How Germany reacted to Theresa May's Brexit speech

British Prime Minister Theresa May delivers her speech, in Florence, Italy. (AP Photo/Alessandra Tarantino, Pool)

A key ally of Angela Merkel has expressed concern about the future of Brexit.

In a landmark speech in Florence, Theresa May set out her plans for a two-year implementation period leading to a “new alliance” with Brussels.

She said that neither the UK nor the EU would be in a position to “smoothly” implement the new arrangements on the formal date of Brexit – March 29, 2019 – so a transitional period would be required.

During that period, market access would “continue on current terms” and the framework for the “strictly time-limited period” would be EU rules and regulation, she confirmed.

And she stated that EU citizens would continue to be free to live and work in the UK during the implementation period – but there will be a registration scheme for them.

But despite attempts to kickstart Brexit negotiations that the PM openly admits have been “difficult”, the speech has been condemned by Manfred Weber, the leader of the right-wing European People’s Party Group and a key ally of the German Chancellor.

He posted on Twitter: “in substance, PM May is bringing no more clarity to London’s positions. I am even more concerned now.”

Other reactions were quick to follow, with many concerned that those who had voted for Brexit have been betrayed by the PM.

Former Ukip leader Nigel Farage criticised Mrs May’s vision, claiming Britain will leave the EU in “name only”.

He tweeted: “Theresa May’s Brexit vision is that we Leave the EU in name only. All areas of integration we have currently will be rebadged.”

Other highlights for Mrs May’s speech included:

  • The UK will honour its commitments under the EU budget to 2020, thought to be around £18 billion (20 billion euro) so no other EU country will “pay more or receive less” as a result of Brexit.
  • Neither an approach based on European Economic Area membership, or a “traditional” free trade deal such as the Ceta agreement with Canada is right for the UK-EU partnership, instead there should be a “creative solution to a new economic relationship”.
  • There is “no need to impose tariffs” where none currently exist.
  • Regulatory standards will be protected or strengthened as Britons do not want “shoddy goods, shoddy services, a poor environment or exploitative working practices”.
  • An “appropriate mechanism” should be found to deal with disputes about the trading arrangements as it would not be appropriate for either the European Court of Justice or UK courts to have jurisdiction over the agreement.
  • A treaty would enshrine a “bold new strategic agreement” on security co-operation, taking in diplomacy, defence and development.
  • An agreement on citizens’ rights will be incorporated “fully into UK law” and British courts will be able to take into account European Court of Justice rulings to help ensure “consistent interpretation”.

The pound also reacted negatively, falling to a daily low against both the US dollar and euro as investors reacted to Prime Minister’s Theresa May’s Brexit speech in Florence on Friday.

Sterling was down 0.6% versus the US dollar at 1.350, having only been 0.2% lower at the start of the Prime Minister’s address.

Versus the euro, the pound extended its losses to trade 0.8% lower at 1.127.

It takes the UK currency further away from the near 15-month highs it reached just last week amid signs the Bank of England is likely to raise interest rates later this autumn.

Hamish Muress, a currency analyst at international payments firm OFX, said that while Mrs May tried to outline an “optimistic and upbeat relationship” with the EU, her speech did little to satisfy investors.

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