May 'misspoke' on transition to Brexit

A bunch of Tory MPs have told me they’ve been assured by 10 Downing St that the PM misspoke when she suggested yesterday there could be no agreement on a post-Brexit transition or implementation period till the post-transition free trade agreement has also been agreed.

That would imply a transition would not be settled till next autumn at the earliest. By which point some of the overseas businesses based in Britain - collectively responsible for just under a third of our gross value added or economic output - would have relocated capital and people to the rest of the world on a scale that would leave the UK worryingly poorer.

And certainly British based international businesses are threatening to up some of their sticks if a transition isn’t promised by the end of 2017.

So what is the PM’s and the government’s actual position on transition?

Well it is subtly but importantly different from what May said.

I am reliably she would in fact very much like a transition agreed in principle at the EU council meeting in December or February.

This would specify that for a couple of years after March 29 2019 the UK would continue to be a member of the EU single market and customs union, still subject to the rulings of European Court of Justice (to the chagrin of the Brexiteering ultras).

We would in effect be a non-voting member of the EU, a Norway-not-so-lite; we would be bound by rules and laws we had no way of influencing.

That said, there would be modest examples of liberation from Brussels, if May were to get what she wants - such as the possible end on Match 30 2019 of the UK’s membership of the Common Fisheries Policy, or Gove’s dream, and a proper beginning for Liam Fox in his role as the UK’s negotiator-in-chief of trade deals with all countries other than those in the EU (because of an EU ban, right now he is International Trade Secretary more in name than substance).

So “transition” would mean most of our businesses would experience no serious change in their terms of trade with the EU for at least a couple of years - which is what most businesses dearly want.

But why didn’t PM TM make clear that such a transition should be in place, more or less, by the turn of the year?

It is because she is an intellectual purist, who does not see how we can commit to a transition or implementation period till we know precisely what we are implementing, viz the destination for our economic journey.

Apart from anything else, May still firmly believes we have to retain as a threat, arguably of mutually assured destruction, that we would be thrilled to do no deal at all rather than a massively sub-par one - and any transition in those unprepossessing circumstances would be a bridge to nowhere.

So what the PM should probably have said, and may yet as soon as tomorrow, is that the rest of the EU may agree the idea of a two-year transition by the turn of this year - but that binding, non-revocable agreement would be conditional an reaching an entente with the EU on trade nine months later (and that may never be forthcoming).

In other words businesses may be able to tell themselves that by the end of the year the locomotive called transition will have just pulled into the sidings.

But if they want and need a legally binding guarantee that their won’t be massive disruption to their terms of trade until March 2021 at the earliest, Theresa May will continue to worry and disappoint them.