MS Risk Blog

UK Prime Minister Calls for Brexit Transition Period in Speech in Florence

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On Friday 22 September, British Prime Minister Theresa May tried to rescue stalled Brexit talks and set out a vision for future ties with the European Union (EU) in a speech in the Italian city of Florence.

Britain is scheduled to leave the EU in March 2019 after a shock referendum result that has triggered more than a year of political turmoil, put business leaders on edge and sent the sterling plummeting. The most complex set of European negotiations to take place since the end of World War Two have effectively pitted London against Brussels over how to unravel over forty years of economic and political integration. However after three months of negotiations, talks have stalled between the UK and EU members, as a number of points have frustrated the two sides. Friday’s speech was aimed at breaking the deadlocks, with talks resuming on Monday. So far, the two sides have not reached an agreement on issues of the rights of EU and UK citizens, the financial settlement or the Irish border issue.

On Friday, Prime Minister May set out proposals for a two-year transition period after Britain leaves the EU. She further disclosed that she wants existing EU market access arrangements to apply during that period and promised that Britain would pay its “fair share” into the EU budget, adding that the UK will be the “strongest friend and partner” of the EU after Brexit. The deal she has proposed could include payments worth 20 billion euros (about 18 billion pounds) over the two years. The PM also proposed a “bold new strategic agreement” on security co-operation. On trade, she stated that the two sides could do “so much better” than adopt existing models and that there was “no need to impose tariffs where there are none now.”

In the wide-ranging speech, the British Prime Minister also stated:

While the 20 billion euro offer is meant to ensure that no EU countries are left out of pocket by Britain’s departure, it is not part of the “divorce bill” covering the UK’s outstanding debts and liabilities to the EU, which still have to be agreed with EU negotiations – effectively meaning that the final bill for Brexit could be far higher.

Mrs May’s speech has received mixed reviews, with many stating that they need more clarity from Britain in regards to what they want.

Brexit Secretary David Davis, who is taking part in the fourth round of Brexit talks in Brussels, stated that Mrs May has shown “leadership and flexibility” in her Florence speech and given reassurances on financial issues. However the EU’s Brexit negotiator, Michel Barnier, called for a “moment of clarity” from the UK. Speaking in Brussels, Mr Barnier stated that he was “keen and eager” for the UK to translate the “constructive” sentiments in Mrs May’s speech into firm negotiating positions on issues such as citizens’ rights, the Irish border and financial issues, including the UK’s so-called divorce bill. Remarking that has already been six months since the UK triggered Article 50, he stated that progress on these three fronts was essential to allow talks to move on to the future of the bilateral trade relationship, as the UK would like.