Britain's May to tell business a Brexit transition period 'crucial' to success

Britain's Prime Minister Theresa May surprised many executives two weeks ago when she said that any transition deal would only be part of a wider trade agreement.
Britain's Prime Minister Theresa May surprised many executives two weeks ago when she said that any transition deal would only be part of a wider trade agreement.PHOTO: REUTERS

LONDON (REUTERS) - Prime Minister Theresa May on Monday will stress to wary business leaders a commitment to securing a transitional deal once Britain leaves the European Union, seeking to assuage fears of a cliff-edge departure.

In a speech to the Confederation of British Industry, May will highlight the importance of a transitional agreement after she recently unnerved executives by saying any deal would not be agreed until the entire exit agreement is sealed.

"I know how important it is for business and industry not to face a cliff-edge and to have the time it needs to plan and prepare for the new arrangements," May will say, according to advance extracts released by her office.

"A strictly time-limited implementation period will be crucial to our future success." Already rattled by the slow progress of Brexit talks, businesses operating in the world's fifth largest economy have been pressing for months for details about what any transitional EU trade deal will actually look like.

International businesses have become increasingly vocal in recent weeks over fears that Britain could crash out of the world's biggest trading bloc without a deal.

May surprised many executives two weeks ago when she said that any transition deal would only be part of a wider trade agreement - potentially stripping companies of the time they need to prepare to leave the EU.

On Monday, May will say that she is confident that Britain and the EU will soon be able to start discussing the outlines of any transitional deal.

May will also tell business leaders they should be "rational optimists" about the economy over the next decade once Britain has left the EU.

Many business leaders are opposed to Britain's plans to leave the EU fearing leaving the trading bloc will increase bureaucracy, drive up costs and eat into profitability.

But supporters of Brexit say although there may be a short-term hit to the economy, Britain will benefit over the long term by being able to set its own rules.

Ahead of a policy document on industrial strategy that will be published this month, May will also signal a new era of greater state intervention in a break with traditional Conservative laissez-faire economic policy.

This will take lessons "from the past failures of governments to give sectors and places across the country the long-term support they need to cope with economic change and compete in a changing global market place", May will say.