Introduction

Theresa May’s Mansion house speech was significant, and outlined the clearest picture of the UK’s post-EU picture so far. It was also perhaps the most pragmatic and realistic. Prime Minister May said that leaving the single market means “life is going to be different. Access to each other’s markets is going to be less than it is now,” and that neither side will “get everything they want.” The speech even ended very matter-offactly: “we know what we want; we understand your principles; we have a shared interest in getting this right; so let’s get on with it.”
The speech comes near the end a long process for May. At the beginning of the year, with phase two of the exit negotiations beginning, the UK did not yet have a clear agreed position on what it wanted. A week ago she manage to manoeuvre her Brexit Cabinet into an agreement on a way forward – on the basis of three baskets of differing levels of divergence with the EU – and yesterday she persuaded her Cabinet to agree to the language in today’s speech. Today, they were expected to put their support behind her.
None of this was straightforward, with the threat of Cabinet-level resignations as well as strong feelings on both sides of the argument. James Forsyth highlighted in The Spectator that right up until yesterday, a key line in the speech, was subject to heated disagreement. The “binding commitment” to align with EU rules and regulations in certain sectors that the Prime Minister wanted to make, was today, just a “strong” one.
Perhaps the difficulty of the last two weeks crept into her speech as it had a definite air of frustration about it. May hit back at insinuations that the only deal open to the EU was a South Korea or Canadastyle deal, as implied by Michel Barnier in December, saying that if the UK’s proposals sound like cherry picking, “then every trade arrangement is cherry picking.” She implored the EU to think about a relationship that goes beyond the transactional.
The Prime Minister also told the EU that they needn’t fear the UK undermining the bloc, making the aforementioned “strong commitment” that the UK’s regulatory standards will remain “as high as the EU’s” meaning that, in practice, UK and EU regulatory standards will remain “substantially similar”.
A key concession was that the UK is now considering “associate membership” of European agencies, suggesting the UK would be a rule-taker, without the ability to make them.

Detail

As trailed May outlined the five tests that any agreement must achieve – though these were vaguelyworded:

  • The agreement must respect the referendum vote – including that people voted to take back control over UK laws.
  • It must be an agreement that endures.
  • It must protect jobs and security.
  • It must be consistent with the kind of country the UK wants to be – outward looking and pioneering.
  • And finally the agreement must respect the nation and all its constituents – including Northern Ireland.

May also set out five principles that should govern any new trade relationship with EU:

  • There must be “reciprocal and binding commitments to ensure fair and open competition”.
  • There must be “an arbitration mechanism” that is completely independent.
  • There will have to be an ongoing dialogue and means of consultation.
  • There will have to be an agreement on data protection.
  • And finally the EU and the UK must “maintain the links between their people”.

On energy, the Prime Minister said the UK wants to “secure broad energy co-operation with the EU”, adding that “this includes protecting the single electricity market across Ireland and Northern Ireland – and exploring options for the UK’s continued participation in the EU’s internal energy market”. She also expressed her desire for a “close association” with Euratom.
On transport, May said the UK wants to ensure “the continuity of air, maritime and rail services” and protect the rights of road hauliers to access the EU market and vice versa.

 What does this mean?

Theresa May’s speech – and the policy agreements behind it – has the potential to move negotiations forward. She will hope so. It desperately needs to.
Michel Barnier’s October deadline gives the UK only months to agree its future relationship with the EU and it is rapidly running out of time. Perhaps that is why May seemed frustrated today. She is, after all, seemingly under attack from every side.
The speech is not standalone, but comes at the culmination of weeks of Cabinet infighting, briefing, manoeuvres and even open disagreement. Getting to this stage has not been easy for the Prime Minister and now she must take the deal she has fought so hard for to a sceptical EU. May has genuinely tried to ensure views from all sides of the debate are reflected in the agreement, and is now keen for the EU to be more pragmatic.
It is not yet clear how the EU will formally respond, but May has certainly given them plenty to consider.