Closed Theresa May lays out her Brexit blueprint – as it happened

Britain's Prime Minister Theresa May delivers a speech on leaving the European Union at Lancaster House in London

The British prime minister Theresa May set out her Brexit blueprint in a speech in London on Tuesday, giving more clarity about the sort of deal the UK is seeking to negotiate with the remaining 27 members of the EU.

Key points

  • UK will come out of the single market and customs union and has an “open mind” on what future customs deal would look like
  • Government wants a “phased process of implementation”, but not “unlimited transitional status”.
  • Promises to put final deal to vote in both Houses of Parliament
  • UK will leave EU without an exit deal, if no good deal on offer.
  • May warns other EU member states that any attempt at a “punitive deal” for Britain would be “calamitous” for the rest of Europe.
  • Post-Brexit, the UK will reintroduce immigration controls on EU citizens; no unilateral guarantee to EU nationals resident in the UK
  • Common travel area between UK and Ireland will remain.
  • Promises to continue to cooperate with EU on defence and use UK’s “unique intelligence capabilities” in fight against terrorism
  • She says the vote to leave was not aimed at damaging the EU

By Mark Odell and Jim Pickard

Good morning and welcome to our coverage of what is Theresa May’s most important speech since she became prime minister last July. Having spent months given f few hints about what sort of exit from the EU she would be seeking, she is expected to outline a plan for a “hard Brexit”.

She is expected to say that this “clean break” from the EU will involve the UK leaving the single market and walking away from the control of pan-European institutions, specifically the European Court of Justice. She is also expected to signal the UK will leave the customs union, that removes all barriers to trade within the EU, but will leave open the possibility of seeking opt-ins to parts of it during the ensuing negotiations.

You can read the full overnight story that by the FT’s political editor George Parker here.

The markets will be watching Mrs May’s speech closely. The prime minister’s previous comments on Brexit have typically led to a fall in the pound and it was no different on Monday when sterling briefly fell below the $1.20 mark — a level at which the currency has not regularly traded since 1985. Ahead of the speech this morning, however, sterling was up against a broadly weak US dollar, which was taken a hit ahead of the inauguration of US president-elect Donald Trump on Friday.

Jamie Chisholm, the FT’s Global Markets Commentator, says ahead of May’s speech and the wider uncertainty caused by the handover of power in the US, most of the main equity markets are also soft and commodity prices are lower. Read his full market report here.

This chart gives a good overview of how sterling’s fortunes have been linked to May’s comments around Brexit in recent months:

The pound and UK assets: what you need to know

Here is a quick FT guide of the state of play in the markets ahead of May’s speech.

May is giving her speech, which is due to start in just under half an hour, in front of EU ambassadors and the FT’s George Parker says one of her aims is to strike a conciliatory tone about the need for a “positive and constructive partnership between Britain and the EU”.

This position contrasts with that of US president-elect Donald Trump, who suggested over the weekend the EU would disintegrate. Those comments caused widespread anger and shock in Europe. The FT’s Duncan Robinson in Brussels writes:

After receiving the harshest blows from Mr Trump, Berlin gave the most forceful replies. The German foreign minister spoke of “astonishment” over Mr Trump’s rambling comments, which ranged from threats of 35 per cent tariffs on German carmakers to stating that he trusted Angela Merkel as much as Vladimir Putin and predicting the EU’s demise.

Read the full blog post here.

Berlin will take some comfort this morning that investor confidence is looking up, with Mehreen Khan, our colleague on FastFT, suggesting the latest data shows that Germany is shrugging off the prospect of Brexit.

The overnight briefing by Downing St has – perhaps unsurprisingly – had the thumbs-up from Fleet Street’s most Eurosceptic newspapers. Here is a flavour…

The May speech is being watched at trading desks around the world: but what is its real significance?

In one sense, the great reveal is not a big surprise to those who have been following British politics closely for the last six months: that May wants Britain to leave the single market. She will say that she does not want a deal that leaves the country “half in and half out” of the EU. There will not be partial membership or associate membership along the lines of Norway, she will add. Limits on free movement – which are a political imperative for the PM – are incompatible with membership of the single market.

The reason this has been making waves is because until now Mrs May’s language has often been opaque on the issue – allowing wriggle room for those hoping that the UK might still stay in the single market. I doubt anyone will still think this by lunchtime.

The FT’s political leader writer and digital comment editor Sebastian Payne writes:

The theme of Theresa May’s Brexit speech is Global Britain. The prime minister is keen to show that leaving the EU does not mean that the UK is turning in on itself; that it remains open for business to Europe and the rest of the world. This is, however, pure rhetoric – the former Labour chancellor Gordon Brown used both the phrase and the argument in a speech 12 years ago.

The proof will be in how her utterances translate into policy. Bringing down the level of net migration is the foremost aim of the government’s Brexit strategy, which does not sit easily with the idea of an open global economy. This speech will try to marry these two visions but it is a formidable challenge for Mrs May, not least because there is no consensus amongst Leave voters about what Brexit actually means. There is no no clear manifesto about the single market, the customs union or any of the other topics on today’s agenda.

The prime minister is speaking to several differing audiences. In her speech to the Conservative party conference last year, Mrs May was addressing a room of party activists while the rest of the world happened to be listening in — hence her controversial “citizens of the world” remark. This time, she is speaking to the UK, the world and her own party. Striking the right tone to please all of these audiences will be the making or breaking of her premiership. No matter how much she wants to talk about social mobility or education reform, Mrs May will be remembered for Brexit. It all begins today.

The FT’s currency correspondent Roger Blitz says just ahead of the speech that sterling is up on the back of inflation data:

Sterling comes into the speech enjoying a 1 per cent boost in morning trading, following stronger-than-expected inflation data.

Mrs May is getting a reputation for moving the pound – driving it lower after her Sky News interview left investors disappointed at a lack of Brexit clarity, lower again just with the announcement of her Brexit speech, and below the $1.20 level after weekend reports of her speech suggested a hard Brexit tone.

The pound is trading at around $1.2170, while a euro is worth about 88p. Since the start of the year, sterling has retreated by 1.5 per cent against the dollar and 2.9 per cent against against the euro.

The question though is which issues will NOT be cleared up today:

1] Customs union. The understanding is that the UK will leave the customs union which provides tariff-free and paperwork-free trade. At the same time the country will try to opt back into the union for certain sectors. Ministers keep saying that the issue is not “binary”. It’s not clear whether there will be much more certainty on that issue today.

2] Immigration, the issue which (some believe) propelled voters towards the Out box back in June. We know that Mrs May wants to tighten migration rules, but the question is how. My colleagues George Parker and Helen Warrell have loads of detail today on how the new system is likely to work: a combination of work permits and new automated security checks. Here’s their article.

3] Many pro-Brexit figures are still talking as if departure is a unilateral discussion between the UK and itself. Instead, there are 27 other European countries who could influence the final result, as Rachel Sylvester points out in the Times today. Her column is worth a read

It’s worth reminding people that the Tory manifesto of 2015 was very clear about staying in the single market.

Here is the immortal phrase: “We say: yes to the Single Market.”

How times have changed.

We are now minutes away from the beginning of the speech, Theresa May has just entered the venue – Lancaster House – in Whitehall, central London.

There has been some gentle teasing about the prime minister’s use of certain phrases in the speech, trailed overnight. None of the pass the “reverse headline test”….

Certainty and clarity
A Stronger Britain
A fairer Britain
A truly Global Britain

The audience at Lancaster House is made up of various dignitaries and ambassadors along with the usual political journalists. In the front row, on the far left, you can see Sir Tim Barrow, our new man in Brussels.

Here’s the start of the Theresa May speech:

A little over six months ago the British people voted for change. They voted to shape a brighter future for our country. They voted to leave the European Union and embrace the world.

And they did so with their eyes open: accepting that the road ahead will be uncertain at times, but believing that it leads towards a brighter future for their children – and their grandchildren too.

“Global Britain” is not the most catchy political soundbite of all time…but here it is in its full context:

And it is the job of this Government to deliver it. That means more than negotiating our new relationship with the EU. It means taking the opportunity of this great moment of national change to step back and ask ourselves what kind of country we want to be. My answer is clear. I want this United Kingdom to emerge from this period of change stronger, fairer, more united and more outward-looking than ever before. I want us to be a secure, prosperous, tolerant country – a magnet for international talent and a home to the pioneers and innovators who will shape the world ahead. I want us to be a truly Global Britain – the best friend and neighbour to our European partners, but a country that reaches beyond the borders of Europe too. A country that gets out into the world to build relationships with old friends and new allies alike.

The FT’s George Parker caught a quick snap of the prime minister as she entered the room to respectful applause from the massed ranks of diplomats in the audience.

The prime minister is insisting that the vote for Brexit was not a decision to “turn inward” – Britain would continue to look outwards to the rest of the planet. “June 23 was not the moment that Britain decided to step back from the world,” she says.

This is not the easiest sell to other European capitals, where Britain’s departure from the EU has been seen with alarm.

Theresa May is claiming that the UK does not want the rest of the EU to unravel without Britain’s presence. The Brexit decision was not a rejection of European values, or an attempt to do harm to the EU or its remaining member states. “We don’t want to turn the clock back to the time when Europe was less secure…and less able to trade freely.”

But she says the “blunt truth” is that there had not been enough flexibility in the EU for enough British voters. The EU “bends towards uniformity,” she says – and the public wanted more self-determination.

She says that the vote in June 2016 is “not always well understood by our friends in Europe.” But the UK will continue to try to be a strong partner.

“We will continue to be reliable partners, willing allies and close friends. We want to buy your goods, sell you ours, trade with you as freely as possible, and work with one another to make sure we are all safer, more secure and more prosperous through continued friendship.”

“We are leaving the European Union but we are not leaving Europe.”

It’s a catchy phrase, but clearly it means pretty much nothing beyond symbolism.

May gives reassurances on the UK’s continued participation in European defence and security as she promises to keep using Britain’s “unique intelligence capabilities” to help keep Europe safe from terrorism.

The FT’s Whitehall editor, James Blitz, reports:

On speculation that Brexit might mean that the EU collapses, May says: “I do not what that to happen. It would not be in the best interests of Britain…It remains in UK national interest that the EU k succeeds.”

This is the first important statement by May. She needs to use this speech to make clear that she bears no ill will to the EU as an institution. She puts distance between herself and Donald Trump who derided the EU this week as a vehicle for Germany.

The PM says she will provide the business world with as much certainty as possible at the moment: “Where we can offer that certainty we will do so.”

She cites the example of providing clarity on continuing payments to farmers and universities (albeit only to the end of the decade) outside the EU.

The final deal will be put before Parliament before it comes into effect, she says. (Cynics may point out that in reality, however, by then it’s likely to be too late to make much of a difference.)

The FT’s Roger Blitz reports that sterling is moving higher:

The pound spiked when Mrs May said the UK would take a balanced approach as the deficit was cut, and remained supported as she said it was in the UK’s interests that the EU succeeded.

Sterling picked up to $1.2233, and took another leg higher to $1.2273 when she promised the final Brexit deal would be put to a vote of parliament. That represented a 1.9 per cent rise on the day.

When Mrs May began her speech, the pound was at $1.2180, up 1.2pc on dollar on the day.

The FT’s James Blitz says May’s promise to put the final deal to a vote in both Houses of Parliament begs a key question:

This does not answer the question of what happens if the Commons votes her deal with Brussels down. Does the UK default to WTO rules or can it reverse the Brexit vote ? This is still not clear.

The pound is recovering sharply on May’s comment that there will definitely be a parliamentary vote on the final terms of Brexit.

Two reasons for caution:

1] The vote is likely to come too late to tweak the details of the agreement – meaning it will effectively be a “take it or leave it” offer.

2] Out of 650 MPs, only around 100 are inclined to vote against Brexit. Even those who backed the Remain camp accept, broadly, that there is a democratic mandate for leaving the EU. That applies to hundreds who voted In but their constituents voted out.

On immigration, May says the uncontrolled influx over in recent years has put “too much pressure” on housing and other public services as she says Brexit “must mean the control of the number of people that come in to Britain from Europe.” She again commits to promising to guarantee the rights of all EU nationals living in the UK at the moment but says the resistance of a number of EU members states governments to providing a quid pro quo guarantee for UK citizens living in their countries has meant an immediate deal has not been possible.

Here’s another plug for this morning’s FT explainer on May’s plan to change the immigration system. Well worth a read.

A few more thoughts from the FT’s James Blitz:

1) May says that after Brexit there must be no new barriers to doing business in the UK, which he says is a rebuff to Nicola Sturgeon who is exploring a bespoke deal for Scotland that keeps the Scots in the single market after the rest of the UK leaves.

2) She says Brexit must mean that there is control of the numbers of people coming to the UK. This is the clearest indication yet from May that she is looking at implementation of quotas on the number of EU migrants coming to the UK.

Koon Chow, macroeconomics and currency strategist at UBP says: “After May’s comment that the final deal will be put to parliament, investors are cutting short positions on the pound. Such speculative positions had not anticipated anything positive coming out of the speech.”

Here is a chart of that rally:

The prime minister says that Britain wants access to the single market through a new free trade deal that would provide the “greatest possible access”. Strikingly she says she is not prepared to pay “huge sums” for that access, although Britain might still make some contributions for “some programmes.” Let’s wait to see what the EU27 say about that.

Now the PM is talking about the customs union, which is one of the biggest concerns for business.

She says that she wants “frictionless” trade” without customs barriers between nations. “I do want us to have a customs deal with the EU”, for example by being an associate member of the customs union. “It is not the means that matter but the ends.” Those comments are likely to reassure some executives.

May says that it is not in the UK’s interests to have a “cliff edge” where the country suddenly falls out of the bloc without any agreements in place. (This is something that the CBI and other business groups have been worried about.)

Instead she wants a “smooth and orderly” departure. The prime minister says this will not be an unlimited “political purgatory”. Instead, she wants Britain to have reached an agreement by the time that Article 50 is completed. Then there will be a “phased period of implementation” while institutions prepare for transition. “That will be in our mutual interests,” she says. That applies to trade, criminal justice, migration, the regulatory framework for financial services.

Interim arrangements are likely to be a “matter for negotiation”: but “we will seek to avoid a disruptive cliff edge.”

The pound is holding its own, reports the FT’s Roger Blitz, despite strong lines on immigration, and leaving single market access and the customs union. It is trading at around $1.2250, up 0.7 per cent since the start of her speech.

Michael Hunter, on the FT’s market desk adds:

The FTSE 100 remains 0.4 lower on the day at 7,297.59. Dollar earners are among the biggest fallers. They dominated the index’s record breaking run higher, set off by the weaker pound, which ran out of momentum on Monday.

May says she does not want to fill the newspapers with “column inches” about Brexit.

In reality it will happen whether or not Downing St wants to give a proactive “running commentary”, to borrow their phrase.

More analysis from the FT’s James Blitz:

May firmly rules out membership altogether. “It would mean complying with the EU’s rules and regulations and accepting a role for the ECJ.” She says the UK will seek fullest access to single market through an FTA.

No surprise – but still a major statement.

On the Customs Union, May spells out the kind of deal she is looking for. She does not want to be part of the common commercial policy and part of the common external tariff. But she wants a bespoke customs agreement with the EU and has “an open mind on how we do it.”

Many will argue that it is deluded to think this is achievable. After ruling out so much, what does it leave? This is weaker than the sector by sector agreements mooted before.

May says it is “economically rational” for the EU and UK to both aim for the same deal. More free trade will make both sides prosperous, she argues, leading to more jobs and wealth creation.

Political commentator Jane Merrick has spotted a lack of logic in Mrs May’s central tenet:

Having struck a conciliatory approach with the other EU members in her speech up to now, May turns frosty and warns the other member states to resist the temptation of seeking a “punitive deal” with Britain. She says that would be “calamitous” for the rest of Europe and would mean loss of access to the City of London and risk exports from the EU to the UK worth £290bn a year as well as disrupting crucial supply chains and sectors, including automotive, energy, pharmaceutical and agriculture. She adds: “No deal for Britain is better than a bad deal for Britain.”

Theresa May is glossing over the close 52:48 result last year and insisting that 65m citizens are willing her on to complete Brexit. She claims that the country will “come together” outside the bloc in a “brighter future” for a “better Britain”.

Business is not trying to reverse the result: the Commons has voted for the government to get on with Brexit….”so that is what we will do.”

The prime minister has now wrapped up.

James Blitz says May’s assertion that “no deal for Britain is better than a bad deal for Britain” makes it clear she is prepared to default to the WTO rules if necessary. Her argument – long held by hard Brexiters – is that the Europeans would lose much by seeing such a hard break.

We are now on to the Q&A with journalists. Laura Kuennsberg has asked Mrs May if she still agrees with her own claim pre-vote that Brexit would make people worse off.

The PM replies that economic data has been positive since the summer: “This is about a confident future, a trading nation that is out there….on the world stage.”

Sterling bounces back from Monday’s lows

Roger Blitz has the numbers on the rally in the pound:

Mrs May’s speech ends with the pound at $1.2250. That represents a 0.7 per cent rise since the start of her speech, and a 2.2 per cent increase since sterling hit a 31-year low on Monday of $1.1979.

The prime minister is now being asked about what will happen to immigration: but this is one area where we aren’t going to get any detail – at least officially – for some time, it seems.

The prime minister is questioning a journalist’s use of the word “weapon” to describe negotiating tactics: “This is not going to be a confrontation…there will be goodwill on both sides.”

That is a quote that may just come back to haunt her.

May is now being pushed on what would happen if she lost the vote in Parliament on the final deal – “would we still be in the EU?” asks ITV’s Robert Peston. She tries to avoid that part of the question by answering the first part about whether she was wrong in her pre-referendum views that Brexit would damage the UK.

When she is reminded that there was she hasn’t answered the issue of the vote she replies: “I’m sure the British parliament will want to deliver on the views of the British people.” So no real answer there.

Here are the closing remarks from the May speech, in case you missed them.

The referendum was divisive at times. And those divisions have taken time to heal.

But one of the reasons that Britain’s democracy has been such a success for so many years is that the strength of our identity as one nation, the respect we show to one another as fellow citizens, and the importance we attach to our institutions means that when a vote has been held we all respect the result. The victors have the responsibility to act magnanimously. The losers have the responsibility to respect the legitimacy of the outcome. And the country comes together.

And that is what we are seeing today. Business isn’t calling to reverse the result, but planning to make a success of it. The House of Commons has voted overwhelmingly for us to get on with it. And the overwhelming majority of people – however they voted – want us to get on with it too.

So that is what we will do.

Not merely forming a new partnership with Europe, but building a stronger, fairer, more Global Britain too.

And let that be the legacy of our time. The prize towards which we work. The destination at which we arrive once the negotiation is done.

And let us do it not for ourselves, but for those who follow. For the country’s children and grandchildren too.

So that when future generations look back at this time, they will judge us not only by the decision that we made, but by what we made of that decision.

They will see that we shaped them a brighter future.

They will know that we built them a better Britain.

And that is the end of the speech and the Q&A. Despite the fact that much of the speech was pre-briefed to the media, it is nevertheless a very significant moment in the history of the UK. The prime minister has finally confirmed the country will leave the EU and the single market, the world’s biggest trading bloc, which it helped shape since becoming a member in 1973.

We have reaction to the speech from the Irish government, which of course is more exposed than any other EU member state to Brexit because of the “soft border” with Northern Ireland.

For Ireland, the priorities for the negotiation process that lies ahead are unchanged: our economic and trading arrangements, the Northern Ireland Peace Process including border issues, the common travel area, and the future of the European Union.

In her speech, Prime Minister May highlighted the specific and historic relationship between Britain and Ireland. In this context, she made clear that her priorities include maintaining the common travel area and avoiding a return to a hard border with Northern Ireland, both of which are welcome.

The alignment between our concerns regarding the economy and trade and the UK objective of the UK to have a close, and friction-free, economic and trading relationship with the EU, including with Ireland is also very important.

And then a warning shot to London that Dublin will be using Brexit to seek to take business away from the UK:

The Government is also very aware of the potential economic opportunities that may arise for Ireland, including in terms of mobile investment. Bids for the EU agencies currently located in London – the European Medicines Board and the European Banking Authority have already been announced and the State enterprise agencies are actively pursuing opportunities for increased investment, business and job creation in Ireland.

Click here to read a full analysis by Vincent Boland, the FT’s Ireland correspondent, on how Dublin is planning to deal with Brexit.

Nigel Farage, the former UKIP leader who is still an MEP, seems slightly incredulous on Twitter:

For those readers that can’t access Twitter, his words are:

I can hardly believe that the PM is now using the phrases and words that I’ve been mocked for using for years. Real progress.

He then follows up on his first Tweet with a bit of a reality check, observing:

My worry is how long this is going to take and when we will start doing a deal with the USA and others.

Downing Street has so not put the full text of its speech on its website so we will get a version up for you shortly. Meanwhile, have a read of our new splash:

Irish business is not happy with UK’s position on Brexit

The Irish government may have been diplomatic but the country’s business lobby is not happy, reports the FT’s Vincent Boland from Dublin.

Danny McCoy, chief executive of Ibec, said:

The possibility of the UK leaving both the single market and the customs union raises fundamental questions about Ireland’s future trading relations with the UK. A return to WTO rules would be a significant economic shock to the economy and would hit Irish exporters hard. It would also set the UK and Ireland on very different economic trajectories. In the interest of maintaining good business relations, it is vital that the UK Government sets out in more detail how the serious challenges presented by a hard Brexit might be addressed, including the impact on cross border trade on the island of Ireland.

This is an aggressive move by the UK, showing little regard for our trading relationship and for relations with other EU member states. Theresa May has signalled a change to the UK business model, away from a collective European rules-based approach, towards a more nationalistic, isolated stance. This is likely to lead to a protracted and unwelcome period of uncertainty and instability for business. Ireland is uniquely exposed to the risks given out deep economic ties with the UK.

Theresa May’s Brexit blueprint speech in full

Click on this link for Theresa May’s speech in full

Reuters has reaction from German foreign minister Frank-Walter Steinmeier:

Germany’s foreign minister on Tuesday welcomed the “little bit more clarity” British Prime Minister Theresa May provided on what kind of Brexit Britain wants and said it was good she made clear she wanted to work constructively with the European Union.

“She emphasized that Great Britain is seeking a positive and constructive partnership, friendship with a strong European Union. That’s good,” Frank-Walter Steinmeier said in a statement after a speech in which May laid out her Brexit priorities.

Steinmeier said Germany also wanted the closest and most trusting relations possible with Britain but reiterated that negotiations could only begin once the British government has invoked Article 50 to start to divorce talks.

“It’s in the interests of Germany and Europe to strengthen the cohesion of the European Union of 27 members and to protect the unity of the European Single Market,” Steinmeier said.

In the Commons, it has been left to David Davis, the Brexit secretary, to delivery May’s blueprint to MPs. Labour criticised the failure of the PM to deliver the speech in the House of Commons but the speaker John Bercow points out it has become a “recurring phenomenon” in recent years for the PM of the to give major speeches outside the chamber.

Mr Davis insists it was former Labour prime minister Tony Blair who started the trend and goes on to tell MPs the UK will seek “the broadest possible access to it through a comprehensive trade agreement with the EU”, adding:

Our approach is not about cherry-picking, but about reaching a deal which fits the aims of both sides.

We understand the EU wants to preserve its four freedoms, and to chart its own course. That is not a project the UK will now be a part of, and so we will leave the single market and the institutions of the European Union.

Another independence referendum for Scotland?

Mure Dickie, the FT’s Scotland correspondent, points out that May’s speech has put new pressure on Nicola Sturgeon, Scotland’s first minister, to decide whether to push for another independence referendum before Brexit takes effect. Scotland voted to remain part of the UK in 2014.

Ms Sturgeon has demanded that either the UK remain in the single market or that special arrangements be pursued that would allow Scotland to do so.

Peter Grant, the SNP MP and a member of the Commons select committee for exiting the European Union, has signalled that the SNP will push for another vote. Speaking in the House of Commons he warned David Davis that government plans for the UK tol leave the single market leaves Scotland with no choice but to seek independence

If the prime minister leaves Scotland with only one option to remain in the EU, Scotland will take it

He reminds MPs that 62 per cent of Scots voted to remain part of the EU in the referendum last year.

More from Berlin

The FT’s Berlin correspondent, Guy Chazan, says the UK prime minister has answered a few key questions the German government had on Brexit:

Angela Merkel has consistently stuck to her mantra that the UK would not be allowed any “cherry-picking”, and that it will only be granted access to the single market if it accepts the EU’s four freedoms – including freedom of movement. In that respect, May’s speech solves a basic conundrum for the Germans – for months they have wanted to see how Britain intends to retain single market access with its professed intention to control immigration. Now they know. Hence Steinmeier’s response that May’s speech brings some much-needed “clarity” into the debate.

Nicola Sturgeon, new IndieRef ‘more likely’

The FT’s Scotland correspondent, Mure Dickie in Edinburgh, now has reaction from Nicola Sturgeon. Scotland’s first minister said Mrs May’s speech made clear the UK was heading for a potentially “catastrophic” hard Brexit that would make another independence referendum “more likely”.

However, Ms Sturgeon stopped well short of committing to push for another vote on leaving the UK amid polls showing a majority of Scottish voters remain opposed.

The first minister, who has been keen to keep her options open, said instead that the Scottish government would “continue to take decisions in an orderly and responsible way”.

Ms Sturgeon warned this month that she was “not bluffing” about pushing for another independence referendum if Scotland is forced out of the EU trading bloc.

But while Mrs May said the Scottish proposals would be “considered”, she appeared to rebuff the idea of special arrangements by warning against the creation of any obstacles to trade within the UK.

“Our guiding principle must be to ensure…no new barriers to living and doing business within our own union,” Mrs May said

“It is now clear that the UK is heading for a hard Brexit, which threatens to be economically catastrophic,” Ms Sturgeon said, adding that she had seen no evidence that Scotland’s views or interest were being taken into account.

“The UK government cannot be allowed to take us out of the EU and the single market…without Scotland having the ability to choose between that and a different future,” she said. “With her comments today, the Prime Minister has only succeeded in making that choice more likely.”

Back in the Commons, Stella Creasy, the Labour MP, has asked David Davis to explain how the government intends to achieve “associate membership” of the EU customs union, an arrangement that does not exist at the moment. Mr Davis replies by saying that the UK is seeking a “unique” deal with the EU post-Brexit.

Donald Tusk, the former Polish prime minister and president of the European Council, has taken to Twitter to express his disappointment at the UK government’s position:

For those that can’t access Twitter, he wrote:

Sad process, surrealistic times but at least more realistic announcement on #Brexit. EU27 united and ready to negotiate after Art. 50.

More on the SNP’s position on a 2nd Scottish independence referendum

The FT’s Mure Dickie in Edinburgh points out that SNP leader Nicola Sturgeon’s caution on a second independence referendum is not shared by at least some of the party’s MPs in Westminster. We mentioned Peter Grant’s comments in the House of Commons in the post at 2:16pm but a bit before that another SNP MP Douglas Chapman, made the same point in response to a typically robust Tweet from the columnist Julia Hartley-Brewer:

Here’s a excerpt from Theresa May’s speech

Jeremy Corbyn, the Labour leader, has accused the government of using Brexit to “turn Britain into a bargain basement tax haven on the shores of Europe.”

Some reactions from the life sciences and health sectors to May’s speech, courtesy of the FT’s Sarah Neville, that illustrate concerns over the impact of the UK disentangling itself from the rest of EU:

Mark Porter, who chairs the ruling council of the British Medical Association, called on Mrs May to guarantee the rights of EU nationals in Britain, and Britons living in Europe, as soon as possible. There were more than 10,000 doctors from the European Economic Area working in the NHS “so it is vital for the stability of the NHS and the future of medical research, that the government removes the ongoing uncertainty and grants them permanent residence”, added Dr Porter.

In her speech, Mrs May said an early attempt to do so had been blocked by “one or two member states”.

Steve Bates, chief executive of the BioIndustry Association, representing the biotechnology sector, welcomed Mrs May’s announcement that a leading role for science and innovation was one of the her “key guiding principles for the Brexit negotiation”.

However he emphasised the importance of clarifying the future of drug regulation once Britain has quit the EU. The European Medicines Agency, which currently assesses drugs on behalf of all 28 member states, is based in London but there is uncertainty over whether the country can continue to be part of that pan-European regulatory system post-Brexit. Mr Bates said: “Drugs are the part of NHS care most integrated with the European Union and therefore drug regulation will need the closest attention to avoid a disruptive cliff edge for patients in both the UK and EU.”

Michel Barnier, the EU’s chief Brexit negotiator, has taken to Twitter and reminded the UK government he is still waiting on them to trigger Article 50, the so-called EU divorce clause:

For those without access to Twitter, it says:

Ready as soon as UK is. Only notification can kick off negotiations. #Brexit

He follows up with a second post:

And for those blocked from Twitter:

Agreement on orderly exit is prerequisite for future partnership. My priority is to get the right deal for EU27. #Brexit

Sterling’s surge hits FTSE 100

The pound’s surge – it’s up 2.6 per cent today at $1.23 – is weighing on UK stocks, reports FastFT’s Nicholas Megaw, with the FTSE 100 now on track for its worst day in more than 2 months.

The UK’s benchmark index, which fell by around 0.4 per cent this morning, is now down 1.1 per cent for the day, its worst daily loss since the aftermath of the US election in November.

The FTSE 100′s fortunes have closely tracked sterling in recent months, tending to rise when the currency falls and vice versa. The index is dominated by multinational companies, which benefit from a weaker pound which makes their exports more competitive and increases the relative value of their foreign earnings.

Boris Johnson, the UK foreign secretary, has posted his reaction to May’s speech via a 41 second video on Twitter.

Here’s what he said:

Hi folks, I’m Boris Johnson and I have just been listening to Theresa May’s fantastic speech about global Britain and about how we are going to take back control of our borders and loads of money that we currently send to the EU. But also of course come of the EU’s legal systems, the single market but not leave Europe. We are still going to be committed to the safety and security of our continent. Still determined with our friends to build a new European partnerships outside the European Union that simultaneously enables us to build a future as a great free trading nation again and it is a very, very exciting vision for this country.

The FT’s political leader writer and digital comment editor Sebastian Payne is warning that the hard work is only just beginning. He writes:

Theresa May is no longer Theresa Maybe, as The Economist dubbed her. After months of gnomic statements, the prime minister appears to have locked herself in a dark room over Christmas and taken the hard decisions about Brexit.

In her speech on Tuesday, she outlined a bold plan of intentions: the UK will leave the single market, regain full control over EU immigration and pursue trade agreements with the EU and other countries. In short, Mrs May confirmed that the government is pursuing a “Canada+” model. Both in the UK and elsewhere, a statement of intent is most welcome. Now, the really hard part is making it happen.

Read the full version here.

Reality check for Theresa May from Guy Verhofstadt

Reuters reports that another key EU figure has warned the UK about what it should expect from any new deal. Guy Verhofstadt, the European Parliament’s Brexit negotiator and former Belgian PM, said it was an “illusion” to think that Britain could enjoy the advantages of the European Union’s single market without accepting the obligations that come with it.
He said the EU would not accept a Brexit deal that would leave Britain better off than a full membership of the bloc.

We are going wrap up our coverage of Theresa May’s historic speech and the aftermath but will continue to provide more analysis on Please visit our Brexit landing page here.

In summary, the key points made by the British prime minister are:

1) The UK will not seek continued single market membership

2) On the customs unions it wants to leave the common external tariff but reach a new, unspecific “customs agreement”

3) UK will make “appropriate contribution” to EU budget but not “vast contributions”

4) Parliament will get a vote on final deal with EU before it comes into force

5) The UK would rather leave the EU without a deal than with a bad deal

6) EU citizens will face immigration controls and the government will not offer a unilateral guarantee to EU nationals resident in the UK until the other 27 member states offer reciprocal deals for UK citizens.

7) Security and defence co-operation, including UK sharing intelligence on pan-European counter-terrorism, will continue.