Theresa May's Florence speech: key points

Jon Henley European affairs correspondent
Protesters gather before Theresa May’s Brexit speech in Florence, Italy. Photograph: Jeff J Mitchell/Getty Images

Theresa May’s third big speech on Brexit delivered clarity in some areas, but none in many others. It could have done just enough to unblock the stalled divorce talks, but maybe not to allow them to move on to the future relationship next month.

The EU27 wanted promises on money and the other key article 50 points, citizens’ rights and the Irish border; detail on the transition period; and a feasible vision of what Britain wants its future trading relationship to look like.

So what did we learn – and what didn’t we?

There will be a “status quo” transition period

Britain wants a transition period aimed at bridging the gap between leaving the EU in March 2019 and beginning the new trading relationship, May confirmed, and envisages it lasting “around two years”.

The UK and the EU would “not be able to implement smoothly” many of the new arrangements that would be necessary, she said, and “people and businesses would benefit from a period to adjust in a smooth and orderly way”.

The EU has long said any transition period must maintain the status quo, meaning Britain will have to abide by EU rules, including the jurisdiction of the European court of justice, and continue to allow free movement.

May accepted this, saying market access “should continue on current terms” and that the framework for this “strictly time-limited period” must be “the current structure of EU rules and regulations”. The only difference will be that from 29 March 2019, all new EU arrivals will be registered.

This gives the chancellor, Philip Hammond, the gradual exit he has been asking for all summer to avert a regulatory cliff-edge for UK business. It should also satisfy the Brexiters, who can at least feel Britain is at last well and truly on the way out.

Britain will pay ... something

To help secure this transition period, the prime minister offered to pay enough into the EU to ensure no member state will have to stump up more (or receive less) during the current budget round ending in 2020. She did not mention a sum, but it should be about €20bn (£18bn).

“The UK will honour commitments it has made during the period of our membership,” she said. This may go part of the way towards kickstarting the divorce talks, which broke down over the financial settlement.

But the EU is looking for far more. It is eyeing a final settlement of €50bn-€100bn, so was also looking for assurances that the UK will meet its longer-term unpaid liabilities for EU projects and commitments lasting years beyond Brexit, something Brexiters will find it hard to accept.

So here she was vague, saying only that the UK wanted to “continue working together to promote long-term economic development” and would contribute “our fair share of the costs” in “specific policies and programmes” including science, education, culture and mutual security.

Concessions on citizens’ rights ...

After a series of Home Office blunders, the EU27 were looking for strong assurances on citizens’ rights. In a significant gesture, May offered to write legal protections for EU citizens living in the UK into the actual exit treaty.

“I want to incorporate the agreement fully into UK law and make sure British courts can refer directly to it,” she said. This represents a considerable strengthening of the UK’s earlier proposals, which would have allowed MPs to alter EU citizens’ rights.

In a further concession, May said she accepted a role for the ECJ in settling rights disputes: “I want UK courts to be able to take into account the judgments of the European court of justice with a view to ensuring consistent interpretation.”

... but no clue on the Irish border

The EU also made it clear it expects Britain to solve the problem of the border between Northern Ireland and the Republic once the UK leaves the bloc and its customs union, and has dismissed London’s proposals so far as “magical thinking”.

It wanted substance here, but it got none. “We have both stated explicitly we will not accept physical infrastructure at the border,” May said, but made no new suggestion on how that might actually be made to work.

UK sees defence as part of the deal

May made a great deal of the contribution the UK can make to European defence. She said she wanted “a bold new strategic agreement” providing a “comprehensive framework for future security, law enforcement and criminal justice cooperation”.

She said the UK was “unconditionally committed” to European security, but it was clear she felt she was was making a big offer. The EU27 will welcome continued defence and security cooperation with the UK, but have repeatedly made clear that they are not willing to see it used as a bargaining chip in Brexit negotiations.

Regulation important – but still no plan for future relationship

The EU27 were looking for an indication of what kind of future relationship and single market access the UK wants, a question on which the government has refused to communicate clearly mainly because it is not agreed on this itself.

Broadly, the choice is between remaining close to the EU in regulatory terms but at a cost in sovereignty and cash, like Norway or Switzerland; and cutting loose to seek a free trade deal such as that the EU recently struck with Canada, which offers greater freedom but fewer rewards.

What the EU will not accept, as its chief negotiator, Michel Barnier, has made clear, is a bespoke halfway house. Britain cannot have its cake and eat it; Norway-style big benefits cannot come at Canada-style low costs.

Unfortunately, this is what May said Britain wanted. A “stark and unimaginative choice” between two options was not “best for either the UK or the EU”, she said. A Norway-style deal would represent “a loss of democratic control”, while a Canada-style deal would be “a restriction on our market access”.

She did, however, make one concession, accepting that “neither the ECJ nor UK courts can be the arbiter of disputes”, meaning a new “strong and appropriate dispute mechanism” would have to be found.