UK Prime Minister Urges Unity Amid Reports Of 'Hard Brexit'

LONDON, Jan 15 (Reuters) - Prime Minister Theresa May will call on Britons to reject the acrimony of the Brexit referendum in a speech this week that some newspapers have billed as setting the stage for a “hard” exit from the European Union.

Investors will scrutinize May’s speech on Tuesday for clues on whether she plans to prioritize immigration controls and bilateral trade deals in a “hard Brexit” that would see Britain leave the EU’s single market and customs union.

May intends to launch by the end of March the formal process of negotiating the terms of Britain’s exit from the EU, but has so far given very little away about what deal she will be seeking, frustrating some investors, businesses and lawmakers.

May’s speech will stress the need for Britons, who voted for Brexit by 52 to 48 percent in last June’s referendum, to unite around common goals such as protecting and enhancing workers’ rights, her Downing Street office said in a statement.

“Now we need to put an end to the division and the language associated with it - ‘Leaver’ and ‘Remainer’ and all the accompanying insults - and unite to make a success of Brexit and build a truly global Britain,” May is expected to say.

The speech extracts cited in the statement did not say whether she would reveal her stance on the single market or immigration, but the Sunday Times quoted an unnamed source in May’s office as saying her words were likely to cause a market correction. A spokesman told Reuters such reports were speculative and did not comment further.

After May said in a TV interview last week that post-Brexit Britain would not be able to keep “bits” of its EU membership, the pound fell sharply as the comment was interpreted as signaling a clean break from the EU’s single market - the biggest destination for British exports.

In the Brexit negotiations, the EU is likely to insist on freedom of movement for its citizens in return for full access to the single market, but many of those who voted for Brexit did so precisely in order to be able to restrict immigration.

EU TRADE WAR

British finance minister Philip Hammond was quoted on Sunday as saying the country could change its economic model to regain competitiveness if it were to leave the EU without an agreement on access to the single market.

His comments, from an interview with German newspaper Welt am Sonntag, were interpreted as a warning that Britain could use its corporate tax rate as a form of leverage in negotiations.

“He appears to be making a sort of threat to the European community,” said Jeremy Corbyn, leader of Britain’s main opposition Labour Party. “It seems to me a recipe for some kind of trade war with Europe in the future.”

Nevertheless, Corbyn said he would not block the triggering of ‘Article 50’ - the legal process of leaving the EU. An upcoming legal ruling might insist that May gets parliamentary approval for her plan to trigger Article 50 by the end of March.

In an article in the Sunday Times, Brexit minister David Davis wrote that Britain would consider ways to extend or smooth the exit process to provide certainty for businesses.

“If it proves necessary, we have said we will consider time for implementation of new arrangements,” he wrote.