Theresa May admits defeat on crucial Brexit policy

Prime Minister accepts trade deal with EU will not be possible before Britain leaves union

Theresa May has been accused of backing away from a key Brexit promise after she appeared to concede that a trade deal with the EU cannot be signed until after the UK leaves.

Opponents of a hard Brexit called on the Prime Minister to ensure that a transitional agreement was in place to avoid the risk of disruption to business if the UK makes a "cliff edge" departure from the EU without a trade deal.

Speaking during a visit to Jordan, Ms May said she expected the shape of a new trade relationship to be clear to everybody by Brexit Day in March 2019, but appeared to accept that the formal conclusion of the agreement will have to wait until after withdrawal.

European Council president Donald Tusk left no doubt in his draft guidelines for negotiations, released on Friday, that EU rules state that trade deals can only be done with non-members, so that the most the UK can hope for prior to Brexit is an "overall understanding on the framework for the future relationship".

Ms May insisted it will be possible to reach clarity on the deal within two years.

But asked if the deal could be finalised in that timescale, she told Sky News: "There's obviously a legal situation in terms of how the EU can conduct trade negotiations.

"I'm clear that by the point at which we leave the EU, it's right that everybody should know what the future arrangements, the future relationship, that future partnership between us and the European Union will be.

"That's the sensible thing, it's the pragmatic way to look at this, and I believe that's what we will do."

Labour said that Ms May's comments amounted to a "significant retreat" from the Government's previous position that a trade deal could be done within the two-year deadline for withdrawal negotiations set down in Article 50 of the EU treaties.

The party's Brexit spokesman Paul Blomfield said: "It is less than a week since the Prime Minister triggered Article 50, and it seems every day brings another broken promise from the Government.

"First they said immigration may go up after Brexit. Now they are backpedalling on trade deals.

"We will hold the Government to account on the pledges made to the British people during the referendum campaign and since. They promised a comprehensive free trade agreement, with the EU giving the 'exact same benefits' we have now. They said it would be ready for the day we leave, along with new trade deals with other countries.

"Now, as they face reality, they are trying to downplay expectations. They need to spell out the transitional deal that will be in place, to stop the economy falling off a cliff edge without new agreements in two years' time."

Labour MP Owen Smith, a leading supporter of the Open Britain campaign, said: "Bit by bit, the main planks of the Prime Minister's Brexit strategy are falling away. Today, she has admitted that we will not have the time to agree a trade deal with the EU before the Article 50 period is finished."

Leaving without a trade deal would mean "our economy will go off a cliff edge, hitting our businesses with punishing tariffs and putting jobs at risk", said Mr Smith.

He added: "Ministers have to prevent this hardest of hard Brexits by at least agreeing a transition deal with the EU that would keep us in the single market before a new trade deal can be signed."

The influential House of Commons Exiting the EU Committee has called on Ms May to commission an assessment of the cost of leaving the EU without a trade deal, in a report which said her claim that this scenario would be "better than a bad deal" was "unsubstantiated".

Responding to the report - which was repudiated by six pro-Brexit members of the committee - Ms May told Sky: "As I said in the Article 50 letter, I set out what would be a 'no deal' situation, but I also said that I don't think that's in anybody's interests.

"We will be working to get the best possible deal in the British national interest.

"I believe that deal will be good for the European Union as well. I believe both sides will be working to ensure we have a good, positive, deep and special partnership going into the future."