The Prime Minister shepherded ministers behind a plan that would give Britain “the right to choose to diverge” from European Union rules in future.
It was reached after eight hours of talks among Cabinet ministers gathered at the PM’s official country retreat.
Health Secretary Jeremy Hunt this morning revealed that the Government believed key sectors of the economy such as car manufacturing could mirror EU rules on a “voluntary basis” in future in order to smooth exports and imports, while in other sectors there could be different rules over time.
But in Brussels, officials said EU leaders will press ahead with their own post-Brexit trade offer in March, rejecting Mrs May’s tentative “three baskets” approach.
“We cannot make sense of all the ideas they have floated because lots of them are inconsistent,” said an EU diplomat of the UK Government plans.
Frustrated by what they view as unclear UK positions, EU leaders plan to make a no-frills offer based loosely on an existing free trade deal with Canada.
“That will happen no matter whether more or less detail will come from London by that time,” said one senior EU official close to the talks. “We are where we are, and time is ticking.”
The EU’s paper will reflect “what we know about the UK’s red lines”, the official said.
Commission president Jean-Claude Juncker has repeatedly asserted that Mrs May’s red lines - such as rejecting free movement, the European Court of Justice and any customs union - leave no other blueprint than a basic free trade agreement.
Mrs May, however, will seek what David Davis called “Canada plus plus plus”, giving free trade in goods and mutual recognition of standards in a range of areas going beyond the Canada deal.
Government sources said a big speech spelling out her vision will probably be staged next Friday at a location in the UK.
The eight-hour meeting at Chequers which ended at 10pm last night was being hailed by Brexiteers as a victory for them. “Divergence has won the day,” claimed one attendee. Others, however, said the emphasis was on perfect alignment in the short term.
Tory MP Sarah Wollaston said it sounded like a “meaningless” fudge. “‘Ambitious managed divergence’ pretty meaningless without further context, more an ambition to manage a divergence of views,” she said in a tweet.
Mr Hunt, speaking on Today, said the Cabinet committee had agreed on a policy which will put Britain outside a customs union but would match Brussels rules in certain sectors.
He said: “I think the central understanding - you have divergent views on a big issue like Brexit as you would expect - but the central common understanding is that there will be areas and sectors of industry where we agree to align our regulations with European regulations: the automotive industry is perhaps an obvious example because of supply chains that are integrated.
“But it will be on a voluntary basis, we will as a sovereign power have the right to choose to diverge, and what we won’t be doing is accepting changes in rules because the EU unilaterally chooses to make those changes.”