- On 22 September 2017, in Florence, May proposed an implementation period of about two years after the exit planned for March 2019.
- She promised to honour current budget commitments and to register EU citizens arriving during the transition.
- The speech clarified the timetable but not the future relationship: companies and families still need alternative scenarios.
On 22 September 2017, British Prime Minister Theresa May gave a long-awaited speech on Brexit in Florence. In it she proposed an implementation, or transition, period of around two years after the UK’s formal exit from the European Union, planned for March 2019. During that time, access to the single market and the customs union would continue on terms very similar to the current ones.
The aim, she explained, was to avoid an abrupt break: citizens, businesses and public services would have to adapt only once, rather than to successive changes. The EU’s chief negotiator, Michel Barnier, called the speech constructive but asked for more precise positions so that talks could move forward. For the business world, the speech mattered because, for the first time, a concrete adaptation horizon was being discussed, although not yet an agreement.
The transition proposal
Besides the transition, May said the UK would honour its commitments to the EU budget for the current period, so that no member state would have to pay more or receive less because of the exit. She gave no figure: the size of the financial settlement was left to negotiation. EU citizens could keep arriving in the country to live and work during the transition, but they would have to sign up to a registration system.
She also ruled out two models for the future relationship, Norway’s, tied to the European Economic Area, and Canada’s, based on a conventional trade treaty, and asked for a bespoke agreement. She further proposed writing the withdrawal agreement into British law, with courts able to take European case law into account without being bound by it, a point that fell short of Brussels’ demand that its Court of Justice have the final word.
What was left open
It was a unilateral proposal, and the European Union had to accept it. Nor did it settle the essentials: what the trade relationship after the transition would be like, what would happen with customs and checks, or how professional qualifications would be recognised. The withdrawal agreement itself, with the financial settlement, citizens’ rights and the Irish border, also had to be closed first. In other words, it gave a timetable but not a destination.
For a company that exports to the UK, has subsidiaries there or relocates staff, the proposal offered a reference for the first time: until about 2021, the environment would resemble today’s. It was a useful reference for planning, though dependent on becoming an agreement, and not a guarantee.
What to review
It is worth going through contracts that run beyond March 2019, above all supply, distribution and financing ones: jurisdiction and governing-law clauses, payment currency, price revision and termination grounds. Also the residence and work status of the people involved, and any services or data flows that depend on single-market membership. The sterling exchange rate adds another source of uncertainty.
A good practice is to work with at least three scenarios: an orderly transition, an exit without a deal and an ambitious trade agreement, and to assess which decisions can be taken now without depending on which one prevails. It is also worth identifying the most critical British customers and suppliers and talking to them about their plans. Your adviser can help you prioritise the most sensitive points for your business.
With negotiations still open, planning for several scenarios costs less than improvising with a single one.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
