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UK PM to Signal EU Clean Break         01/17 06:09

   LONDON (AP) -- Prime Minister Theresa May is preparing to make a speech that 
will signal that Britain will make a clean break from the European Union and 
not seek to remain "half-in, half-out."

   In her most detailed remarks on the U.K.'s exit strategy, May will promise 
to forge "a new and equal partnership" with the EU.

   "Not partial membership of the European Union, associate membership of the 
European Union, or anything that leaves us half-in, half-out," she plans to 
say, according to excerpts released by her office.

   "We do not seek to adopt a model already enjoyed by other countries. We do 
not seek to hold on to bits of membership as we leave."

   May's speech appears to rule out the sort of close ties adopted by non-EU 
members Switzerland or Norway.

   It's likely to be another shock for the pound, which hit a three-month low 
below $1.20 Monday. It traded slightly above that level early Tuesday.

   Neil Wilson, senior market analyst at ETX Capital, said he was "expecting a 
wild ride," for the currency amid hints that May would signal an 
economy-roiling "hard Brexit." Sterling has lost about a fifth of its value 
since Britain voted in June to leave the EU.

   The plunge in the pound has started to hit the consumer. Inflation has 
soared to its highest level in 2  years hitting 1.6 percent in December, from 
1.2 percent in November.

   May has said she rejects both the "hard Brexit" label and its opposite, a 
compromise "soft Brexit" --- but wants a new relationship in the interests of 
both Britain and the EU.

   "We want to buy your goods, sell you ours, trade with you as freely as 
possible, and work with one another to make sure we are all safer, more secure 
and more prosperous through continued friendship," she'll say.

   In a bid to alleviate fears that Brexit will mean a more insular Britain, 
May will say she wants the country to be "stronger, fairer, more united and 
more outward-looking than ever before."

   In an attempt to symbolize the U.K.'s outward-facing aspirations, May will 
deliver her speech to an audience of British civil servants and international 
diplomats at London's Lancaster House, a Georgian mansion that has hosted 
international summits over the decades.

   May's speech signals that Britain will quit the EU's single market in goods 
and services in order to gain control over immigration --- a key issue for many 
voters who backed Brexit. EU leaders say Britain can't stay in the single 
market without allowing free movement of people from the bloc.

   The prospect of losing single-market access alarms many in Britain's huge 
financial services sector, which relies on an ability to do business seamlessly 
across the 28-nation bloc.

   It also worries the many foreign firms that use London not only as a 
financial hub but as an entry point into the EU.

   May said that she would invoke Article 50 of the EU's key treat by March 31, 
to formally begin a two-year process of negotiating Britain's departure.

   But she has until now refused to reveal details about the government's goals 
or negotiating strategy, arguing that to do so would weaken Britain's hand.

   Some details have now begun to emerge.

   British Treasury chief Philip Hammond fueled speculation that Britain will 
play hardball in Brexit negotiations, telling the German newspaper Welt am 
Sonntag that the U.K. hoped to retain single-market access but would be willing 
to "change our economic model to regain competitiveness" if that was cut off.

   Opposition Labour Party leader Jeremy Corbyn accused Hammond of threatening 
a "trade war with Europe" and seeking to turn Britain into a tax haven.

   May spokeswoman Helen Bower said the prime minister and Hammond both want 
Britain "to remain in the mainstream of a recognizable European-style taxation 

   "But if we are forced to do something different because we can't get the 
right deal, then we stand ready to do so," she said.

   May will also use her speech to appeal for reconciliation between the 48 
percent of British voters who wanted to stay in the EU and the pro-Brexit 52 
percent. But the gap between "remainers" and "leavers" appears as wide as ever.


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