Theresa May’s challenge: Unite her Cabinet around a Brexit vision

The mood was relief in the Number 10 team this morning, as it was confirmed that they had got there in the end.

After a rollercoaster few days last week, in which it looked as if the move to trade talks could be delayed until next year, today EU leaders officially ruled that phase two can begin.

We have the EU’s terms: they accept that Britain wants a transition deal lasting around two years. According to the guidelines issued by the Council today, during this period after March 2019, all the current rules would apply including free movement of people, but we will have no say in making them.

The UK will remain part of the single market and the customs union; pay into the budget; accept all the EU’s structures and the remit of the European Court of Justice, in our new status as a “third country” with no right to elect or nominate representatives to EU bodies.

Publicly welcomed by Theresa May and Davis Davis today as a positive step, this is – as expected – essentially a two-year standstill, rather than the “implementation period” the PM promised her Brexiteers.

But it’s an offer which Brexit-supporting Conservatives I’ve spoken to think the Government would be wise to accept – and swiftly.

Minds in Westminster are now focused on the tight timescale. Preliminary talks about the future relationship will begin in March and hammering out a common EU position on trade with the UK – given the divergent interests of its members – will be much thornier than the divorce issues.

Meanwhile, Theresa May’s warring Cabinet has not yet discussed what it wants from the “end state”. Those discussions will begin next Tuesday, and the battles between the Philip Hammond faction and the former leaders of Vote Leave, Boris Johnson and Michael Gove, will have to play out.

By October 2018, it is still the British government’s official position that they hope to have the outlines of a future trade deal to put to the EU27 and – as a result of Wednesday night’s Commons defeat – to our Parliament for approval.

Insiders on both sides are deeply sceptical that the talks will have progressed much beyond the transition period within the next ten months, despite David Davis’s recent promises that a trade deal “isn’t that complicated”.

The Leavers have floated the idea of changing EU laws – or opting out of certain policies – during such a transition period, which the EU has made clear is off the table.

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One Conservative told me: “Boris and Gove will need to consider how much time and effort they put into achieving carve-outs during the transition period.

“They might publicly suggest they are pushing for it, but they would be wise to concede the transition period will be the status quo, and concentrate on getting what they want from the future relationship. It’s that battle that they really need to win.”

MPs also point out that a long battle over the terms of the transition deal would embolden the increasingly powerful group of Tory rebels who defeated Mrs May this week to secure a meaningful vote, and could well do so again in the coming months.

Number 10 sources say the EU’s position today is positive, because it shows an acceptance of the Government’s timescale – a two-year transition period after March 2019, and then a new deal signed soon after Britain is out of the door.

“They accept that we want to move quickly”, one Downing Street source said. A free trade deal in the early part of 2021, if it can be done, would mean a clean break before the next election; and avoid too many complications over Britain’s payments into the EU budget beyond 2020.

But having managed to carry her party along with her in the first phase – including a £40bn bill – political pressure on Mrs May from within her party will mount over trade.

Jacob Rees-Mogg MP sounded a warning shot on Sky News today, saying: “As usual the EU has set out a hard-nosed negotiating stance, we must be equally robust. If the acquis, the ECJ and free movement remain we would not be in an implementation period but would still be de facto in the EU.

“I assume that Her Majesty’s Government will make its own proposals and not roll over in the way it did at the beginning of the process.”

EU leaders demand in this document that Britain provides “further clarity on the framework for the future relationship”.

Whether she manages to find a position her Government can unite around is likely to define Theresa May’s premiership.

(c) Sky News 2017: Theresa May’s challenge: Unite her Cabinet around a Brexit vision