 Tony has had two careers, the first one with Roy Schertz, where he worked in a number of different countries and secondly he worked from 1990 to 97 at the independent in London where he was successively East Europe editor and Europe editor and I suppose most of us know him for his career with the financial times which he has been in since 1997. Today, according to my brief here, he's going to argue that Theresa May's government will no longer be able to avoid necessary choices between hard and soft Brexit and that these decisions may expose the internal contradictions of the political and electoral coalition that rejected EU membership in June 2016. He will analyse the possible impact this will have on British politics in 2017. It's a fascinating perspective and we look forward to hearing it. Thank you very much Tom, ladies and gentlemen. The people of Britain and the EU 27 should I suppose be grateful to Theresa May for setting out her Brexit vision last Tuesday. Without the Prime Minister's guidance, we might have spent this event in much fruitless speculation about the objectives of the Conservative government in taking Britain out of the EU, forging a new relationship with the 27 and redefining Britain's place in the global economy. That said, May's speech by no means answered all questions and the reactions of some Brexiters raised questions of their own. The leader of the right wing populist anti-immigrant UKIP party graded her speech 7 out of 10. That reminded me of what Dora Gateskill said to her husband, the late Labour party leader Hugh Gateskill, when he gave a speech at the Brighton Party Conference of 1962, declaring that a federal year would mean the end of 1,000 years of English history. Amid the stormy applause, Mrs Gateskill murmured to her husband, darling, all the wrong people are cheering. Today I propose to devote some attention to the uncertainties that hang over the process of British withdrawal and the nature of the future EU-British relationship. I won't linger on the possible reasons why in a gloss on May's speech Boris Johnson, the foreign secretary and master of the gratuitous insult, compared the French president with a second World War camp guard administering punishments to prisoners. Instead I want to focus my remarks more on what seemed to me to be profound contradictions in the government's longer term strategy for post Brexit Britain. Contradictions which have their origins in the political and electoral coalition that won last June's referendum and which are likely to become increasingly visible and awkward for the Conservative Party as events unfold this year and next. Let's remind ourselves of the key points in May's speech. Britain is to give up membership of the EU single market, but in some sectors such as financial services and vehicles will seek privileged access to it. Britain will also pull out of the EU customs union in the sense of not sharing the common external tariff or the common commercial policy, but it will seek some sort of customs agreement with the EU to keep cross-border trade as frictionless as possible. Britain will go down this road, she said, because it wants to recover the right to control migration. It wants to escape from the jurisdiction of the European Court of Justice and it wants the freedom to strike trade deals wherever it chooses. However, Britain wants a comprehensive free trade accord with the EU. Britain intends to maintain a close relationship with the EU in matters of defence, intelligence cooperation, counter-terrorism and crime fighting in general. Britain also forces close ties in areas such as science, research and education. In fact, Britain is willing to make an appropriate, though not vast, contribution to the EU budget to secure such ends. Above all, she painted a picture of a global Britain shaking off the shackles of a Europe too small and stifling for British ambitions. Yet, Britain wishes the EU well and wants it to succeed, she said. However, and here I'm reminded as a former Moscow correspondent of what Andrew Gromyko once told the Soviet Central Committee about Mikhail Gorbachev, comrades, he has a nice smile but teeth of iron. She added that if anyone in the EU was thinking of punishing Britain for Brexit, it would be, and I quote, an act of calamitous self-harm for the countries of Europe and not the act of a friend. Should this happen, the government might even change the basis of Britain's economic model by which most commentators have understood an attempt to undercut mainland Europe by such means as slashing corporate taxes and offering unmatchable incentives for foreign investment. Some brief remarks on that last threat. Britain's tax base is already stretched close to the limit. The health service, social care, pensions and other areas funded by public expenditure need more money, not less, to appease a restive citizenry. May had nothing to say about how bargain basement corporate taxes would generate the revenue to address these urgences. Be that as it may, to what extent are the May government's goals achievable. The timetable for the withdrawal on negotiations is very tight, not least because of the European electoral calendar this year, the sheer complexity of the issues at stake and the need to allow time for ratification of a deal between late 2018 and March 2019. It is not hard to imagine an acrimonious atmosphere emerging at the talks early on because of all sorts of disputes, starting with Britain's so-called bill for leaving, which at least one EU policymaker estimated at 55 billion to 60 billion euros. Naturally, the only Brits who appreciate that the EU may have a case on this point are quote, citizens of nowhere, as may provocatively label them in her speech at last October's Conservative Party conference. Another complication is whether discussions of the future EU-British relationship will at some point run alongside the Brexit negotiations. For what it's worth, my own view is that it will be difficult in practice to separate the two at some point. Yet the idea aired in May's speech that it should be possible within two years to lay down the framework of an EU-British free trade deal, including access to the single market for specified British business sectors, strikes me as ambitious to put it mildly. I'm not saying that eventually something along these lines won't be the outcome, but on the EU side, the multiple divergent interests of governments, parliaments, business lobbies, unions and constituencies of all kinds will need to be reconciled. It will be an arduous process, scarcely smoothed by the possibility that the European political landscape will look substantially different in late 2018 from how it looks today. What can be predicted with some confidence is that the EU will not tamely grant Britain privileged market access for sectors such as car manufacturers. As Donald Tusk put it last week, there will be no place for pick and choose tactics in our negotiations. Both politically and technically, selective single market access may in certain areas just not be possible. Let's consider the letter which the British government wrote to Nissan last year promising that Brexit would not harm the company's interests as a British based car maker and exporter. We don't know the letter's precise content, but its message was that the government would ensure that Nissan could continue to operate within the single market, the customs union or equivalent rules. After May's speech, this letter looks like a hostage to fortune. To the extent that she prioritises the car sector or others such as aerospace or pharmaceuticals, the EU's negotiators will at a minimum push for British concessions on other fronts. To the extent that she yields on the car sector, for example, to protect the city of London's interests, she will risk affronting Nissan and the Japanese government, which after the June referendum spoke with unusual firmness about why it wanted to Britain to retain broad, trouble free access to the European market. Her vision of partly privileged market access will generate some pushback from British industry too. According to industry and trade people I have spoken to, you cannot simply ring fence the auto sector from other manufacturing sectors and include the former in the EU market and customs union, but not the latter. Supply chains and the overlap between different sectors are too complex to permit that. As a result, it is easy to imagine that pressure would build up from other British manufacturers and exporters to the EU to be inside any special arrangements set up for the car sector. The larger point here is that many British businesses fear being supplanted by European competitors in global supply chains because the Chinese, US and other manufacturers who form part of these chains will see it as a priority to stay inside the EU customs union and its VAT regime. What about May's plan for a quote global Britain? It sounds attractive and even sincere if you can say that of a political slogan, but it conceals what I referred to at the start as profound contradictions in the pro-Brexit political and electoral coalition. Global Britain, as I said, proceeds from two assumptions that EU membership has restricted Britain's worldwide opportunities and that the EU is, economically speaking, if not all washed up, then certainly ragged and damp. In a report that came out last week from the Eurosceptical Bruges group, which has long exercised influence over anti-EU elements in the Conservative Party, the author stated that Britain, quote, should not be hemmed into little declining Europe. To this one can respond that anyone who considers German business to be little in declining must be living on Mars. Then again, is it really true that EU membership has confined any member state, including Britain, to some mouldering, walled-off European crypt of the world economy? May admitted to mention that Britain actually sells less than comparably sized EU economies to China to take just one big non-European market. If Britain, if France and Germany can outsell Britain in China, then EU membership is a flimsy explanation for Britain's less prominent place in Chinese trade. Forgive my carping, I fully recognise that for some Brexiters the notion of economic self-liberation from Europe was and is a captivating vision. This vision encompasses bonfires of business regulation, zero tariffs, the removal of non-tariff barriers, nimble and competitive new age industries springing up in Britain, lean and hungry exporters piling into non-European markets, everyone's safe in the knowledge that for the British government protection is a dirty word and red tape is for fools, lawyers and wimps. But is this what all leave voters had in mind when they backed Brexit in June? I think not, as the Prime Minister noted. The vote was in some degree a vote for migration controls. But you cannot build global Britain without a labour market open to the best, the brightest and sometimes the less well-paid recruits wherever they may come from. On this point, all sorts of British businesses from engineering companies to the creative industries are adamant. Moreover, the linkage between global Britain and an array of rapidly negotiated prosperity boosting international trade deals starts to look more complicated than may made it sound when you consider the case of India. India will not give her the trade deal she wants without reciprocity in the form of a liberal British migration and visa regime for Indian skilled workers and students. In short, the political imperative of imposing migration controls dictated by one half of the pro-Brexit coalition will clash with the economic imperative of establishing less restrictive migration rules needed to fulfil the goals of the Brexit coalition's other half. The leave vote was also inspired in part by insecurity, not joblessness but stagnant or falling living standards, poorly paid work, a shrinking welfare state and the feeling that the gap is widening every year between the advances of technology and the receding possibilities of social and economic self-improvement. Yet, unlike in 1979, when Margaret Thatcher was swept to power thanks to a widespread sense that Britain's economic malaise needed drastic treatment, the angry voters of June 2016 were not calling for a radical pro-business revolution. They do not want Britain to be Singapore on the channel. They want simpler things, better wages, affordable housing, no more hollowing out of the health service. To an extent may took account of this in her global Britain speech by saying she would not only uphold workers' rights as set out in EU legislation but enhance them. We shall have to see what her words amount to in practice, if anything, but we already see the outlines of disagreement between her wing of the Conservative Party fishing for votes among disaffected labour and recently converted UKIP voters and the other wing which dreams of a Thatcher type dash for free market glory. Perhaps the two wings can be reconciled if the British economy performs strongly over the next two years and more. The early signs are not promising. This year the economic headlines will be dominated by rising inflation, wages that fail to keep pace and a glaring failure on the part of British companies to exploit Stirling's plunge since June by boosting exports. This in turn will pile pressure on the already high current account deficit and the budget deficit, making tax increases more likely, not less, and exposing the economy's so-called resilience over the past seven months as built on sand. To give you an idea of what is in the pipeline, it was reported on the very day of May's speech that consumer price inflation went up to 1.6% year on year in December and input prices for companies soared by no less than 15.8%. In these figures lies a profound truth about the British economy which explains why Brexit will be hard going and why a switch to a different economic model is pure fantasy. During its 40 years in the EU and as a result of globalisation Britain has become deeply integrated into European and world supply chains and its domestic manufacturing base has shrunk decade by decade. More and more companies source their supplies from abroad, not from domestic businesses. With a depreciating currency this heavy reliance on imports stokes inflation. One way to change this would be to rebuild Britain's manufacturing base. The Prime Minister is saying some things about this today I believe in Britain. But the fact of the matter is that the skilled domestic workforce, engineers, computer technicians and so on doesn't exist in sufficient quantities. That points to keeping the door open to European and non-European employees but as we know such a policy would contradict the pledge to cut back immigration. As the year progresses, frictions will develop in the Conservative Party as the realisation dawns that the economic strategies available to a Britain outside the EU's single market are also the strategies most at odds with the political promise of Brexit. Brexit, it's a big topic and I apologise for not covering it's every angle. Let me conclude with some observations on the UK's internal constitutional settlement and the all important relationship with Ireland. In her speech May was almost brutal in ruling out special Brexit arrangements for Scotland. This does not necessarily accelerate the timetable for a second Scottish referendum on independence. Right now the economic and fiscal outlook in Scotland is not at all favourable for holding another referendum. Moreover at the moment there is no automatic correlation between Scots who voted to stay in the EU a 62% majority and Scots who today support independence well short of 50%. Yet the inescapable fact that the Brexit vote, the Brexit negotiating process and post Brexit British economic policies were and will be dictated largely by the English and English Conservatives at that means that the constitutional issue will remain very much alive. To bury it would require in my view some far reaching political realignment in Scotland including the revival of Labour or some similar pro unionist party of the left and that seems at present to be a very remote prospect. As for UK-Irish relations clearly the priority must be to preserve the common travel area between the North and the Republic to avoid customs trade and investment barriers and most crucial of all to uphold the peace process and promote harmonious community relations in Northern Ireland. I trust that didn't sound like a pious wish list and I hope you won't label me short-sighted or polyannerish if I say that May and her ministers have so far spoken on Irish matters with a caution even the maturity that are often shockingly absent from their remarks on the EU. Just think of Boris Johnson. I expect this sense of responsibility to prevail no matter how fraught the Brexit negotiations become. That said constitutional instability in the UK cannot fail to have profound implications for the Republic. As I indicated it would be naive to assume all will be calm on that front in coming years. Ladies and gentlemen against the sweep of 20th and early 21st century history Brexit looks less like an abrupt about turn for Britain than the culmination of a trend of increasing detachment and disenchantment that was set in motion almost from the very moment the country joined the old EEC in Ireland's company in 1973. Still Britain is undoubtedly setting out now on a new uncharted course and it will just have to make the best of it. Or as Samuel Beckett put it, ever tried, ever failed, no matter, try again, fail again, fail better. Thank you.