Britain WILL be able to set its own regulations and strike trade deals after Brexit, vows May as ministers agree 'ambitious' demands for negotiations

Theresa May is gearing up for next phase of Brexit talks starting in the New Year
PM has gathered Cabinet to discuss the 'end state' after we cut ties with Brussels
She told the meeting that ability to diverge from EU rules would be a key demand
Ministers are urging her to 'aim high' in the looming negotiations with the EU

By James Tapsfield, Political Editor For Mailonline

Published: 09:33 GMT, 19 December 2017 | Updated: 16:19 GMT, 19 December 2017

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Britain will be able to set its own regulations and strike trade deals after Brexit, Theresa May vowed today.

The Prime Minister made clear that having scope to diverge from Brussels rules will be a red line in the impending negotiations.

She also said she wanted the package to be 'bespoke' and 'significantly more ambitious' than that between the EU and Canada - even though Michel Barnier has suggested that is the best the UK can hope for and there will be no special deal for the City of London.

The combative stance was laid out by Mrs May as she led a Cabinet discussion on what the 'end state' of relations with the EU should be.

The government is increasingly confident of securing a broad trade agreement with the bloc, insisting the key UK services sector must be allowed to keep operating across the continent.

Theresa May (pictured in the Commons yesterday) is preparing to turn the tables on Brussels by warning that it won't be allowed to 'cherry pick' parts of the UK economy to include in a Brexit trade deal

Foreign Secretary Boris Johnson and Home Secretary Amber Rudd joined their colleagues in Downing Street today for a Cabinet meeting on the Brexit talks

Brexit Secretary David Davis was attending the Cabinet meeting in Downing Street today

Ministers are expected to deploy one of Brussels' favourite phrases, by warning that the EU cannot hope to 'cherry pick' parts of the UK economy to trade with.

However, the scale of the challenge has been laid bare after the EU's chief negotiator Michel Barnier again warned there will be no special Brexit deal for the City of London.

Downing Street said 25 ministers contributed to a discussion in Cabinet today that lasted an hour and 45 minutes.

Mrs May's spokesman said there had been agreement on the UK's aims for the negotiations.

'The PM said it was clear what the cabinet's objective is: a deal which secures the best possible trading terms with the EU, enables the UK to set rules that are right for our situation and facilitates ambitious third-country trade deals,' the spokesman said.

In a statement to the Commons yesterday, Mrs May insisted Britain will not be bound by EU rules on fishing and farming during a Brexit transition period.

She also insisted that Britain wants a 'bespoke' trade deal from the EU, and said she wanted the same level of access as the current arrangements.

The bullish comments came as she defended her handling of the Brexit talks after an EU summit last week formally signed off on moving on to the next phase of negotiations.

THE POTENTIAL MODELS FOR BREXIT

Norway

Norway is a member of the European Economic Area with near-full access to the single market.

But it is obliged to contribute to Brussels coffers, and accepts most EU rules, including free movement, without getting a say in setting them.

Canada

The Ceta free trade deal with the EU has yet to come into force, gets rid of most tariffs on goods.

However, it excludes most services and some food items, and there is an obligation to prove where goods are made.

Canada plus plus plus

David Davis suggested this model in an interview earlier this month.

It would mean taking the Ceta agreement and bolting on elements like services.

However, the EU has ruled this out saying it could mean the 'end' of the single market.

WTO

Leaving on World Trade Organisation (WTO) terms is the favoured option of many hardline Brexiteers.

The UK would rely on basic tariff rules applicable around the globe, potentially meaning charges on exports and imports.

In reality, a WTO model would require a series of smaller deals to cover areas like aviation - otherwise planes might not be able to fly to EU countries after the Brexit date.

A 'war Cabinet' of big beasts like Boris Johnson and Michael Gove met yesterday to start taking the key decisions.

Ministers appear to be lining up behind a 'slow Brexit' option - where the UK starts by keeping the same regulations as Brussels and gradually moves away.

The approach would ease the impact on the economy of cutting ties with the EU, and could satisfy both 'hard' Brexiteers like Mr Johnson and Mr Gove as well as supporters of keeping closer links such asPhilip Hammond and Amber Rudd.

Meanwhile, some ministers are said to be urging Mrs May to stay on in Downing Street until 2021 to ensure any Brexit deal does not fall apart at the last moment.

New EU regulations could be rejected by the government as they arise after the end of a mooted two-year transition period, leaving Britain free to streamline rules and become more competitive globally.

Mrs May told the Commons that the UK will seek to sign trade deals with third countries during the transition period - although they would not come into force until 2021.

She said that even though the UK is leaving the single market and customs union in March 2019 she wants 'access to one another's markets' to continue 'as now' during an implementation period.

The EU's guidelines say that during any transition period the UK would have to comply with the bloc's trade policy - preventing it from striking its own deals with other countries.

But Mrs May said the UK wants to sign agreements which would come into force after the 'strictly time-limited' period has ended.

'We will prepare for our future independent trade policy by negotiating - and where possible signing - trade deals with third countries, which could come into force after the conclusion of the implementation period,' she said.

The Prime Minister said there is a 'shared desire' between the UK and EU for 'rapid progress on an implementation period' before any UK-EU deal comes fully into effect.

The EU's negotiating position makes clear that the bloc expects the UK to observe all of its rules - including on freedom of movement - and accept the jurisdiction of the European Court of Justice (ECJ) during this time.

But Tory backbenchers including Jacob Rees-Mogg are demanding that Mrs May take a stand against the EU's hard line, saying that meekly signing up to it would make Britain 'no more than a vassal state, a colony, a serf of the European Union'.