In a major speech, the Prime Minister said there was “no escaping the complexity of the task ahead” as she accepted “tensions” in the British negotiating position and detailed the costly new systems needed to maintain post-Brexit trade.
She also admitted that after withdrawal the UK will have less access to EU markets, will be affected by the European Court’s judgments and must commit to staying in step with some Brussels rules.
But the new realism also allowed Ms May to flesh out for the first time more detail on the mechanisms she hopes will allow Britain to maintain trade.
The speech marked a clear change in her rhetoric, from the opaque days of “Brexit means Brexit” to what Downing Street aides are calling a more “pragmatic” approach.
Speaking to an audience of Tory cabinet ministers, business people and diplomats, Ms 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.”
In words apparently directed at Tory Brexiteers, adamant about ending the European Court of Justice’s jurisdiction, she said: “The second hard fact is that even after we have left the jurisdiction of the ECJ, EU law and the decisions of the ECJ will continue to affect us.”
A further “hard fact” they would have to swallow was the UK having to make binding commitments to keep British regulation in step with EU rules, for example on “state aid and competition”.
A reciprocal commitment on fair competition rules is one of five key pillars Ms May said were needed to secure a trade deal, also including an independent dispute resolution body, data protection arrangements and “maintaining links between our people”.
To achieve a deal on goods, the Prime Minister said there would need to be “a comprehensive system of mutual recognition” of standards.
She added: “The UK will need to make a strong commitment that its regulatory standards will remain as high as the EU’s.”
The sentence in the speech is said to have originally called for a “binding” commitment, but was downgraded to “strong” amid a push from cabinet Brexiteers on Thursday.
She then fleshed out detail of the two potential customs solutions, that also begin to spell out how she believes the Irish border question can be addressed.
But both are dependent on the bloc’s agreement to new systems and potentially complex and costly administrative and IT systems.
There were also commitments to try and remain in some EU agencies and a demand that financial services be covered by the trade deal eventually agreed.
Ms May also challenged the EU to face up to the “tensions” in its own position, and said it is incumbent on Brussels to help solve the Irish border problem.
Former Attorney General Dominic Grieve, who backed Remain and has been at the forefront of a push to keep a customs union on the table, told The Independent: “This seems to me to be much more realistic about the options and it was helpful to understand the Prime Minister’s thinking.
“I do, however, think that it highlights the enormous complexity of what’s being undertaken even after we’ve persuaded our EU partners to accept it.”
Sarah Wollaston MP, who has also backed staying in a customs union, called it “a pragmatic and positive speech”, but noted that it needed EU approval of customs regimes or would mean little.
Prominent Scottish Tory Paul Masterton told The Independent the speech was “honest” and was more “detailed in our vision”.
Another Conservative MP who backed Remain went further off-record: “There was realism about the considerable cost that it’s going to entail – she ran through the customs options, saying ‘this is going to need this, and that is going to need that’ – well that is all complexity – costly complexity. We have a mountain to climb.”
The senior Tory went on: “It still leaves open the big issue at the end of all this – if what she is asking for, if what she agrees, is significantly different than what was set out at the referendum, then what?
“It would be quite wrong for Parliament to pitch the country into radical complex and costly transformation, without going back to people and saying ‘is this really what you want?’ in another referendum.”
Tory Brexit rebel leader Anna Soubry, who has tabled the amendment pushing for the UK to remain in a customs union with Europe, agreed – although did not mention a new referendum in public interview.
She said: “It will not deliver the same benefits, the positives to our economy, as we currently have, and I think there is an acceptance of that by her.
“And frankly, the British people need to look at this and say, ‘do I really want all of this? Is this what I voted for?’”
But Brexiteers on Ms May’s benches also welcomed the speech, and said the new approach by the Prime Minister would rally the British public towards EU withdrawal.
One Leave-backing MP said: “Soubry was ranting on the BBC. But she is going to be increasingly isolated.
“Public opinion is going to come round behind the Prime Minister on this and they will find themselves isolated.”
Jacob Rees-Mogg, at the forefront of the Tory Brexiteers, told The Independent: “The Prime Minister’s speech is welcome, a clear statement of how we can leave the European Union and maintain friendly relations with our European neighbours.”
Brexit-backer Andrew Bridgen said: “I was delighted with its content and tone. It was firm, but very fair, but reasonable in setting out the UK position.
“It puts the ball very firmly in the Mr Barnier and Mr Juncker’s court. If they don’t accept it in good grace it will show them for what they are.
Labour Party leader Jeremy Corbyn said: “After 20 wasted months, Theresa May has once again failed to bring real clarity to the negotiations – and worryingly, she admitted that her approach will reduce our access to European markets.
“She read out a long list of problems but failed to provide solutions, particularly on the urgent question of preventing a hard border in Northern Ireland.”
European Parliament Brexit coordinator Guy Verhofstadt said in response that he hoped “serious proposals have been put in the post” by the Prime Minister.
But the key figure in negotiations, Commission frontman Michel Barnier, tweeted that he welcomed it and that the new clarity about “trade-offs” would inform the EU’s guidelines for agreeing a trade deal.
The European Council is expected to publish its draft guidelines for negotiating a future trade deal with Britain next week.