Theresa May asks EU for two-year Brexit transition period

Speech calling for a pause to full exit until 2021 described as ‘constructive’ by Michel Barnier, the bloc’s chief negotiator.

Theresa May has proposed delaying a full Brexit until 2021 by asking EU countries to agree to a two-year transition period during which the UK would continue to enjoy unfettered access to the single market.

The prime minister said the government would be prepared to accept EU rules in that time, including allowing EU citizens to live and work in Britain, submitting to European laws and continuing to pay into the EU budget.

But although her speech was described as “constructive” by Michel Barnier, the EU’s chief negotiator, and appeared to have placated Boris Johnson, the two-year transition plan was immediately criticised by hardline Brexiters for lasting too long – and by business groups for being too short.

May had tried to set out an upbeat vision for Britain’s future relationship with the EU in a speech at the Santa Maria Novella church in the heart of Florence, Italy. Arguing that more time was needed to work on the details of Brexit, May insisted the proposed implementation phase would be “strictly time-limited” lasting “about two years” and the UK would still be formally leaving the bloc in March 2019.

However, she offered a string of concessions to the EU as well as the transition period in a bid to break the deadlock in Brexit negotiations and push talks from the divorce procedures onto questions around the future trading relationship.

The prime minister also suggested that the UK could be ready to offer significantly more than the €20bn (£18bn) bill to cover annual contributions over two years, with some suggestions that the final bill could be twice that or more, and discuss other long term liabilities such as pensions and debt.

“I do not want our partners to fear that they will need to pay more or receive less over the remainder of the current budget plan as a result of our decision to leave. The UK will honour commitments we have made during the period of our membership,” she said.

In the 45-minute address, the prime minister also:

insisted the UK was “unconditionally committed to maintaining Europe’s security” and offered a new treaty on maintaining law enforcement and criminal justice cooperation
indicated that the UK could make extra financial contributions on top of continuing to pay into the EU budget until 2020. She said Britain would “cover our fair share of the costs” to participate in “specific policies and programmes … such as science, education and culture – and mutual security.”
reiterated that the UK will not accept “physical infrastructure at the border” between Northern Ireland and the Republic of Ireland, but gave no details that could help break the stalemate in talks in this area.
promised to enshrine the rights of EU citizens in the Brexit treaty and allow British courts to take the rulings of the European Court of Justice into account when judging disputed cases

May said she recognised that Brexit was a “distraction” from the work that European countries wanted to focus on, but added: “We have to get this right.”

The prime minister did not set out the type of trading arrangement that Britain would seek after the implementation period, instead repeating a call for EU partners to provide a bespoke deal closer than any that already exist.

She argued that neither the Norway-style deal inside the European Economic Area, favoured by the Treasury, nor a Canada-style free trade deal, favoured by Boris Johnson, “would be best for the UK or best for the European Union.”

May argued that EEA membership would mean accepting rules without influence or votes, which would inflict a “loss of democratic control” that she said British voters would not accept.

She added that the Canada-EU deal was the most advanced that had been carried out, but added: “Compared with what exists between Britain and the EU today, it would nevertheless represent such a restriction on our mutual market access that it would benefit neither of our economies.”

Despite refusing to pick between the two models, some suggested May’s speech, which comes after a week of infighting triggered by Johnson’s decision to publish his own 4,200-word vision of Brexit, leant towards a closer relationship, as favoured by Hammond.

However, the foreign secretary was quick to respond by telling journalists he was “very happy” with the speech, and tweeting:

Jeremy Corbyn said it sounded as if the prime minister had listened to the Labour party, which has a policy of remaining within the single market and in a customs union for a limited period.

But he added: “Fifteen months after the EU referendum the government is still no clearer about what our long-term relationship with the EU will look like.”

He said May and her cabinet colleagues [were] were “spending more time negotiating with each other rather than with the EU”, and repeated his claim that the Tories were trying to use Brexit to deregulate and cut taxes.

Reaction among senior Brexit campaign supporters was conflicted, with some reservations about May’s strategy for a transitional period that will maintain the status quo. Owen Paterson, a Tory MP and former cabinet minister, told the Guardian: “The speech was very good really, generous in tone and content.”

But he added: “My main quibble is the transition period as it puts off the time when we can really take advantage of having left. The whole establishment mantra is that business wants to ease in and put off the evil day and it’s all going to be very difficult. That is absolute tosh … ”

One backbench Brexiter argued against the security treaty, saying they did not want the UK to continue to take part in Europe-wide schemes and feared that the move could undermine Nato.

Pro EU Tories were largely pleased with the speech, with Nicky Morgan calling it a “very realistic Brexit position – finally!”

But business offered a more mixed response, with calls for a longer transition period. Adam Marshall, director general of the British Chambers of Commerce (BCC), praised the “constructive” tone of Theresa May’s speech but he said the transition period should last for at least three years.

“We will challenge both the UK government and the European commission over the coming months to agree a transition that lasts at least three years from the date of our formal exit from the EU, giving businesses enough time to prepare for a final deal,” he said.

Guy Platten, CEO of the UK Chamber of Shipping, said it was welcome to set out plans to reduce friction but argued that a two-year limit was too tight.

French President Emmanuel Macron has warned May greater clarity was needed over Britain’s negotiating position if she wants to break the deadlock.

Speaking in Paris, Macron said that while he welcomed May’s “willingness” to move forward, more progress was needed on the rights of EU citizens in Britain and the border with Ireland as well as the so-called “divorce settlement”.

“Before we move forward, we wish to clarify the issue of the regulation of European citizens, the financial terms of the exit and the question of Ireland,” he said.

“If those three points are not clarified, then we cannot move forward on the rest.”

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