After all the speculation and Cabinet infighting of the past week, Theresa May finally gave her much-anticipated speech on Brexit this afternoon. As had been widely trailed, the main points were:
- A request for a transition period of (probably) 2 years during which the UK would to all intents and purposes remain a member of the EU, notably via membership of the Single Market and a Customs Union;
- A commitment for the UK to continue paying its dues to the EU at its current rate during that transition period;
- No commitment to meet the other financial obligations that the EU is seeking;
- The offer of a new Treaty with the EU on criminal justice and security; and,
- An attempt to reassure EU citizens that their rights will be upheld post-Brexit, but by the UK courts only.
So, progress of sorts, in particular the public acceptance of the need for a transition period and the willingness to continue to pay the UK’s contributions during that period. But that merely represents an acceptance of the reality of the UK’s precarious position – there is simply not time left in the Article 50 negotiating period for the UK’s government and businesses to leave the EU on 29 March 2019 without chaos resulting.
But, to get to a position where the EU is ready to agree to a transition deal, sufficient progress needs to be made on the separation issues (money, citizens’ rights and the question of Ireland). Michel Barnier’s remit from the other EU27 leaders is very clear on that and, indeed, the UK Government agreed to that very sequencing on the first day of the Brexit talks back in June. May’s call, therefore, for the EU to show greater creativity around the talks (code for relaxing the sequencing) is not going to get anywhere. Neither, unfortunately, is what she said in her speech on the separation issues going to be sufficient for Barnier to recommend to the EU27 leaders that sufficient progress has been made. This was clear from a speech Barnier gave yesterday. And while the issue of the money as a sticking point grabs most of the headlines, Barnier’s comments yesterday highlighted that the EU will be steadfast on securing citizens’ rights and, in particular, the insistence that those rights are guaranteed by the ECJ. Indeed, this insistence has been strengthened by recent events in the UK where legally-resident EU citizens have been (incorrectly) sent deportation letters and the Home Office has ignored orders from the UK’s High Court. May’s offer that UK courts would be able to take into account ECJ judgments on citizens’ rights will not go far enough in that regard.
In reality, therefore, this speech leaves us not much further forward. Without next week’s talks yielding significantly more progress on the separation issues, there will not be agreement at the October European Council meeting to move the talks on to the question of the transition arrangements. Meanwhile, we still don’t know what final relationship the Government will seek from the EU, with Theresa May rejecting both the Norway and Canada options, instead seeking a bespoke arrangement. This lack of clarity largely reflects the fact that the Cabinet remains deeply divided between those who want the hardest of separations, and those seeking something much closer to the status quo. In all, for all of the heat around May’s speech, it has unfortunately not delivered a great deal of light, although Michel Barnier did describe it as showing a 'willingness to move forward'. And for businesses, with time running out and no certainty over transition (transition will require that the talks don’t break down, while May continued to say that “no deal is better than a bad deal”) or what Brexit in the end will look like, contingency plans will increasingly be implemented, with knock-on negative consequences for business investment in particular in the UK.