Theresa May has promised to be “straight with people” and face up to the “hard facts” of Brexit, including that leaving the single market will mean the UK and EU enjoy less access to each other’s markets.
The prime minister used her third major speech on what Britain wants after leaving the EU, delivered to ambassadors and business figures at London’s Mansion House, to hit back at critics who say the government is pursuing a “cake and eat it” strategy.
May’s decision to double down on red lines on immigration and trade while also opening up areas of potential compromise was welcomed by Tory remainers and Brexiters, whose relationship has become increasingly fractious in recent months.
However, the speech triggered a muted response from Brussels, with some high-profile figures accusing May of failing to go beyond “vague aspirations”. The Labour leader, Jeremy Corbyn, said it simply piled confusion on top of complication.
The European commission’s chief negotiator, Michel Barnier, welcomed the intervention, but his suggestion that “recognition of trade-offs” would inform EU guidelines, to be published on Tuesday, was described as an ominous warning by some observers.
In a speech that was relocated from Newcastle as a result of the bad weather, May said: “I want to be straight with people – because the reality is that we all need to face up to some hard facts.
“We are leaving the single market. Life is going to be different. In certain ways, our access to each other’s markets will be less than it is now. How could the EU’s structure of rights and obligations be sustained, if the UK – or any country – were allowed to enjoy all the benefits without all of the obligations?”
But she suggested the EU had pushed too hard, adding: “So we need to strike a new balance. But we will not accept the rights of Canada and the obligations of Norway.”
Among the hard choices listed by May were less access to EU markets, the UK still being affected by the European court of justice after Brexit, and the country being constrained in its ability to lower regulatory standards for some goods.
She said she accepted there was a balance to strike between obligations and rights, but insisted that Britain’s desire for a deep and ambitious partnership was not the same as cherrypicking.
“The fact is that every free trade agreement has varying market access depending on the respective interests of the countries involved. If this is cherrypicking, then every trade arrangement is cherrypicking,” May said.
The prime minister’s vision was described by some as the softest Brexit possible outside the single market and customs union, but she pleased pro-leave MPs by hinting that future parliaments could opt for a harder form of Brexit.
One source close to the European Research Group of pro-Brexit politicians insisted they were not going to quibble about details around regulatory questions at the border, and said they saw this speech as simply a staging post on the way out of the EU.
They also welcomed the language on Northern Ireland. May said Britain must take responsibility for avoiding a hard border, but warned the EU that she would not accept anything that would “damage the integrity of our precious union”.
She insisted the UK would be leaving the EU customs union, but called for a new agreement that would secure “as frictionless a border as possible”.
May also set out her hopes to remain part of EU agencies, including those involved in chemicals, medicines and aerospace, which would require Britain to abide by the rules and make an “appropriate financial contribution”.
However, despite setting out some areas in which the UK accepted ongoing obligations, May was unswerving about Britain’s red lines, around ending free movement and being able to strike trade deals with third countries.
She rejected a customs union with the EU – in contrast with the Labour party – by arguing that such an arrangement would be asymmetrical and prevent the UK from striking new trade deals after Brexit.
Instead, she argued for two potential alternatives: a “customs partnership” in which the UK would mirror EU requirements on imports at its borders; and a “highly streamlined customs arrangement” using technology to minimise friction on the border.
The first option has been described as unrealistic by EU officials, and even dismissed as blue-sky thinking by the Brexit secretary, David Davis.
May said there would need to be a “strong commitment” that regulatory standards would remain as high as within the EU – a phrase watered down by Brexit supporters in her cabinet from a binding promise.
Overall, she said, the Brexit process would be governed by five tests: “Implementing the decision of the British people; reaching an enduring solution; protecting our security and prosperity; delivering an outcome that is consistent with the kind of country we want to be; and bringing our country together, strengthening the precious union of all our people.”
And she set out five foundations: “reciprocal binding commitments” to fair and open competition; an independent arbitration system; ongoing dialogue with the EU; ensuring the EU and UK have the means to consult each other regularly; and arrangements for data protection and links so British and EU workers could travel to each other’s countries within a new system.
Guy Verhofstadt, the former prime minister of Belgium who is the European parliament’s Brexit coordinator, said: “Theresa May needed to move beyond vague aspirations – we can only hope that serious proposals have been put in the post.
“While I welcome the call for a deep and special partnership, this cannot be achieved by putting a few extra cherries on the Brexit cake.”
The director of the Resolution Foundation thinktank, Torsten Bell, said the prime minister was essentially laying out “as soft a Brexit as she can outside the single market and customs union”, but allowing future prime ministers to take a harder stance if they wished.
Senior leave campaigners in parliament seemed satisfied with the speech. Iain Duncan Smith, a former Tory leader, described it as “upbeat and clear” and called on the European commission to “stop playing games” and treat Britain as an equal partner.
A customs union means that countries agree to apply no or very low tariffs to goods sold between them, and to collectively apply the same tariffs to imported goods from the rest of the world. International trade deals are then negotiated by the bloc as a whole.
For the EU, this means deals are negotiated by by Brussels, although individual member state governments agree the mandate and approve the final deal. The EU has trade deals covering 69 countries, including Canada and South Korea, which the UK has been attempting to roll over into post-Brexit bilateral agreements.
Proponents of an independent UK trade policy outside the EU customs union say Britain must forge its own deals if it is to take advantage of the world’s fastest-growing economies. However they have never explained why Germany manages to export more than three times the value in goods to China than Britain does, while also being in the EU customs union.
He said the prime minister wanted to secure a special relationship that seemed “reasonably and wholly achievable”.
Remainer Nicky Morgan, the Conservative chair of the Treasury select committee, said this was “recognition at last of the complexity involved in Brexit”, including the hard choices ahead and need for compromise.
Sam Lowe, a trade expert at the Centre for European Reform, said: “Reality is starting to seep in. It is positive that she has come clean on the fact that we won’t be able to get everything we want. And indeed that there are trade-offs.
“It remains a shame that while May has correctly identified that remaining close to the EU is economically in the UK’s best interest, she was seemingly otherwise unable to put forward a palatable [to the EU] means of doing so.”
Arlene Foster, leader of the Democratic Unionist party, welcomed the speech, but former remainers were disparaging, with the Labour MP Peter Kyle calling it “meaningless soundbites”.
