Britain could stay in the single market and customs union in a bespoke deal without breaching any of Theresa May’s Brexit “red lines”, Italy’s ambassador to the UK has said.
Pasquale Terracciano’s intervention, days before he leaves his post in London, comes as several cabinet members urge a rethink of the pledge to leave the customs union.
Mrs May has laid out three red lines for a future relationship with Europe: Britain must take back control of its borders; the jurisdiction of the European Court of Justice must end; and Britain should contribute only to the programmes in which it participates.
Mr Terracciano insisted that the prime minister was mistaken to believe those conditions could be met only by leaving the single market and the customs union, pointing to compromises already made in negotiations with Brussels. “You can interpret the three red lines in a less fundamentalist way,” he told The Times in an interview marking his departure. “If you interpret the three red lines as the end of the automatic contributions to the budget, supremacy of the court of justice, and freedom of movement, then you can keep the red lines and still stay in the single market and the customs union.”
Mr Terracciano said Britain could pay to use the single market, just as it plans to do with individual research programmes, without contributing to the EU’s overall budget. “It’s not like a membership fee where you’re a member of the club and even if you don’t use the club you have to pay the fee,” he said. “There you pay for what you use. If you use the single market, the customs union, the research programme, you would pay for those.”
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Mr Terracciano said that the compromise over the role of the ECJ in protecting the rights of EU citizens in Britain suggested there was room for manoeuvre over its role in policing the single market. “There was a compromise for the EU citizens’ rights and so some further compromise on the single market would still be possible,” he said.
On freedom of movement, he suggested that the decision to start registering EU citizens in Britain this year opened the door to the application of existing rules that Britain has never previously used to control immigration.
EU rules allow for EU citizens to be sent home after three months if they do not have a job, but Britain has never applied the measure because of a historic antipathy towards registration on the grounds of privacy.
“I think in the end it would still be possible to re-adapt the relationship between Britain and the EU without a traumatic break,” he said. “And of course staying in the single market and the customs union is the way to guarantee your exit would not be traumatic.”
Yesterday David Davis was forced to defend the government against charges that Mrs May was preparing to turn Britain into a “vassal state” of the EU during a Brexit transition period.
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Jacob Rees-Mogg, the newly elected chairman of the European Research Group (ERG) of Tory Brexiteer MPs, accused Mr Davis of agreeing to accept EU laws without having a say in their making.
Sources suggested it was part of a deliberate strategy by the ERG to take on ministers in public over their concerns that Mrs May was wavering on the commitments she made in her Lancaster House speech.