Brexit: What's Next?

Hello, I'm Katya Adler.

And I'm Kamal Ahmed.

He reports on economics for the BBC.

And Katya reports from all around Europe, often from Brussels.

For the next half hour, we'll try to bring you the essential,

up-to-date guide on the big issue that 33 and a half million people

in Britain voted on a year ago - whether to remain inside or to leave

the European Union.

That result - 17 and a half million for leaving

and 16 million for remaining - was a majority for Britain exiting

the EU, what we all call Brexit.

But after an election result where no-one won

a majority, what's changed?

The deadline has been set, the clock is ticking,

the EU says there'll be no concessions.

But what are Britain's options now?

What next for Brexit?

Well, I'm heading to Brussels to get some answers and to speak

to those on the other side of the negotiating table.

And I'm going the other way.

To the north - to a town with a special place in my life

and which helps to tell the story of a very divided Britain.

Rotherham in South Yorkshire is the area where my mother was born.

It voted firmly for Brexit.

But after a year of turmoil, I want to find out if views

there have changed.

For years, Rotherham was famous for steel

and for coal, with factories and pits employing thousands.

Mostly gone now, along with the jobs.

Today, the forges are silent at what was once the biggest

steelworks in Europe.

It's now a science theme park.

But new industries have taken root.

Newburgh Precision makes hi-tech steel components

for markets at home and abroad.

The chairman is Vince Middleton.

Unlike many business leaders worried about Britain leaving the EU,

he wants out, and says he's already been feeling a Brexit bounce.

Certainly since the referendum, our orders have increased,

our confidence has increased, our recruitment's increased,

so from our personal point of view, we've seen a boost.

He's confident too that British industry can thrive outside the EU,

if politicians get it right.

The confidence in the political arena to deliver a good deal is very

low, both within the EU and within the UK, I think.

A year ago, Rotherham voted two-to-one to leave.

At Natters Social Club, I asked if people had

changed their minds.

What we voted for, to me, that's final.

If the people that lost that vote - tough.

Immigration was an issue for me.

You know, we've got 375,000 people from the world and Europe,

coming into Great Britain, size of Birmingham.

Where are they going to live?

Where are they going to go to school?

Where are they going work?

You can't have that volume coming in without making plans for them,

which we never did.

I would be more than willing for our country to stand

on its own feet again.

If we're going into a depression, fine, we'll do it for now

but we will rise again.

And that's what I believe.

So, from what I heard, Rotherham leavers haven't

changed their minds.

And their message loud and clear to Westminster is - get on with it.

Rotherham voted one way, but where I grew up -

160 miles south in Ealing, west London - it was the other

way around, for Remain.

I'm coming to see someone who understands why

Rotherham and Ealing felt so differently, my mum.

I don't think you were quite a teenager there, but you obviously

fancied yourself as a teenager!

I remember going on the train from Sheffield to Rotherham.

You passed all these furnaces, you could see the workshop

with the fires going, and people were busy.

People worked in the mines or the steel works, I think

they felt that they had a place.

Now, why do you think round here and London in general

voted very heavily to stay in?

I don't think there's pressure on jobs so much around

here as there is in other parts of the country.

Being a very cosmopolitan city, people are used to mixing

with all sorts of different people.

We all get on, on the whole, very well.

We enjoy that diversity, it's something we're very proud

of and we're happy to be part of.

Two of my childhood friends, John and Pier, still live in London.

I met them - and John's children - at a local haunt.

How did you feel the day after the actual referendum?

I felt really quite depressed, it was very sad to see that a lot

of people had voted to leave.

It was just like what was next then, what happens now?

I am resigned to the fact we are going to have to leave,

but I am also reassured by the fact that the election has

resulted in a compromise, that has really put the brakes

on Brexit, as it were.

Pier, you are a senior doctor in the NHS -

has it affected the atmosphere around the health service?

In my department, nearly half of the consultants

are European consultants.

A hard Brexit in the most extreme sense would be

a disaster for Britain.

Jade, do you think people understand hard/soft Brexit and what those

two terms might mean?

I can't speak on behalf of the country but I certainly

have absolutely no idea.

Not the whole country maybe, but Jade is possibly

speaking for many.

This hugely important debate is in danger of drowning in jargon.

The phrases being used like hard Brexit and soft Brexit

are of course political, and for many are adding

to this sense of confusion.

But let's try and explain what the differences might be.

First, hard Brexit.

What some people have described as clean Brexit.

Bluntly, hard Brexit means the UK is completely out of the EU.

Out of the single market, which allows the free

movement of goods, people, services, and money

between all EU members.

Out of the customs union, in which all EU members buy

and sell from each other without paying import taxes.

And they all charge the same taxes on goods coming

in from the rest of the world.

Britain would regain control...

Control of its borders and immigration - no more open door

to people from the EU.

Control of employment rights and trade -

a British rule book, not an EU one.

Control of its own trade deals with countries outside

the EU like America, China and India.

Many say hard Brexit could cause economic damage not just

to the UK but also to the EU.

We are the second largest economy in the EU.

Since the election, things have certainly become less clear.

Some people believe we should now be pushing for what is described

as a "softer" Brexit.

Many argue this makes jobs and the economy the priority -

more important than controlling immigration or regaining

sovereignty.

With a softer Brexit, Britain could gain special access

to the single market, but we might have to make it easier

for EU immigrants to work here.

We could just try and stay in that EU customs union.

That would allow free movement of goods, but not

free movement of people.

EU trade laws would still apply, which would prevent the UK

signing its own trade deals with other countries.

Brexit is up there as one of the most dramatic European

stories I've ever covered.

The economics, the politics, and the effect it can

have on all our lives.

It's a real ripping up of the history books.

Brussels hosted the first day of negotiations between the EU

and Brexit Britain just last week.

In all the years I've lived and worked across Europe,

no-one here saw this day coming.

After 12 months since we had the EU referendum, only now

the face-to-face talks started between the UK and the EU.

And the EU still has no idea what the UK wants.

We must first tackle the uncertainties caused by Brexit.

We will do all that we can to ensure that we deliver a deal that works

in the best interests of all citizens.

Thank you.

Thank you very much.

In order to make an informed guess as to where these

negotiations might end, you first have to understand why

the EU feels as it does about the UK leaving.

When the result of the referendum was announced, there was genuine

shock in this town and dismay, and a feeling that this could be

the beginning of the end for the EU.

Brussels insiders told me they feared for their European dream.

So you think Brexit is a disaster for Europe.

On a scale of one to ten, what kind of disaster?

Ten.

Spanish MEP Esteban Pons became a social media hit overnight

when he delivered an impassioned speech on the break-up of EU unity.

Since the first day that the United Kingdom

leave the European Union, I will fight to take you back

because Europe cannot be without United Kingdom.

We have to invent another name because Europe

without the United Kingdom is not Europe.

Britain was always seen as a very valued member of the European team

on a number of levels, and that meant that the other EU

countries were willing to do some special deals for the UK

to keep it sweet.

We didn't have to join the euro currency, for example, and we got

a rebate on our contributions to the EU budget.

But, that was when we were inside the club.

Now we're on our way out, and the EU says it has other priorities.

I know the UK very well, I've been working with a lot

of British ministers in the last 20 years - they are very fine

negotiators, but they have the characteristics to negotiate

in their own interest.

We are going to negotiate for our own interest too.

The European Commission is negotiating Brexit on behalf

of all the EU's 27 countries.

Nobody wants to punish the UK for its choice,

the British people for their choice, but one thing is clear -

the show must go on.

The European show will go on.

Even if there'll be some changes in the props department.

I've been told all the flags of EU are in this room.

Let's have a look.

Lithuania, Latvia, Ireland, Italy in alphabetical

order going that way.

So where do I find our United Kingdom?

There it is.

Ironically actually, since we're talking about Brexit, right next

to the European Union flag.

I guess after the UK leaves the EU, this flag will be taken

out of this cupboard.

I don't know where it's going to go!

The EU didn't know where it was going after the Brexit vote.

It was already reeling from the migration and euro crises

and the rise of Eurosceptics like France's Marine Le Pen.

12 months on and it feels really different here,

there's a new EU self-confidence in the air, and why?

Well, a lid has been put on the migrant crisis

and as for those populist Euro-sceptics, we've seen them

squashed at the polls, notably in France.

As for the shock of Brexit, far from ripping the EU apart,

it's actually driven normally bickering European countries

into each other's arms, forming a united front.

For now at least.

What about how the EU now views the UK?

Has that changed over these last 12 months?

Oh, I think dramatically, and particularly in the last few weeks.

There has been utter astonishment since the general election

at the disarray in the UK.

They believe this chaos in British politics makes

a deal harder to reach.

One of the best known champions of Brexit works

right here in Brussels.

He dismisses all the negative talk.

You can't be a self-governing nation if you're part of the EU.

You can't control your borders or your immigration numbers,

so it's the biggest constitutional change in our country

since the 17th century.

It's about getting back control of our laws.

But will we?

At the close of day one of EU-UK negotiations,

Brussels remained unclear about the kind of Brexit

Britain was after.

Secretary of State, can the EU trust that what you ask for today

or tomorrow will be what you ask for in a few days' time,

considering the political confusion at the moment in the UK?

We will be leaving the single market, we will be seeking to set up

a free trade arrangement.

Similarly, we will be leaving the Customs Union

and that is a major upside for Britain and so circumstances

have not changed at all.

But from the EU perspective, everything has changed.

I watched its chief negotiator lose his cool at this first press

conference between the two sides.

The focus shouldn't be on compromise in Brussels, he said.

The UK chose to leave the EU.

Not the other way round.

So, despite a lingering sense of sadness, the mood music right now

in Europe is this...

Brexit, if you're sure you really want it, bring it on.

After a general election that nobody quite won,

the big question is this for Brexit: what, if anything, has changed?

Not partial membership of the European union, no.

The United Kingdom is leaving the European Union.

How do you think that election result has changed

the approach Britain will take to the Brexit negotiation?

I think it's changed pretty fundamentally.

Theresa May went to the country saying this

is my mandate for an extreme form of Brexit and she didn't get it.

And so we start the negotiations in a position where there's no clear

mandate and the Prime Minister's lost authority abroad.

Overall I don't think it makes a very big difference, if any,

because the Government set out the direction of travel.

We didn't say we would part leave the European Union,

we said we would leave it and that's what we're going to do

Dr Fox, you can't seriously be saying that nothing has changed

since Theresa May failed to get a majority in Parliament and lead

a majority government?

In Parliament, will it be easier erm, with no overall

majority, of course it won't but the Government's

approach will be the same

because we believe that what we set out is in our national interest.

I think many people who campaigned to remain

in the European Union really feel the tide is turning.

Just a few weeks ago, they seemed down and out but now

they're going back into battle, fighting for a different

kind of Brexit.

But don't think there are many settled viewpoints.

There are splits between parties, splits within parties.

And now, may I invite you, Chancellor, to address the audience?

The Chancellor Philip Hammond made his intervention

in a speech to City and business leaders.

When the British people voted last June, they did not vote to become

poorer or less secure.

They did vote to leave the EU.

We will leave the EU but it must be done in a way

that works for Britain.

I am confident we can do a Brexit deal

that puts jobs and prosperity first - that keeps our markets for goods

and services and capital open - that achieves early agreement

on transitional arrangements to avoid unnecessary disruption

and dangerous cliff edges.

Very good to hear the economy put back centre

stage and the sense that economic growth is the only way to go.

Jobs coming first, investment coming first.

What really struck me about Philip Hammond's speech

at the Mansion House was the sharp change in tone.

He talked about jobs and prosperity, in contrast to Theresa May before

the general election.

She was much more focused on immigration and on sovereignty.

The message from the public before and during the referendum campaign

was clear - Brexit must mean control of the number of people who come

to Britain from Europe and that is what we will deliver.

Next door neighbours but different approaches.

Mrs May wants to cut immigration to the tens of thousands.

The Chancellor is keener to promote immigration

as good for the economy - a view shared by political rivals.

What he is doing, it seems to me is, is inching closer to the position

we've been advocating for some time.

We've said jobs in the economy must be the priority.

At his Mansion House speech, he said jobs and prosperity must

be the priority, so that's almost the same language

as we've been using.

Is there common ground between you, between the Liberal Democrats

and Mr Hammond's position that he has outlined?

I think there is a lot of common ground with him and indeed

with a lot of people in the Labour Party who,

who can see the potential disasters of going into

a really hard, disruptive, extreme form of Brexit.

And I think our job is to reach out to them to find ways

of achieving compromise.

So, where might those compromises come?

Well, let's look at Honda's factory in Swindon.

It's the European single market in action.

Every day two million components are delivered here,

many of them from across Europe, with no hold ups at the border.

If we leave the customs union, it could spell trouble for some.

We don't want our components stuck at ports.

We don't want to see our cars going to Europe

being stuck this side of the Channel.

It's really keeping that free flow of product going.

One compromise could be to stay in the customs union

where goods can cross borders within the EU without import taxes.

But that's not government policy at the moment - it wants out.

For me, it's about getting what we promised the British people,

getting control of their laws, getting control of the borders.

You cannot do those things if we remain inside the single

market and inside the customs union.

If you want the benefits of Brexit, being able to get new trade

agreements so that we can access the growing markets of the world,

that requires the model that we have set out.

The customs union will be one of the big battles over

the next few months.

If we stay inside it - as many big businesses

want - that could mean we won't be allowed to sign free

trade deals with countries outside the EU.

And if that happens, frankly, Liam Fox would be out of a job.

And how long would any deal take?

Well, the EU divorce is meant to be completed by 2019.

And David Davis says the transition to a new relationship after that

could take a further two years.

Others are not as optimistic.

There's a host of laws and regulations, which we have

painfully negotiated over the last 30 years that will potentially

at least have to be unpicked and, to do this in a sensible way

really is, we are talking decade rather than years.

The transitional arrangements will probably be in the order

of about three years.

Now it may be that they would have to be extended but I

genuinely think that we should be able to get the divorce

aspect in the two-year framework

and then probably about three years to transition

to a new partnership.

I think we have to wait and see how the negotiations go.

But on the essential point, is it reasonable to have your

transitional period if required for the stability of our business

and maintaining the market opportunities in Europe,

that's perfectly reasonable.

They may well try and dress it up as a transition period to stop

a huge amount of public anger but I do think there is now

a significant shift in British politics that says to me that the 17

and a half million people who voted Brexit are probably not going to get

what they voted for.

A soft Brexit, a slower Brexit, some in Europe even suggest that

Britain could stay in the EU.

The EU was built on dreams that seemed

impossible to ever achieve.

So, who knows?

You may say I'm a dreamer but I'm not the only one!

Thank you.

Is there any way you could foresee Britain staying in the EU?

There's about as much chance of us staying

in the European Union as of me finding the tooth fairy.

There was audible spluttering across Europe, when in the lead up

to the EU referendum, Boris Johnson said, "Do

you know what, we can have our cake and eat it."

We can leave the EU but keep the good bits.

From an EU point of view it's like me coming into this

cake shop and saying, "bonjour.

I'd like the blueberry from on top of that cake.

All that lovely chocolate flakes from around that one and, oh yes,

I'll have the raspberries from right in the middle of that cake.

Thank you."

And off I go leaving the cake shop to sort out the mess.

We are here in a firm but friendly attitude

towards the UK but, no, Boris Johnson, is totally wrong.

He's sure that in the end that Brussels will do a deal.

This is the city of deals, often at the 11th hour.

You British invented the clubs and when you're in the club you have

some privileges and not being a member means that

you lose some privileges.

You cannot have the best of the two worlds.

That's just impossible.

If we were to do so that would encourage all

of our members to leave.

However hard the EU tries to market its tough guy approach,

make no mistake.

It wants a deal with the UK.

After all, if the UK economy nosedives, that has a big impact

on the rest of Europe.

But Brussels insists it won't do a deal at any price.

When the EU thinks about Brexit, it wants to do everything to protect

the European Single Market.

It's the biggest trade area in the whole world.

Right now made up of half a billion potential customers.

The thing is, it's not just about goods and trade, it's

about the free movement of people as well.

And so when UK politicians say they want full control over

immigration but they want to retain the full benefits of the European

single market, Brussels says that's pie in the sky.

A taste of things to come then - an EU no to compromise when it comes

to its rules and principles.

But is that realistic?

Isn't it true that the EU has all the cards?

What you're saying is that our European partners would treat us

as international pariahs,

not want our business, not want our markets,

not want our money.

The people that would hurt most would be German car manufacturers,

French wine producers.

I'll tell you what the EU really needs more than anything

and that's our market.

Now there is an assumption that all this deal-making with the EU

basically comes down to money

and that the Germans will be pushing hard for a good deal to sell

us more and more cars.

But to think that would be to fundamentally misunderstand

Germany and its attitude to the EU.

Hitler's march across Europe and the horror that followed

still loom large in European minds.

The EU was born out of the ashes of World War 2.

EU unity symbolises democracy and security here.

For Germany it was a chance for a new start

We tend to underestimate in Britain the importance and the way

in which Europe and the EU is part of the German DNA, part

of the European DNA.

It was a way back for Germany into respectability after the horrors

of the Second World War.

So this idea that of course the Germans are going to push

for a favourable deal for the United Kingdom

because they want to sell us lots of cars, what do

you make of that?

But they are not standing up and saying to the German government,

"we must have access to the British market."

What they're saying is, if you, the German government, have

decided that the unity of the EU27 is more important than access

to the UK market, so be it, and we will live with that.

Contemplating the future of EU/UK relations, I keep coming

back to the unknowns.

What will a deal look like?

How long will it take to agree?

What happens if it all falls apart?

Be under no illusions.

If we don't get those deals, and if we dont get that agreement,

whilst everyone will suffer, Britain will be a lot worse off

than our former European partners.

They have very many options for them than we do.

The European Union - its single market -

is the largest single export market for British goods and services -

it's where 50% of our exports go.

In the UK, many see Brexit as an exciting chance

for new beginnings, whereas Brussels is convinced this is

a lose-lose scenario for everybody.

The warning here to the UK is stark.

There'll be little cake left on the plate after Brexit,

just a lot of salt and vinegar.

The election has made everything less clear but has what the UK wants

out of Brexit really changed?

There are plenty who think the UK should strike a Brexit deal that

secures control over immigration

but, for others, trade and the economy comes first,

even if it means easy access for EU workers to UK jobs.

The referendum was about whether to leave the EU,

not how to leave.

You went through that referendum and the recent election

and you possibly thought that was it, all decided.

But it isn't.

Goodnight.