PM Theresa May seeks transitional Brexit deal

By Gregory Barradale

The concept of a Transitional Brexit exposes the hard choice facing the government.

Speaking to business leaders at the CBI conference, Mrs May invited the possibility of a transitional deal to smooth the interim period after Brexit. “People don’t want a cliff edge, they want to know with some certainty how things are going to go forward,” she said, acknowledging she wants “the arrangement that is going to work best for business in the UK.”

Article 50 charts a clear course for Brexit. Although Mrs May’s early 2017 target now looks unlikely – owing to the recent court ruling – if it were managed, negotiations would unfold over a two year period. In 2019, at the end of this period and regardless of the state of negotiations, Britain would officially leave the EU.

The UK would revert to trading with the EU on World Trade Organisation terms. Businesses dealing with the EU would face tariffs and a lack of access. It may not be a desirable outcome.

To avoid this, the UK would hope to have a deal in place by 2019. However, the free trade arrangement the government is aiming for is estimated to take five years to negotiate, and is reckoned to be impossible within the two that Article 50 allows for.

Wary of leaving the British economy stricken on the rocks for three years, Mrs May has coined the ‘transitional’ Brexit. Single market access sits at the forefront of this, and is what would keep businesses and the wider economy happy.

Unfortunately, the latest bit of Brexit newspeak may just be the one that points out the intricate balancing act of Britain leaving the UK.

Preserving single market access requires keeping free movement of people. For the EU, these fundamental freedoms are an area with little room for manoeuvre. “The four fundamental freedoms are not negotiable for us,” says Manfred Weber, an influential figure within the European parliament.

“We will not move a millimetre from this position.”

This has placed the PM in an unenviable position, having committed to limiting immigration whilst making assurances to the business community.

Britain is unlikely to have enough negotiating clout to force the EU to allow such amendments by Mrs May. However, the EU is not expected to compromise on its fundamental principles.

Backtracking on immigration would upset a lot of Brexit supporters and leaves the Prime Minister on uncertain ground going into an election – whether in 2020 or earlier.

However, the impact could be much more significant than upsetting those concerned by immigration, damaging the economy alongside the Conservative Party’s electoral chances.