This was a crucial speech for the Prime Minister. It needed to win on at least three counts, for the sake of her government and for the progress of the Brexit talks. First, it had to demonstrate that the Cabinet could muster a united front. Second, it needed to persuade the European Council to move to the second stage of the talks on the wider questions of the UK’s future relations with the European Union. Third, it needed to secure support from the EU for the notion of an “implementation period” after March 2019.
It was a bonus that beyond that, it aimed to give more sense than Government statements have yet done of what the UK would like its future relations with the EU to be.
It achieved the first goal, in at least superficial terms. Boris Johnson, Foreign Secretary, accompanied the Prime Minister and listened to the speech; both he and Philip Hammond, Chancellor, secured key parts of what they wanted.
The second and third goals will depend on the reaction of Michel Barnier, the EU’s negotiator. His initial response, crediting her with a “constructive spirit” and a “willingness to move forwards”, was warmer than anything he has said about the UK for weeks. There was a distinct movement in the UK’s position in parts of this speech; whether enough to enable progress remains to be seen, but the pressure of time weighs on the EU side too, if less heavily. The logic behind the call for an implementation period is compelling from the British perspective, and businesses will have heard her words with relief, but that is not the same thing as securing European assent.
It is on the question of the final destination that there is most uncertainty in the UK position – and most cause for concern. There is still a sense that an element of wishful thinking remains in the UK’s call for a bespoke free trade deal. While making clear that the UK will leave the single market and customs union, and stating explicitly that the UK recognised this meant it could not retain all the benefits of membership, the Prime Minister still left the impression that the UK will push to retain as many of the benefits as possible.
The Prime Minister tried harder in Florence than she has before in trying to change the tone of the debate. There was nonetheless a sense in her remarks that the UK approaches the EU very differently from many of its other members – as an economic project above all. For many of the other member states, its appeal is as a political union first and foremost. Theresa May acknowledged this directly in saying that “throughout its membership, the UK has never totally felt at home being in the EU.”
On the other hand, she went further in Florence in spelling out the common project that the UK and EU could still share after Brexit, talking about shared values, stability, security and prosperity. This may prove to have had a real value in injecting a more optimistic mood into talks, and in asserting that the UK still wants a close partnership with Europe.
But Barnier, while seeming cautiously to credit her for a helpful tone, called in almost every line of his response for more detail. The great unknown of the whole enterprise is whether there is a deal that can be done: that is one the EU will accept that can also get support from the Cabinet and survive passage through Parliament.
The hard kernel of the speech is the new formal proposal for an “implementation period” after March 2019 during which the UK would continue to take part in the single market on the same terms. Theresa May, saying this was in both sides’ “mutual interest”, described it as “about two years” and should be determined by how long it would take in practice to bring in new practices (for instance, for customs and immigration), although Barnier promptly replied with “up to two years”. The aim of this is to allow government, people and businesses to prepare for a new set of rules – and not to have to adapt twice, to a transition period and a final status. She does not intend, it seems, for this time to be spent negotiating a deal on future relations. The UK desire is still to conclude that by March 2019.
The exit bill
During this implementation period, the UK would offer to continue to pay its share of the EU budget. Barnier’s cautious response was “We stand ready to discuss the concrete implications of this pledge.” Although media reports in advance anticipated that the Prime Minister would mention a figure of around £18bn, she offered no precise figures at all. Nor did she touch on points of principle about longer term obligations which have bedevilled the talks (such as contributions to pensions of EU officials). The UK has not wanted to specify such figures, or even to commit at this stage to the principles for working those out, because the “exit bill” is one of its strongest cards in securing good terms in a deal on future relations.
Rights of EU citizens in the UK
The Government has offered what it may see as more reassurance, saying that these rights will be put into UK law but that UK courts could then continue to take account of judgements of the European Court of Justice. While Barnier called her remarks “a step forward”, he called for “a precise negotiating position”.
In another new element in the speech, the Prime Minister put considerable weight on the potential for a “bold security partnership” with the EU, making much of the UK’s defence capabilities. Past attempts to link explicitly the UK’s contribution to European security with any future formal deal provoked rage in EU capitals. Here, she presents it more tactfully, less as a bargain or point of leverage in the negotiations, but instead as part of a vision of a future partnership.
The tortured question of the border gets only a brief mention – because of the difficulty of saying anything. Although the EU negotiators stipulate that this should be part of the first stage of talks, as the complexity of the issues has dawned on both sides, the UK has made a renewed bid to discuss this as part of the second stage on wider relations with the EU. Theresa May reiterated the UK’s commitment to the Belfast Agreement and the Common Travel Area, repeating too that the UK “will not accept any physical infrastructure at the border.” Barnier’s response, in one of its crisper passages, noted baldly that “Today’s speech does not clarify how the UK intends to honour its special responsibility for the consequences of [Brexit] for Ireland.”
The UK wants the EU to negotiate a bespoke free trade agreement as part of its future relations with the EU. The Prime Minister gave glimmers more of insight into what that might be, but was carefully silent on key elements – as the rifts in UK politics, as well as the state of EU negotiations, require her to be.
The Prime Minister said a lot about what the deal won’t be. A future trade deal will not leave the UK as part of the European Economic Area; this would turn the UK into a “rule-taker”, obliged to accept many of the rules of the EU as the price for access to its markets. This would be an affront to democracy, she said. She ruled out, too, modelling a deal on the Canadian free trade agreement; that had to be worked out from scratch, she pointed out, and would fall far short of the relations the UK currently had with the rest of the EU.
“I’m optimistic about what we can achieve, by taking a creative approach to a new economic relationship,” she said, without offering details on the form which that creativity might take. In her emphasis on the fact that the EU is the UK’s largest trading partner, and vice versa, she put weight on the economic arguments which tend to play more strongly in the UK than in much of the rest of the EU. All the same, despite the lack of detail, she made an optimistic argument for the possibility of such a deal which may yet prove important in steering the tone of the talks, appealing both to shared beliefs and to the EU’s “creativity” in striking previous deals with all kinds of neighbours.
The risk remains that this is wishful thinking. The UK may still seem essentially to be asking to leave the single market and customs union but to retain as many benefits as possible. Most dangerously, at some point, the Prime Minister will have to fill in the blanks with more detail about what exactly the UK wants and is prepared to settle for. She will then have to confront the full reality of the EU’s negotiation position, as well as the rifts in her Cabinet, in her party, in parliament and in the UK itself over any one version of exit.
Her hope must be that this speech has done enough to get the talks over their sticking point. With a bit more detail in the days to come, she may have managed just that. She may also have managed to improve the tone of the talks. But the blanks in the UK position still cover over some of the trickiest questions. The biggest one is whether a deal that the EU accepts can also survive an encounter with UK politics.