Early pronouncements from Philip Hammond and David Davis indicate that the Government is set to abandon hopes of remaining within the Single Market as the price the UK will have to pay for imposing immigration controls on EU citizens. This strategy is clearly aimed at pacifying those who prioritise reduction of immigration within the Tories and also reducing the attacks from the xenophobic right, whose 'respectable' wing resides in UKIP.
Politically this might take the shine off the electoral threat to Conservatives posed by UKIP in the short term, but this threatens to unravel in the longer term and it will be at great cost to the British economy.
It seems that Hammond is fighting a rearguard action to preserve internal market market access for British financial services, but how successful and costly that will be to the British exchequer remains to be seen. But the British economy now faces having nearly half its trade facing not only tariffs in the EU but also falling prey to non-tariff trade barriers as the EU changes its rules to which the UK will not be subject.
In terms of energy our influence in regulations governing energy markets will decline and the automatic upgrading of energy efficiency standards and labels that comes with the EU will cease. Directives on renewable energy and energy efficiency will cease to apply.
There will be a lot of talk about trade agreements with the USA and maybe others, but in reality nothing can be effected until after the UK formally leaves the EU, which, according to David Davis, is likely to be in December 2018. That implies the issue of an article 50 notice in December of this year (2016).
In the longer term (which may not be very long at all!) this attempt to feed the monster of xenophobia is likely to fail as the hard right demand more and more stricter immigration controls. The targets of abuse have already been widened from just perceived EU migrants to muslims, and soon no doubt others.
'The hopes of self-styled 'civilised' Brexiteers such as Daniel Hannan are being dashed. His 'libertarian' eurosceptical views favouring continued free movement and internal market membership outside of the EU have merely ended as being ballast to pave the way for the objectives of the anti-immigration English nationalist lobby.