Theresa May proposes two-year 'period of implementation' after UK leaves EU - as it happened

Michel Barnier, the EU’s chief Brexit negotiator, has welcomed Theresa May’s speech as “constructive”. He has tweeted a link to a longer statement about it.

Here are the key points from Theresa May’s Florence speech

• May said she wanted a transition period that would see the UK accepting EU rules for two years after Brexit.

Clearly people, businesses and public services should only have to plan for one set of changes in the relationship between the UK and the EU. So during the implementation period access to one another’s markets should continue on current terms and Britain also should continue to take part in existing security measures. And I know businesses, in particular, would welcome the certainty this would provide.

The framework for this strictly time-limited period, which can be agreed under article 50, would be the existing structure of EU rules and regulations.

How long the period is should be determined simply by how long it will take to prepare and implement the new processes and new systems that will underpin that future partnership.

For example, it will take time to put in place the new immigration system required to retake control of the UK’s borders. So during the implementation period, people will continue to be able to come and live and work in the UK; but there will be a registration system – an essential preparation for the new regime.

As of today, these considerations point to an implementation period of around two years.

This sounds like a big concession. But most people in business and government have always thought a transition period would be essential, and the European council’s negotiating guidelines (pdf) are very explicit about how the UK should only get access to the single market during a transition period if it accepts EU rules. So this concession was probably inevitable.

• She said the UK would continue to pay into the EU budget until 2020, when the current EU budget ends. And she said further payments could be made beyond that.

I am conscious that our departure causes another type of uncertainty for the remaining member states and their taxpayers over the EU budget.

Some of the claims made on this issue are exaggerated and unhelpful and we can only resolve this as part of the settlement of all the issues I have been talking about today.

Still 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.

And as we move forwards, we will also want to continue working together in ways that promote the long-term economic development of our continent. This includes continuing to take part in those specific policies and programmes which are greatly to the UK and the EU’s joint advantage, such as those that promote science, education and culture – and those that promote our mutual security. And as I set out in my speech at Lancaster House, in doing so, we would want to make an ongoing contribution to cover our fair share of the costs involved.

This may be the most significant passage of the speech. It has been estimated that paying into the EU budget until the current budgetary period ends in 2020 would cost the UK around €20bn. But the total figure the EU is said to be demanding is much higher – €60bn according to this estimate, between €82bn and €113bn according to this estimate, between €25.4bn and €65.1bn according to this estimate – and May is hinting that the UK will pay for obligations stretching beyond 2020. The EU wants the UK to contribute to long-term spending commitments agreed by the EU but not covered in the current budget, and this is what May seemed to be referring to when she spoke of the UK and the EU “working together in ways that promote the long-term economic development of our continent”. On top of that, as May has said before, the UK would continue to pay for access to specific programmes such as Erasmus.

• May said the UK was “unconditionally committed to maintaining Europe’s security” and that she wanted to offer the EU a comprehensive security treaty.

The United Kingdom has outstanding capabilities. We have the biggest defence budget in Europe, and one of the largest development budgets in the world. We have a far-reaching diplomatic network, and world-class security, intelligence and law enforcement services.

So what we are offering will be unprecedented in its breadth, taking in co-operation on diplomacy, defence and security, and development. And it will be unprecedented in its depth, in terms of the degree of engagement that we would aim to deliver.

It is our ambition to work as closely as possible together with the EU, protecting our people, promoting our values and ensuring the future security of our continent.

The United Kingdom is unconditionally committed to maintaining Europe’s security. And the UK will continue to offer aid and assistance to EU member states that are the victims of armed aggression, terrorism and natural or manmade disasters.

This declaration quashes the impression given earlier this year by May’s article 50 letter that Britain was threatening to withhold security cooperation if it did not get a good trade deal. At the time No 10 insisted this was a misunderstanding of what was in the letter, but the notion that Britain could use security as a bargaining chip has persisted. Nick Timothy, May’s former co chief of staff, seemed to propose this in a recent Sun column.

• May said she wanted a “creative” approach to forming a new UK-EU trade relationship, and that neither Canada nor Norway were attractive models.

One way of approaching this question is to put forward a stark and unimaginative choice between two models: either something based on European economic area membership; or a traditional free-trade agreement, such as that the EU has recently negotiated with Canada.

I don’t believe either of these options would be best for the UK or best for the European Union.

European economic area membership would mean the UK having to adopt at home – automatically and in their entirety – new EU rules. Rules over which, in future, we will have little influence and no vote.

Such a loss of democratic control could not work for the British people. I fear it would inevitably lead to friction and then a damaging re-opening of the nature of our relationship in the near future: the very last thing that anyone on either side of the Channel wants.

As for a Canadian-style free-trade agreement, we should recognise that this is the most advanced free-trade agreement the EU has yet concluded and a breakthrough in trade between Canada and the EU. But 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.

Not only that, it would start from the false premise that there is no pre-existing regulatory relationship between us. And precedent suggests that it could take years to negotiate. We can do so much better than this.

As I said at Lancaster House, let us not seek merely to adopt a model already enjoyed by other countries. Instead let us be creative as well as practical in designing an ambitious economic partnership which respects the freedoms and principles of the EU, and the wishes of the British people.

May is being optimistic. Yesterday Michel Barnier, the EU’s chief Brexit negotiator, explicitly rejected the idea that some optimal halfway house between the Norway and Canada options would be available to the UK.

• She said she would not accept the European court of justice being the arbiter of trade disputes between the UK and the EU after Brexit. And it could not be the UK courts either, she said. But she said she was confident both sides could find “an appropriate mechanism for resolving disputes”.

• She said UK courts would take into account European court of justice rulings when making decisions about the rights of EU nationals. She said she hoped this would enable the UK and the EU to reach an agreement on this issue. She said:

I want to repeat to the 600,000 Italians in the UK – and indeed to all EU citizens who have made their lives in our country – that we want you to stay; we value you; and we thank you for your contribution to our national life – and it has been, and remains, one of my first goals in this negotiation to ensure that you can carry on living your lives as before.

I am clear that the guarantee I am giving on your rights is real. And I doubt anyone with real experience of the UK would doubt the independence of our courts or of the rigour with which they will uphold people’s legal rights.

But I know there are concerns that over time the rights of EU citizens in the UK and UK citizens overseas will diverge. I want to incorporate our agreement fully into UK law and make sure the UK courts can refer directly to it.

Where there is uncertainty around underlying EU law, I want the UK courts to be able to take into account the judgments of the European court of justice with a view to ensuring consistent interpretation. On this basis, I hope our teams can reach firm agreement quickly.

Adam Marshall, director general of the British Chambers of Commerce, praised the “constructive” tone of Theresa May’s speech. But he said the transition period should last for at least three years, not the two years promised by May. He said:

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.

Manfred Weber, the leader of the centre-right European people’s party in the European parliament and a key ally of the German chancellor, Angela Merkel, said the UK position was still unclear. He posted this on Twitter.

This is from Jenny Chapman, a shadow Brexit minister.

We are 18 months in. The speech she gave today had one hell of a buildup and it was very, very weak, disappointing, empty, and clearly leaves so many questions unanswered, and I think many people will be scratching their heads and wondering what on earth the fuss has been about with this speech.

Beyond committing to transition, which frankly everybody knew was an inevitability, there really wasn’t very much to it.

Here is the full text of Theresa May’s speech.

Here is the Lib Dem leader, Sir Vince Cable, on the speech.

Both the Conservatives and Labour have now essentially converged on the same position, which is to kick the can down the road and simply delay the economic pain caused by an extreme Brexit.

Neither are prepared to fight to keep Britain in the single market and customs union or to offer people a chance to exit from Brexit.

Labour’s Ben Bradshaw has told BBC News that Theresa May has adopted Labour’s position on a Brexit transition. Labour wants to keep the UK in the single market and the customs union during the transition.

Nigel Farage, the former Ukip leader, has told Sky News that May’s announcement means the UK will not be signing any trade deals until 2022. It means Britain is not open for business, he says.

The two cabinet ministers who effectively led the Vote Leave campaign have welcomed the speech.

From Boris Johnson, the foreign secretary

From Michael Gove, the environment secretary

Today’s Evening Standard claimed in advance that Theresa May’s speech would amount to a victory for the cabinet’s “soft” Brexit faction over its “hard” Brexit faction. (See 1.48pm.) But that’s a partial reading of what is actually happening. On the basis of what we have just heard, the softies have won some decisive victories regarding the transition period. But in the long term, the hard mob have the upper hand. It will be a transition to a fairly hard Brexit.

At least, as far as we can tell. The section of May’s speech dealing with what she wants the final UK-EU trade relationship to be was the weakest. She spoke about the need to be “creative”, but that sounded like a clever way of disguising the fact that the cabinet still has no clear view of where it is heading – beyond the fact that it will be outside the single market and the customs union. The new Tory MP Kirstene Hair has been mocked today for admitting that she could not decide how to vote in the EU referendum (see 11.49am), but in some EU-related aspects, her indecision is a trait she shares with her party leader.

On the transition, however, May was specific. The UK will continue to pay into the EU budget, and it will continue to be bound by EU rules. It was telling that May refused to answer the question about whether this would amount to continued EEA (European economic area) membership, or whether this would involve having to obey new EU regulations passed by the EU27 during that period. Further briefing this afternoon from No 10 may clarify the position, but from what May said it sounded very much as if the answer to both questions is yes. The government has always insisted that in March 2019 we will leave the single market and the customs union. After May’s speech that now sounds like a semantic evasion. Judging by what the prime minister said, it sounds as if we are staying in until March 2021.