhelming opposition to Theresa May’s plans in Westminster.
The uncertainty of the Brexit negotiations appeared to spur the Queen into urging feuding politicians to find common ground for the sake of the UK.
In an extraordinary move, the monarch – who is supposed to remain politically neutral – said: "As we look for new answers in the modern age, I for one prefer the tried and tested recipes, like speaking well of each other and respecting different points of view; coming together to seek out the common ground, and never losing sight of the bigger picture.
“To me, these approaches are timeless and I commend them to everyone.”
She went on to state “every generation faces fresh challenges and opportunities”.
