What is the true meaning of May's Brexit transition?

There is a fairly profound misunderstanding about what the PM meant when in Florence she talked about a "transition" period of "around two years" after we leave the EU on March 29 2019.

Alright I will own up. What I am saying is I did not properly understand what she meant.

I thought transition would include continued negotiation of the minutiae of our future trading relationship with the EU. But it turns out that is not right.

Her plan, which she nodded towards last night at the 1922 committee's traditional conference party, is that transition just means a period for businesses and citizens to make their technical and admin preparations for the post-Brexit world.

The nature of that post-Brexit world, the shape of our access to the EU's single market, would already have been negotiated by our Brexit negotiator Davis and theirs Barnier, all being well.

Which means that the big questions, what kind of regulatory alignment we would have with the EU, and which supranational body would arbitrate when either the UK or EU wants to change those regulations, would already have been decided.

And that brings the implication, which will partly reassure most businesses but will upset many Brexiteers, that we would start with a systemic deal that accepts all EU regulations, rather than negotiating waivers for sectors less dependent on the EU market.

So why rush to negotiate everything about Brexit that matters by the autumn of next year - which is the deadline if any deal is to be ratified by the formal Brexit day in March 2019?

Well it is largely because May has just about persuaded her Brexiteering colleagues to pay circa £10bn a year for two years to the EU budget during transition, as an investment in avoiding a profound business shock or so-called economic cliff-edge.

As you may have noticed, Boris Johnson for one is NOT happy about this.

But the Brexiteers don't want to pay a penny more. And they legitimately fear that if the negotiations were to continue after March 2019, the EU would have an incentive to string them out as long as possible, so that we would continue to pay that £10bn a year subscription ad infinitum.

Here is the punchline of course. Given that the earliest those trade negotiations now look as though they can start is December, there is a significant probability they will flop and we will exit with no deal. Apart from anything else it is not remotely clear that Barnier and the EU will accept an arbitrator of regulatory divergence that is not the European Court of Justice (which would be impossible for May to accept).

So as I have been shouting for months, we all need to think much more seriously about what a no-deal Brexit would actually mean.

It would not have to be catastrophic for us. But it would be complicated. And I will share some thoughts on this explosive issue in coming days.