THERESA WALKS THE TIGHTROPE

PM puts Brexit on hold for two years to placate warring wings of her party and vows: Our future’s bright outside EU

THERESA May hit the pause button on Brexit yesterday as she tried to break the deadlock in talks with Brussels.

In a speech that was distinctly conciliatory to the EU, she outlined plans for a two-year transition after 2019 that could see the UK stay in the single market in all but name until 2021.

This would entail handing an extra £20billion to Brussels and accepting unchecked immigration from the EU during this period. But the Prime Minister also quelled fears within her party that this could mean Britain never leaving. Any transition would be ‘time limited’ with a clean break when it finishes, ending free movement and halting payments to Brussels.

Her speech was delivered in the basilica of Santa Maria Novella in Florence – a city chosen to underline her message that Brexit can spark a British renaissance.

She insisted this country’s future outside the EU was bright, adding: ‘Our fundamentals are

strong: a legal system respected around the world; a keen openness to foreign investment; an enthusiasm for innovation; an ease of doing business; some of the best universities and researchers you can find anywhere; an exceptional national talent for creativity and an indomitable spirit.

‘It is our fundamental strengths that really determine a country’s success and that is why Britain’s economy will always be strong.’

The upbeat message was a rebuke to Philip Hammond, whose gloomy assessment of Brexit has irritated many in the Cabinet. Mrs May also explicitly ruled out membership of the European Economic Area – an option said to be favoured by her Chancellor – saying it ‘could not work for the British people’.

Both moves were welcomed by Boris Johnson, who has clashed with Mr Hammond behind the scenes.

A source close to Brexit Secretary David Davis described Mrs May’s words on the EEA as ‘a big setback for the Remainers’.

He added: ‘They were boasting about a never-ending transition period and an EEA trading relationship – both are now dead and buried.’

But there was also a victory for Mr Hammond, who has championed the idea of a transitional deal for more than 12 months.

The deal, if agreed by Brussels, would see the UK effectively remain a member of the single market for a further two years after March 2019, when Britain leaves the EU.

This would involve budget payments of about £10billion a year, acceptance of European Court rules and the continuation of free movement in all but name.

Mrs May denied the move amounted to a betrayal. She pledged to ‘deliver on what people voted for’ in last year’s referendum.

But she said a transition period was needed to ‘ensure we do that in a way that does as little damage and disruption to our economy and people’s lives as possible’.

She said the implementation period would give business and government services like customs longer to adjust and help ensure a ‘smooth and orderly’ exit.

She said it made no sense to ask business to adjust to new arrangements in 2019 only for them to change again two years later.

The UK, she said, had ‘never totally felt at home being in the European Union’ during its four decades of membership.

Life after Brexit would be ‘different’ and the UK had no desire to wreck the EU.

‘In short, we want to work hand in hand with the European Union, rather than as part of the European Union,’ she said.

Pro-Brexit ministers in government publicly welcomed the speech. Environment Secretary Michael Gove, who jointly led the Leave campaign, described the speech as excellent and said Mrs May was ‘delivering on the wishes of the British people’.

But other Eurosceptics questioned the need for a costly transitional period.

Former environment secretary Owen Paterson welcomed the positive tone of Mrs May’s speech, but added: ‘What worries me is the transition phase.

‘Although she made it very clear that it should be of course as short as possible, as long as we have that transition period we are still bound in by European rules.

‘That delays us grasping the wonderful opportunities offered by leaving the EU.

‘I don’t see the need for it. We should tell them if they are not serious about striking a deal by Christmas then we are off.’

Fellow Tory Jacob Rees-Mogg said: ‘ As long as the transition is not subject to the ECJ and the EU migrants don’t get permanent rights it is on the margin of acceptability.’

Mrs May’s speech was designed to break the deadlock in the Brexit negotiations which resume in Brussels next week.

The Prime Minister wants to kickstart talks on a new trade deal next month. But, with Brussels digging in its heels over issues like the divorce bill, Mrs May decided it was time to offer an olive branch.

The £20billion payment plugs a potential hole in the EU’s budget which runs until the end of 2020, almost two years after the UK leaves. But Downing Street made it clear that ‘cash for access’ payments will not continue beyond the transition. In answers to questions after the speech, Mrs May confirmed that she still believed ‘no deal is better than a bad deal’. But the push for a transitional arrangement – a key demand of big business – suggests Mrs May would take the UK out of the EU without a deal only as a very last resort. She also dropped a threat to withdraw security co-operation in the event of Brussels refusing to agree a trade deal. She said the UK was determined to continue helping to defend other European countries but would do so ‘ as a sovereign nation in which the British people are in control’.

And the Prime Minister offered a comprehensive guarantee to three million EU citizens living in the UK, designed to end the ‘great worry and anxiety’ some have felt.

She said their rights would be guaranteed in law. And, as an extra precaution, British courts will be required to ‘take account’ of European court rulings on citizens’ rights – although they will not be bound by them.

In a direct message to EU migrants living in the UK, she said: ‘We want you to stay; we value you; and we thank you for your contribution to our national life – and it has been, and remains, one of my first goals in this negotiation to ensure that you can carry on living your lives as before. I am clear that the guarantee I am giving on your rights is real.’

The EU’s chief Brexit negotiator Michel Barnier praised Mrs May’s ‘constructive spirit’ but said the Prime Minister needed now to put forward ‘concrete’ proposals ‘to make meaningful progress’ ahead of a key summit next month.

He said: ‘Prime Minister May’s statements are a step forward but they must now be translated into a precise negotiating position of the UK government.’

Mr Davis will go to Brussels on Monday to begin the next round of exit negotiations.

Former Tory leader Lord Howard last night urged warring ministers to get behind Mrs May.

He said there was now no excuse for Brussels to continue dragging its feet over a future trade deal: ‘It was consistent with what the Prime Minister said at Lancaster House but the tone was conciliatory.’

Arch Europhile Lord Mandelson accused the Prime Minister of failing to give enough detail about her demands for a future deal.

‘The only sound that can be heard is of a can being kicked down the road,’ he said.

‘As little damage as possible’

TRUE, the tone was measured and conciliatory – too much so for ardent Brexiteers, impatient for an uncompromising and hostile divorce from Brussels.

Indeed, some maintain Theresa May has given in too readily to demands that we should carry on paying our subscription and remain bound by EU laws for a two-year transition period after withdrawal on March 29, 2019, during which little will change.

But on the points that matter most, the PM remained steadfast and unyielding.

Yes, we’re getting out of the single market and the customs union – no ifs, no buts.

Yes, we’re reclaiming control of our borders, our laws and our right to strike trade deals with any country we choose.

And no, we will not settle for an ‘EU-lite’ deal like Norway’s – nor for any off-the-peg arrangement that fails to take account of the UK’s unique position as the EU’s single most lucrative trading partner. At the same time, Mrs May remained adamant that no deal would be better than a bad deal, while reassuring businesses there was ‘no need to impose tariffs’.

As for her concessions, the promise to keep up our payments for a strictly limited period after Brexit was certainly generous. So, too, were her pledges to co- operate fully over security and expats’ rights.

But since we signed off and committed to the current EU budget, which runs until 2020 – and will remain members in all but name for a further year – pragmatists would argue it is surely reasonable to meet that commitment until our separation is complete. Crucially, this will happen before the next election.

Let’s be blunt. The Mail would have preferred an earlier exit. But we accept the Prime Minister had a deeply divided Cabinet and country which she has to unify – not to mention a hostile Europe to placate.

A two-year transition is also considerably better than the three years advocated by Philip Hammond, Amber Rudd and Damian Green (which would have delayed separation until after the election).

Meanwhile, yes, Britain’s military and intelligence pre- eminence gives us great leverage. But with the UK and Europe alike under threat from Islamist terrorism, it would plainly be wrong to withdraw it.

And while it would also be wrong to uproot EU nationals’ families who are already settled in Britain, Mrs May was right to emphasise that those wishing to come after March 2019 will be required to register.

But what made this speech stand out was the Prime Minister’s uplifting optimism and faith in Britain’s future as a prosperous sovereign nation once again.

‘Our fundamentals are strong,’ she said. ‘A legal system respected around the world; a keen openness to foreign investment; an enthusiasm for innovation; an ease of doing business; some of the best universities and researchers you can find anywhere; an exceptional national talent for creativity and an indomitable spirit.’

What a contrast to those big business Remoaners, flirting with Labour at its conference since Jeremy Corbyn vowed to sabotage the Brexit Bill. If this unreconstructed Marxist achieves power, they deserve everything coming to them.

One thing is clear. A magnanimous, conciliatory Mrs May has given as much as she can in appeasing Remainers and a hostile EU. If she can keep the Cabinet united, while staying true to Brexit, she will have squared a very difficult circle. In that, she deserves full support.

If her colleagues now undermine her, then truly they will deserve our contempt for increasing the chances that Mr Corbyn will be the next British prime minister.

As for the small-time bureaucrats and politicians of Brussels, they need to know that any further obstacles, insults or sneers that stand in the way of what can be an amicable and mutually beneficial deal will be their fault, and theirs alone.