Last week, Prime Minister Theresa May made clear that Brexit means the UK retaining control of immigration and taking back control over our laws. While the EU’s original sin is to ignore voters in referendums, it’s finally dawning in Brussels that Britain means business. Until now, EU leaders have been in denial, expecting Britain to come crawling back on its knees. Instead, the public are increasingly optimistic about Britain’s prospects, buoyed by healthy economic data (last week on manufacturing, services and construction) and big guns like the International Monetary Fund beating a retreat on forecasts of recession. Britain will be the fastest growing G7 economy this year. The UK’s future trading relationship with the EU can now be predicted within a clear range of outcomes. Ideally, we continue trading without tariffs or other barriers. In the worst-case scenario, we would face the EU’s external tariff, which averages 3.6%, rising to 10% on cars and 32% on wine. How bad would that be? There would be a short-term hit to UK exports (although European business would be hit harder, because they sell us £68 billion more each year than we sell them). But three factors would smooth the transition. First, the devaluation of the pound will help British firms absorb the cost of any new tariffs. As Mervyn King, former Governor of the Bank of England, argues: ‘we are now in a better position to rebalance the UK economy’, away from consumer spending, towards an export-driven growth strategy. Second, teeing up UK free trade deals beyond the EU can supplement our stagnant European trade (UK exports are 8% less than in 2011) with the growth markets of the future, from Asia to Latin America. Ignore EU grumblings, we’re on solid legal ground. And broadening our trade horizons will heap pressure on Brussels’ negotiators, as continental businesses oppose spiteful new tariffs that would further squeeze their share of the UK market. Third, the government can mitigate the pinch on UK firms, by cutting taxes and supporting export opportunities – with a boost from an unlikely source. Should the EU impose tariffs, forcing the UK to reciprocate, the UK government would rake in an estimated £12 billion each year (on top of the £10 billion from not paying an EU membership fee). This can be used to support vulnerable business sectors. It would be the ultimate schadenfreude, if it were to be German car manufacturers and French farmers compensating British businesses, bruised by vindictive bureaucrats in Brussels. Britain can flourish with even the worst deal. But how can we get the best? The government should work up an ambitious, positive, set of proposals to present to our continental friends. After all, we’re leaving the EU, not Europe. The package should include strengthening operational security co-operation (without giving up democratic control over such sensitive matters), and political and military support for Baltic and eastern European countries fearful of Russia. Likewise, ending free movement doesn’t mean pulling up a drawbridge. We should still allow UK companies to recruit top European talent, offer visa waiver for tourism and business trips, and permit European nationals to plug skills gaps in the UK economy. None of that requires giving up national controls over welfare, overall numbers arriving, or powers to deport criminals. And it’s time to make clear that EU nationals living here lawfully will have their existing rights respected. If we approach Brexit with a generosity of spirit, mutual interest should lead to a good deal for Britain and Europe. Would the EU defy its own rational self-interest to punish Britain, to deter other EU members from leaving? That would inflict disproportionate harm on European business, investment and jobs at a vulnerable time for the Eurozone. The defensive comments from Angela Merkel and Francois Hollande last week were aimed at continental business groups like Germany’s BDI and France’s MEDEF, which oppose any trade barriers. Ipsos Mori also found popular support for a favourable deal with Britain, from Hungary to Sweden, while countries with less support – including Germany and France – have the most to lose from a poor deal. Why do you think neither Hollande nor Merkel want preliminary negotiations in the run up to their 2017 elections? They’re feeling the heat, as ivory tower Brussels dogma is pierced by the raw economic interests of European businesses and workers. And it’s sheer lunacy for anyone in Brussels to think that responding to Brexit in a malicious and masochistic way would convince other wavering members to stay in the club. Theresa May was wise to narrow the parameters of Brexit now, allowing five months for this reality to sink in. Even on the worst case scenario, Britain will thrive outside the EU. How the EU reacts will define its future too. If it responds with protectionism, the EU will pay a heavy price. Brussels can’t realistically attack UK financial services in the City, and then expect to offer an alternative strategic hub to the world. Most financial services would stay in London, and any minded to leave would weigh up New York or Tokyo – not Frankfurt or Paris. Britain is well-placed to navigate this brave new world. Brussels can’t escape the fact that Brexit presents just as big an existential question for the EU.