Theresa May's Case for a Two-Year Transition Period After Brexit

The proposal could extend negotiations until 2021.

British Prime Minister Theresa May
British Prime Minister Theresa May delivers a speech in Complesso Santa Maria Novella in Florence, Italy on September 22, 2017. (Jeff J Mitchell / Reuteres)

Theresa May reaffirmed her belief that “no deal is better than a bad deal” when it comes to Brexit, but added that she would like to try for one anyway—even if it means going beyond the March 2019 deadline. In a highly anticipated speech in Florence Friday, the British prime minister called for establishing a two-year “implementation period” after the U.K. formally leaves the EU, during which time the U.K. would continue to observe EU rules and access EU markets.

“Clearly people, businesses, and public services should only have to plan for one set of changes in the relationship between the U.K. and the EU,” May said. “The framework for this strictly time-limited period, which can be agreed under Article 50, would be the existing structure of EU rules and regulations.”

This is the closest the British government has come to calling for a maintained status quo in the immediate aftermath of its exit from the bloc—an apparent attempt to placate the concerns of those fearing the heightened prospects of a “cliff edge” or hard Brexit, a no-trade-deal scenario in which U.K. exports would be subject to automatic tariffs and regulations once it leaves the bloc. Under the transition period, May said access to one another’s markets would continue “on current terms,” noting that “businesses, in particular, would welcome the certainty this would provide.”

The prime minister also used her speech to address two of the three major issues related to the U.K.’s withdrawal from the EU: the fate of EU citizens’ rights in the U.K. after it leaves the bloc and Britain’s financial obligations to the bloc, known commonly as the “divorce bill.” On citizens’ rights, May reiterated the U.K.’s stance that its courts—and not the European Court of Justice, the EU high court—would ensure the rights of EU nationals living in Britain. “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,” May said. “I am clear that the guarantee I am giving on your rights is real. And I doubt anyone with real experience of the U.K. would doubt the independence of our courts or the rigor with which they will uphold people’s legal rights.”

On the divorce bill, May reaffirmed that the U.K. would honor the commitments it made to the bloc’s common budget when it was last finalized in 2013 (the budget is agreed to by all of the EU member states every seven years, with the current one spanning until 2020). Though May did not name a specific figure, U.K. officials have estimated it would cover approximately 20 billion euros—a sum markedly lower than the approximately 60 billion euros Brussels reportedly wants (the EU has also never named a specific figure, though economists have projected it could cost the U.K. anywhere between 20 billion to 100 billion euros).

The offer hasn’t come a moment too soon. After three months and three rounds of negotiations, the two parties have remained deadlocked over the major withdrawal issues, with both sides conceding after the last round of talks that “no decisive” progress had been made—an omission that prompted some EU negotiators to question if reaching a withdrawal agreement by October as planned was still possible.

Professor Anand Menon, the director of independent research institute U.K. in a Changing Europe, told me that while May’s speech could be enough to break the impasse ahead of the next round of talks, which is set to resume in Brussels Monday, it may not do much more than that. “None of the big questions have been answered, all of the major disputes remain,” Menon said. “The U.K. is trying to hide the fact that we want more time, which is why she insists on calling it an ‘implementation phase.’ But that’s nonsensical, because we’re not going to have a deal to implement by March 2019. We’re going to have a deal to negotiate.”

Though the EU hasn’t formally declared whether such a transition phase would be accepted, its chief Brexit negotiator, Michel Barnier, praised May’s speech for its “constructive spirit,” adding that the U.K.’s request for continued access to EU markets on current terms for a time-limited period “could be taken into account.”

Menon said the chances of the EU accepting the proposal are good, and noted that more time to negotiate the withdrawal agreement, trade, and the future U.K.-EU relationship would be mutually beneficial. “It allows everyone to  keep trading while ensuring that we leave, and it doesn’t give us special treatment in the long-term because it’s explicitly time-limited,” he said. “The pressure is off.”