UK Prime Minister Theresa May proposed for the first time to payto maintain trading links with the European Union for up to twoyears beyond Brexit as she laid out her most detailed everblueprint for a deal.

Speaking in Florence, Italy, May said the U.K. stood willing tocover the cost of EU membership beyond March 2019 in return for atransitional period that mirrored the status quo of tariff-free,regulation-light commerce. The sum could run to about 20 billioneuros ($24 billion).

“I do not want our partners to fear that they will need to paymore or receive less over the remainder of the current budget planas a result of our decision to leave,” May said in the great hallof a former monastery in the Tuscan capital. “The U.K. will honorcommitments we have made during the period of our membership.”

May made her first major intervention in the Brexit processsince triggering the withdrawal in March and gave her first roadmap for the departure since a speech in London in January. TheBritish need to force a breakthrough in the negotiations after theybecame stuck on the issues of money and citizens' rights.

Pressing the reset button, May also offered more legalprotections than she has previously for EU nationals residing inthe U.K. and called for deeper cross-continent cooperation onsecurity, months after she used defense provisions as a barteringtool in the talks.

One of the most notable aspects of the speech was the change intone. She also said the U.K. wanted to remain part of EU programsthat promoted education, science and culture and that it would payto do so.

New Deal

What she would like in return is a sweeping trade deal unlikeany other. She ruled out joining Norway in the European EconomicArea or xeroxing the EU's commercial pact with Canada, which shedescribed as not ambitious enough for the U.K. She said an accordshould be easy to arrange given the U.K. and EU already enjoy fourdecades of legal links and that it was in the interest of boththeir economies to maintain easy trade.

“I look ahead with optimism,” May said “We want to work hand inhand with the European Union rather than as part of the EuropeanUnion.”

Businesses will welcome May's talk of a transition althoughit falls short of the three years many wanted. The goal is tomaintain trade with the U.K.'s biggest market and give companiestime to adjust to the new regime. It also would protect industriesfrom being hit with unwieldy tariffs and regulations overnight, andallow extra time for talks if no long-term trade deal has beenstruck by Brexit day in March 2019.

May acknowledged there would be a need for a dispute mechanism,although she added that that shouldn't include the European Courtof Justice.

Tough Balance

The prime minister is trying to maintain a precarious balancebetween the demands of Europe and those of her own Conservativeparty colleagues. May's position is even more difficult at home,where her political authority has been eroded after a botchedelection cost the party its parliamentary majority.

May must somehow deliver a clean enough break with the EU tosatisfy the euroskeptics in her Tory party, while giving enoughaway to Brussels to keep the talks on track.

In her speech she called on EU governments to be “imaginativeand creative” in the talks and said “it is in all of our interestsfor our negotiations to succeed.” That was an attempt to bypass EUnegotiator Michel Barnier and appeal directly to her fellowpoliticians who have the power to trigger trade talks.

Pressure ratcheted up on May in the days leading up to herspeech. Barnier warned Britain must “settle the accounts”—areference to the so-called Brexit bill—and also accept the EU'srules during any transition period.

The question now is whether May said enough to put the talksback on track. If Barnier and his team aren't convinced, then theEU may not declare sufficient enough progress has been made fortrade negotiations to begin.

From: Bloomberg News

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