Any reasonably well informed person who has been following the UK’s flirtation with economic ruin, knows that once Article 50 of the Treaty of Lisbon is triggered it starts a two year process where the EU and the UK attempt to disentangle their affairs. The process can only be extended by the unanimous approval of EU member states which, in the circumstances, is highly unlikely. Once that two year process has concluded, the UK will no longer be an EU member state and is then (and only then) free to negotiate its trading relationship with the EU. This could involve continued membership of the EU Customs Union, some kind of continued membership of the Single Market or falling back upon WTO rules to govern trade between EU and UK businesses. It is technically impossible for the EU and UK to negotiate any trade deal before it has left the EU.
Received wisdom suggests that it would take typically 7 years to negotiate a trade deal from scratch, but arguably, the existing trade alignment between the EU and the UK (as a current member) could reduce this timeline significantly. But even if this were the case, there is a clear risk of a chasm between UK-EU trading relations up to and immediately after the split.
Speaking to the Confederation of British Industry, yesterday, Mrs May acknowledged the potential of a “cliff” in trading relations and was understood to be hinting at asking the EU to agree to a transitionary period between the conclusion of the two-year notice period and the eventual full exit of the UK from the EU. This was, of course, not explicitly stated for fear of giving away the UK’s negotiating position or providing a running commentary on the government’s thinking (or the lack of it).
Whilst it is certain that business would delight in seeing an open-ended transition period, it is much less probable that the EU would be willing to grant it because of domestic political issues in several other of its member states (Germany, France and the Netherlands immediately spring to mind). It would also incense hard Tory Eurosceptics and staunch Brexit supporters in the UK, so it is probably a non-starter. It is, however, the first clear public statement that, rather than putting the UK on the path to be the world’s leader on Free Trade where it will all be sunny uplands; there are real and significant economic risks to the path that Mrs May seems intent on leading the nation down.