George Osborne has warned Theresa May against pursuing a “hard Brexit” that would see the UK drifting away from cooperation with the rest of Europe. The former chancellor made the remarks at a speech in Chicago in a sign that he intends to continue to play a role in the political debate about leaving the EU.
Osborne, who campaigned strongly to remain, argued that it was unwise for politicians to claim the UK had a stronger hand in negotiations than the EU. “I find some of the take-it-or-leave-it bravado we hear from those who assume Europe has no option but to give us everything we want more than a little naive,” he told the Chicago Council on Global Affairs.
“We need to be realistic that this is a two-way relationship – that Britain cannot expect to maintain all the benefits that came from EU membership without incurring any of the costs or the obligations.”
He urged May’s government to “resist the false logic that leads from exiting the EU to exiting all forms of European cooperation – and that values the dangerous purity of splendid isolation over the practical necessity of cooperation in the real world”. “Brexit won a majority. Hard Brexit did not,” Osborne said.
Osborne also predicted that there would be no serious progress in negotiations with the EU until after the French and German elections next year. “My experience of six years of European negotiations is that nothing serious happens until the French and, especially, the German governments take a view, and both countries will be preoccupied with their own domestic elections for much of next year,” he said.
It was Osborne’s first major speech since he lost his job when May took over from David Cameron as prime minister in July. Since then she has set about unravelling key aspects of Osborne’s economic policy and overturning central tenets of Cameron’s premiership, such as his opposition to bringing back grammar schools.
Osborne indicated in a BBC Radio 4 interview last week that he would stay on the political scene, but gave only a lukewarm endorsement of May’s premiership.
May is facing competing pressures in negotiations with the EU. She has said she wants a bespoke deal for Britain that preserves free trade at the same time as curbing the freedom of EU citizens to come to Britain.
However, Martin Schulz, the president of the European parliament, stressed in a speech on Friday that Britain would not be allowed to pick from an “à la carte menu” of EU privileges and would get no deal on enhanced single market access without free movement of labour.
Schulz, who met May this week, said she should invoke article 50 “as soon as possible” to avoid British voters electing MEPs in the 2019 European elections.
“I leave London with a feeling that the government is undecided about how and when they should trigger Article 50,” he said, describing Brexit as “a failure” and “lose lose” for the UK and the EU.
If the UK does manage to leave by 2019, councils and other bodies face the possibility that billions of pounds of funding for regeneration projects could end abruptly, as not all of it has been guaranteed by the Treasury.
The chancellor, Philip Hammond, has promised that projects signed off before 23 November will continue to receive cash until 2020, at which point the UK may have been out of the EU for two years. Projects signed off after the autumn statement will be approved for guarantees on a case-by-case basis.
Greater Manchester council has said that around 90% of its regional development funding from the EU due between 2014 and 2020 is still not under contract, including projects worth more than £150m.
Others to sound the alarm about budgetary black holes for major projects include Tees Valley, where only around £27m of £170m in EU funding is under contract. Cornwall’s chamber of commerce has listed nine projects that might have to be scrapped, including road and rail improvements.
Figures from the House of Commons library found by the Labour MP Emma Reynolds suggest that an estimated £4bn would be due from the EU for structural and investment fund projects in 2019 and 2020.
A Treasury spokeswoman highlighted a letter from Hammond that set out the terms of the guarantees, and said that it was “working with departments on future arrangements”.