Theresa May's Brexit speech in Florence
The UK prime minister delivered a landmark speech in Italy on Friday with the aim of unlocking the stalled Brexit negotiations. Did she say enough to bring the EU and the UK closer together? With Alex Barker and James Blitz of the Financial Times, plus Henry Newman from the Open Europe think tank.
Presented by Sebastian Payne. Produced Aleksandra Wisniewska. Edited by Paolo Pascual.
Welcome to FT Politics, the Financial Times' podcast on British politics. I'm Sebastian Payne and in this week's special episode, it's all about Theresa May's big Brexit speech in Florence. What did she say that was new about transition, money, the future relationship, and the state of the talks.
To dissect it, I'm delighted to be joined by Alex Barker, the FT's Brussels Bureau Chief, James Blitz, our Whitehall editor, and our friend Henry Newman, from the Open Europe think tank. Thank you all for joining.
So let's begin by asking each of you what you made of this speech. We've talked about it quite a lot on this podcast, it's been heavily trailed, and it's going to be dissected for a long time to come. Alex, what was your perspective on what the British prime minister said on Friday afternoon?
Given the background and the kind of political strife we had in the UK before this speech, it seemed a little underwhelming. But if you look at it in terms of the dynamics of the negotiation, it actually made quite considerable headway.
I mean, first and foremost, six months ago, if we'd been talking about a standstill transition that included the entire [INAUDIBLE], free movement, budget contributions, it was almost kind of unthinkable at that point. And that has been landed.
And the EU has moved as well in saying, OK, we're willing to discuss that in the first stage of this, rather than right at the end of the process. So that's a serious development. Citizen rights, it looks like a deal is being cooked. That was another big sticking point around the ECJ, that's a big development.
On money, it's short of what the EU want, they're going to wrangle for months, I suspect. But the prime minister didn't close off the potential to negotiate and the EU will see that as encouraging. So in terms of the divorce negotiations, I would say it's kind of rightly been cautiously welcomed on the EU side.
James Blitz, what was your take on this? I think it's fair to say that you've been a little bit sceptical of the prime minister's approach to Brexit so far. But this time, this does seem to be a welcome dose of reality into the process from the British side.
Yes, that's very much what I think. I have been critical. I think Mrs. May's made a lot of strategic mistakes when she came to power in July, 2016. But I think this was an important speech.
I agree with everything that Alex has said. I think, first of all, you've had a very concerted attempt to try and break down the door at the talks and get into phase two. And she's made a lot of important moves there on money, on the rights issue.
I think on security, to add something to what Alex was saying, Mrs. May got into a lot of trouble over looking like she was using security as a bargaining chip. She's now talking about Britain being unconditionally committed to European security. So that's good news.
The really big thing, obviously, is the transition, though, as Alex says. It's two years. It's not just two years, though. I think Philip Hammond, who was going for the standstill transition, said he wanted three. And it's interesting she uses the phrase as of now.
As of now, I think it should be two years. But she's even left that open for Hammond a little bit. And that's good news. And it changes a lot of the optics. That the big problem, which we'll come on to discuss, is the end state.
What happens after the transition, what kind of relationship do we want with the EU? And that looks to me like it's still wide open. And the cabinet hasn't produced the consensus that's needed. But we can go on to discuss that.
And Henry Newman, what was your thought on this? There's a lot of things, again, you would have liked in this speech. But it's taken a long time for us to get to this phase in the process. Because there is an argument that everything Mrs. May has said in Florence, she could have actually said last year.
Well, perhaps. Certainly, the last time I was on the podcast, I was saying exactly that, that we were overdue in a substantive update from the prime minister on the government's overall Brexit direction.
I think that's partly the reason why we've had so many noises off from within the cabinet. Because there's been no single document, no single speech that you can point to and say, this is the policy. But I think she's generally developed a sort of grown up Florentine consensus and brokered her way through.
I might disagree slightly with James that we have got a little bit more clarity about the future. But I do completely agree that the most important substantive change is this standstill transition. And that always seemed to me the only real way through for the transition that business will require.
The other alternative would have been to stay a member of the single market, perhaps through one of the existing institutions like the EEA. But for many conservative MPs and Brexiteers more generally, that was a bridge too far and they spoke about putting blood in the water if that happened.
And they wanted to sort of create the facts on the ground that pulled Britain irrevocably out of the EU and the single market institution. So they've got their way on that but I think the standstill is actually a very sensible way through it, it doesn't offend the EU's determination to avoid cherry picking and keep the integrity of the single market.
And finally, I think the other important thing here was the tone was extraordinarily different. So she avoided saying no deal is better than a bad deal. She sort of said that was the policy when she was asked but not even repeating the phrase.
It was not very convincing at the end either.
Exactly. And I think she also said, exactly as James pointed out, that on security and defence, our commitment was unconditional. And on citizens, she said, thank you for coming here, EU nationals, thank you for what you do and how you contribute.
And then I think she also sort of came close to almost apologising for Brexit. She said, look, it's not you, it's me, sort of. She said, Britain has always had a different relationship with Europe from the rest of the continent. And this is, in some sense, is a sort of logical conclusion to this. And we part in sorrow.
But I think all of those were designed to put a very different approach on the table. And that comes alongside, essentially admitting that we'll be paying money for the transition period, which gets us at least halfway towards the Brexit bill.
I think this new approach, James, is a factor of several things. One of which is political reality, that since June's general election, there's had to be a recalculation from the government about how they look and how they approach to Brexit.
And as Henry said, the no deal is better than a bad deal, which is what was put forward in the Lancaster House speech in January. Which essentially said, if there's not a good deal on the table, Britain will walk away and we will bomb out of the EU without any kind of withdrawal agreement, even though she did say that in the question, it feels like there's a big change here. And she even plays Jean-Claude Juncker and this idea that Europe is going to develop on its own. So it was, again, a very different pivot from the UK prime minister, who's taken often very brisk language towards the EU, and is now taking a much friendlier approach. You know, strongest friend and partner.
Yes, I very much agree. I think the tone was totally different from Lancaster House in that regard. Much more diplomatic, much more accepting that the European Union has a legitimate task now and, if you like, with its member states growing more-- growing closer together. And as you say, what was interesting at the end, far from saying that no deal was better than a bad deal, she actually has language about how if we don't have a deal, if we don't have an agreement, this is going to be bad for absolutely everybody. So she really moves the language on in that regard.
Now, I think you can say, if you're going to be ungenerous to her, that this speech reflects, in many ways, the strategic mistake she made early on, in that this is quite a big correction of strategic mistake she made early on. You could make the argument that she triggered Article 50 far too quickly, that she had done so without proper preparation by the civil service of the kind of work that needs to be done to leave, but six months after triggering Article 50, she finds herself having to have this [INAUDIBLE] transition because we're just not going to be ready to leave.
And a lot of her language about leaving the ECJ, again, earlier on, was mistaken. So she's had now to make a correction and talked about some kind of arbitration involving both the ECJ and the UK court system. So in that sense, this was actually a very difficult speech. But I think if she can now come away from this and move the UK towards phase two, she might begin, at the end of this year, to look as though she actually knows what she's doing. And that's the good news for her.
Alex, let's talk about money, because that was one of the crucial things in this speech here, because Brussels is very interested in making sure the EU budget doesn't have a big hole in it on the official Brexit day, which would be March 2019. Based on what the prime minister said, what kind of sums are we talking about? Because you know, we, the FT has reported that over 20 billion pounds would be continued to be paid. But that may be the beginning of it, because she did talk about fulfilling past commitments and future, as well. So what was your reading in terms of what kind of sums will continue to go to the EU after Brexit day?
There are three main kind of chunks of money that are being discussed. The first one is around 20 billion old debt that the UK built up in terms of unpaid bills. That would need to be paid off after 2019. And that's about 20 billion. And that actually corresponds with, coincidentally, the 20 billion gap that the EU will have in years '19 and '20. And just because the UK would have withdrawn and wouldn't be making contributions anymore. So basically, Theresa May is filling that gap and ensuring they don't have to reopen their budget early.
The second chunk are long-term commitments like pensions. That's another 10 billion or so. And then there's a third chunk, which is the contributions you'd make to participate in the single market in the years '19, '20, '21, if you're staying for longer. And that's around five to 10 billion a year, in those years.
So the EU are saying, thank you very much for filling our gap. He's got a great relief to them. But it's also something in a way they would take for granted because they'd say, well, you've got a standstill transition, of course your contributions would continue. What we're really interested in is the liabilities you have that run for many, many years. Will you give us a guarantee that you're going to honour those well after you've left the EU. And that's going to be the kind of meat of the discussion.
One thing that struck me from the language the prime minister used today is what's going to happen between 2020 and 2021. Because that could be a situation where the UK is essentially, you could say, paying for access to single market, which is something conservative [? US ?] sceptics have said that's actually not acceptable. It was Boris Johnson who said in his infamous Telegraph article that is not something we're going to be able to do. Is that a possibility? Because the budget plan goes up to 2020. The transition, you know, if all goes as we expect, would be 2021.
Well, she talked about a staggered transition. Some sectors in, some sectors out. You could imagine the Customs Union potentially even lasting beyond two years. She didn't mention anything about the Customs Union. And every bit of this would probably require a contribution of some sort.
You've then got, after the transition, probably an adjustment phase, where you're working into a new agreement. And that potentially could include some implementation costs. And all of that you can work with to basically disguise what would be this kind of Brexit bill. So there are lots of channels of money flow that you could use.
And in terms of the most significant thing for the EU is that she didn't close any of that off. She didn't follow Boris Johnson and say, look, we're going to be very clear there's no single market contributions. She actually talked about quite a wide range of programmes they could participate in.
Right. Well, I think that's absolutely right. And I think she also said, as you're implying, that we could continue to participate in programmes in the future for which we would specifically pay. And that's obviously different from Boris Johnson's comments about paying for market access. But she said we'd pay for education, cultural, and scientific programmes, which I think makes perfect sense.
So overall, I think this has moved a very long way. The question is, of course, whether the 27 will feel that it's sufficient to switch to the next stage of the talks. But I think there's a danger that if they don't-- and certainly they're enjoying their sort of theatre of negotiations with the commission saying go back and redo your homework, Britain. But there's a danger that, if they don't, they're somehow potentially calling into question their own legal obligations under Article 50 to not just negotiate with the UK, but to conclude an exit deal which takes into account the future arrangements.
So I think there is a bit of a difficulty there. And I'd like to think a bit about-- I mean, we talked at the beginning about the future direction that this points to. And my view was that actually the speech went further towards a sort of Boris Johnson [? Leave-o-Vison ?] within the cabinet in terms of the fact that it crucially said that the UK would-- there'd be some areas of regulation and rules in the future which the UK would share essentially the aims and accept the methods of the EU in terms of regulation. But there'd be others where we would not share their aims in terms of the regulation, and therefore not want to share their methods.
And that regulatory divergence means that the UK is planning not to be in a position where we are simply having regulations faxed across to us from Brussels, and we're not in a sort of regulatory ERM. Now, some would say that might never have happened, but from what I've heard from officials I've spoken to inside government, that was very much one of the options that was on the table and being seriously considered in Whitehall.
And now just to pick up on that point, James, because towards the end of Mrs. May's speech, she talked about this idea of a Norway-style model or the Canada-style model. And this is essentially the ideological disagreement. Does the UK sort of hug Brussels after Brexit, because this is after the transition period, or does it move a bit further away. And I think when we get the next Brexit speech, after that, one would assume that is what Mrs. May will be tackling in that.
And it is problematic for her because there's two gangs, as Henry was referring to sort of in the cabinet. You've got people like [INAUDIBLE], Philip Hammond, and Ruth Davidson outside the cabinet. And those people would want to follow a more Norway-style option. But then you've also got the Michael Gove, Boris Johnson. And they really want to push towards a more free trade side, where Britain can look out towards different areas of the world. Bringing those two together is a big political challenge for Mrs. May.
I think it is a big political challenge. And where I disagree with you is that I don't actually think she did opt for one way or the other. I think she did remain rather equidistant. I think we did come away from the speech without a proper resolution of the Hammond versus Johnson issue. Look, the first and most important thing is that the timing optics have changed now.
I mean, in the end, this is an issue that doesn't necessarily have to be resolved in its entirety before March 2019 it goes into the transition period. And so there's probably more time now to sort this out. But then also on regulation, there was also some really strong language in the speech about how we don't want to have a kind of Singapore-style race to the bottom, either. We do want to be a country, the British people want to be a country which actually has very high standards. It doesn't want shoddy goods.
And so I think she actually rather counterbalanced that. I came away with this feeling that although she'd been very clear on the transition, very clear on doing what was necessary to move to phase two in October of the talks, but where she hadn't really shown that much clarity was over the long-term future, because I just think the cabinet is completely split on the issue.
And Alex, what was your reading of that part of the speech about the future relationship?
From the Brussels perspective, I think if you go and speak to the negotiators here in many of the member states, they all see it as the most kind of unrealistic part of the speech. And that's for a few reasons. One, because I don't think they would have seen that tension between the two sides of the cabinet resolved in the direction she's taking.
Secondly, they see the word partnership and think what kind of partnership does the UK want? If it involves the UK having more of a say over the way the EU rules develop outside the union than they did inside the union, that's pretty much a red line that it's unacceptable for them. And so the call for creativity, they see it as some kind of challenge to the integrity of not just their rules, but their control of the rules.
And I think one of the themes we'll see in coming months is that they fundamentally see the UK as a junior partner in this. And they're not going to be willing to provide the kind of mechanisms that Theresa May is hinting at that would allow the UK to feel that they're not just rule-takers in those areas where they have a very close relationship.
And one point I'd pick up on James, he said we've got more time, you know, because the transitions will kind of resolve a lot of these issues. That's certainly the case, but I think that the fundamental tensions are going to have to be settled quite soon. I mean, if the EU tomorrow turned around and said, fantastic, you've made sufficient progress, now let's talk about trade, what do you want, I think there's going to be a few cabinet meetings about that. And they are going to expect the UK to take the initiative about the kind of relationship they want, and be very specific about it. Not options papers, but say, look, this is the framework, this is the legal mechanism, this is where we want to be a bit more like rule-takers. And that's going to really cause a lot of the questions in Westminster, I think.
To be frank, I'm glad that there's a cabinet discussion on these issues. These are the most important issues facing the country.
This is what Brexit comes down to, ultimately.
Yeah, quite. I mean, if we aren't discussing it, if the cabinet isn't discussing it, the politics and the media and everybody else aren't considering these completely fundamental questions, what are they there for? I mean, I think the fact that the cabinet has failed to discuss many of these questions until now is certainly lamentable, but it's good if they continue to have a very vigorous debate internally and the prime minister continues to be able to build a consensus, as she's done I think today. And you're going to have different views around the table. That's part of the point of having a diverse cabinet representing different positions.
James, to pick up on the security angle of this, because in the Lancaster House speech back in January, this is one area where the government's thinking really does seem to have changed, because it essentially put the card on the table to say security is something the UK is good at. It's a key partner in Europe. But if we don't get a deal, maybe that's something that might come into question. A lot of people are quite surprised at that. Now, we've sort of done an 180-degree turn, and the veiled threat is gone, and she's called for a new treaty that would cover law enforcement, criminal justice, defence, security. And again, it shows goodwill towards these negotiations.
Yes, I very much agree with that. It was actually in the Article 50 letter that I think she caused the most anxiety in Europe, where she seemed to be using security as a bargaining chip, basically saying if you don't give us what we want on trade, you know, it'll be disappointing if all that gets mucked up.
She's moved to totally different language. They signalled it in the partnership paper a few weeks ago. What it actually means in practise is much less clear. I think if it comes to bilateral defence cooperation, then I think there's an awful lot that could be done very easily and simply, because broadly speaking defence is all about broad political statements. We will, for example, send one of our ships to help Operation Atlanta deal with pirates off the Horn of Africa and so on.
Note, however, that although we might give that assistance, a lot of the securocrats in the UK say we won't actually be in on the initial decision-making. So if the EU wants to do something and we give assistance, that's fine. But we're going to do that in a kind of passive way, if you like, not actually be part of the decision-making.
Where I think things are going to be much more difficult still is on the whole question of counterterrorism, because there I think an awful lot boils down to EU legal agreements on arrest warrants and so on. And it's unclear how the UK will fit into that. That's a much more nitty gritty set of issues. And I'm not entirely clear how her idea of a treaty will address that.
Henry, to pick up another big bit of the speech was about citizens' rights, which has been really one of the thorniest and most complicated issues of the Brexit talks here, because the EU has been looking for reassurance from Britain that the EU citizens in the UK won't be second class after Brexit. And what Mrs. May put forward is the idea that ECJ [INAUDIBLE] can be, quote, taken into account, and their rights will be enshrined in UK law.
That seems like a pretty constructive agreement. I think as Alex said in a previous podcast on this, the EU is looking for [INAUDIBLE] chink of light between where we are now and where we go in the future. Do you think this offers that?
I certainly think it offers another step forward. And I think the-- as I said at the top of the podcast, the tone was very different from her. That was very important. And she got herself in a bit of a mess by letting it look as if she was treating EU nationals living in the UK as bargaining chips--
For the past year.
--even if she hadn't intended to do so. And I think actually in many ways her decision not to-- well, the EU is in danger of vindicating her decision to not unilaterally guarantee the rights of EU nationals by being so difficult about letting us make progress on this. But anyway, I think the-- certainly again she's offered a further guarantee here, and she's offered to protect those rights in UK legislation. But she's right to point out that our judges are extraordinarily prepared to rule against the government to protect citizens' rights. So I think overall the offer made by the government for EU nationals is very fair and very reasonable, and Europe does need to move on this.
Right. Well, this brings us to our final point, which I'm going to put to each of you now. The whole point of this speech was to unlock the Brexit negotiations, and for that crucial summit on the 19th of October for Theresa May to get the go-ahead to begin talking about a future relationship, because for her that is proof this process is constructive, Brexit can be a success in her eyes, and that we're not just wallowing in divorce terms. That was what she set out. So I want to know from each of you, do you think she has said enough, and should the EU move forward? Alex.
I think should and will are different points. They're going to probably take their time, because the discussion on the transition isn't as mature within the 27 as you'd imagine. And there are some countries that think why should we offer guarantees early. You know, this uncertainty is doing quite well for us, thank you. I mean, we've got businesses coming over, the economic pressure is building on the UK. That's leverage we have. It's more in their interests than ours. And holding off till December I don't think would matter then at all.
So that's going to be one of the most important considerations as they review how much progress is made on [INAUDIBLE]. At the same time, they're also well behind on that trade discussion. And some of them may well feel that it would be in their interest and the UK's to start that early to try and resolve some of the tensions on both sides in the kind of coherence of their positions. And the earlier that starts, the better. I suspect there will be a stepping stone in October, where they say we've made progress, we'll start discussing between ourselves on the trade front, and maybe by November we'll make sufficient progress and get the talks started.
Henry, so should they, yes, will they, probably not. I think for the EU this is all about-- or it's very tempting for it to be about the theatre of negotiations. And as I think I said before, go back and redo our homework, that's not good enough, we need more. But I think they will recognise that the UK has moved substantially.
And I think although it's not necessarily intrinsically crucial, the German elections are an important factor here. I don't think it'll shift Germany's position. I don't think we should wait for Mrs. Merkel to ride over the horizon on the white horse. But I do think that the process of coalition-building after the German elections will take out Germany for quite a while. And I think it's sort of-- as Alex was saying, probably by December is more realistic time to look for sufficient progress. So I think that still leaves plenty of time to make proper progress on the next phases of the talks.
And finally, James.
I think the EU should move in October. I think Mrs. May has put a lot down on the table. Will they, I agree with you, I think they probably won't because it's part of this negotiation that they're going to want to make the British sweat. But the fact is that the British have moved. This is actually a slightly more generous speech from Mrs. May than had been anticipated.
And the only issue is for the British is that once they have actually pushed the door down and got to phase two, they don't at this moment know what they actually want to offer as a way forward. And that's the long-term problem for the British.
But does Brussels know that, either? Not sure.
But do they need to know, Henry? I mean, they will be reactive. I mean, after a period, the first stage where they've been painstakingly detailed and controlling about how the whole thing runs and what they need, they're going to be much more reactive and wait for the UK to take the initiative [INAUDIBLE].
Well thankfully, on the issue moving forward I think we've all got a broad consensus that it should. Will it? Well, we'll find out. We've got two more rounds of Brexit talks before the October 19th summit. Mrs. May also will address the Conservative Party Conference, possibly with a bit more of a tubthumping speech about Brexit. But either way, this is a significant day.
Thank you very much to James, Henry, and Alex for joining. We'll be back next week for another [INAUDIBLE] FT Politics after Labour Conference in Brighton. Until then, thank you for listening.