LONDON (AP) – More than six months after Britain voted to leave the European Union, British Prime Minister Theresa May finally spelled out what it means: The U.K. will make a clean break from the EU and leave its single market of around 500 million people.

In her most detailed remarks since the June 23 vote, May said Tuesday that Britain must regain control of its laws and borders, while she called on the bloc to negotiate a free-trade agreement that will benefit both sides.

“We do not seek membership of the single market,” she said in her speech, which had been highly anticipated. “Instead, we seek the greatest possible access to it through a new, comprehensive, bold and ambitious free-trade agreement.”

May promised for the first time that Britain’s Parliament will be able to vote on the final divorce deal reached between the U.K. and European Union – likely in 2019. However, she did not say what would happen should Parliament reject the agreement.

The British pound rallied on having some clarity at last. The currency was recovering from steep losses earlier in the week, trading 2.2 percent higher at $1.2309. On Monday, it was as low as $1.20, a near 31-year low.

Currency traders liked that the matter would be put to Parliament, giving May a chance to tame the excesses of the more fervent Brexiteers, said Kathleen Brooks, research director of City Index.

“But, even this concession cannot hide the fact that the U.K. wants the best parts of the EU, with a cherry on the top, which could make the next two years extremely tense,” she said. “So, the pound is not out of the woods yet.”

The plunge in the pound has started to hit the consumer. Inflation in Britain has soared to its highest level in 2½ years, hitting 1.6 percent in December, from 1.2 percent in November.

The pound’s plunge earlier this week was sparked by fears of an economy-roiling “hard Brexit.”

May rejected both the “hard Brexit” label and its opposite, a compromise “soft Brexit.” She said she wants a new relationship based on free trade between the U.K. and the EU.

“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,” May said.

That includes a customs agreement, though May said she has an “open mind” about whether that means staying in the EU Customs Union, which currently prevents Britain from striking trade deals with other countries. Alternatively, Britain could leave that too and try to forge a new deal with the EU.

In a bid to alleviate fears that Brexit will mean a more insular Britain, May said she wants the country to be “stronger, fairer, more united and more outward-looking than ever before.”

In a symbol of the U.K.’s outward-facing aspirations, May spoke before an audience of British civil servants and international diplomats at London’s Lancaster House, a Georgian mansion that has hosted international summits.

Britain is quitting the EU’s single market in goods and services in order to gain control over immigration – a key issue for many voters who backed Brexit. EU leaders say Britain cannot stay in the single market without allowing free movement of people from the bloc.

May was firm on the immigration question, saying it was a key reason people voted to leave. But she softened the message by saying she wants Britain to guarantee the right to remain of EU citizens already in Britain, and British citizens elsewhere in the bloc.

“It remains an important priority for Britain – and for many other member states – to resolve this challenge as soon as possible,” she said.

Losing single-market access alarms many in Britain’s huge financial services sector, which relies on an ability to do business seamlessly across the 28-nation bloc. It also worries the many foreign firms that use London not only as a financial hub but as an entry point into the EU.

But the financial sector warmed to the idea of a free-trade arrangement and welcomed an end to the period of uncertainty.

“Today the prime minister changed the landscape,” said Carolyn Fairbairn, director-general of business group the Confederation of Business Industry. “Businesses will welcome the greater clarity and the ambition to create a more prosperous, open and global Britain, with the freest possible trade between the U.K. and the EU.”

The speech received a mixed reaction from the EU, whose leaders largely lament Britain’s decision to leave.

German foreign minister Frank-Walter Steinmeier said the speech had “created a little bit more clarity about the British plans” and noted May’s willingness to engage in a constructive and positive partnership with the EU.

European Council President Donald Tusk tweeted that it was a “sad process, surrealistic times but at least more realistic announcement” on Brexit. He said the 27 other EU nations sre “united and ready to negotiate” once Britain formally starts the two-year process of talks by invoking Article 50 of the EU’s key treaty.

May says she will do that by March 31. The government insists it will not be delayed even it loses a Supreme Court case brought by claimants who say Parliament must be given a vote before Article 50 can be triggered. The court is due to rule this month.

Amid May’s warm words for Britain’s European neighbors was just a hint of a threat. She said that a “punitive” Brexit deal that tried to make an example of Britain “would be an act of calamitous self-harm for the countries of Europe. And it would not be the act of a friend.”

Should that happen, May said Britain would be free to change its economic model, “to set the competitive tax rates and embrace the policies that would attract the world’s best companies and biggest investors to Britain” – while imposing trade barriers to the EU.

Labour Party leader Jeremy Corbyn said she appeared to be warning that she was ready to turn the U.K. into a “low-corporate taxation, bargain-basement economy off the shores of Europe” if the EU didn’t give her everything she wanted.

And Liberal Democrat leader Tim Farron called the speech “a mixture of vague fantasies and toothless threats to our nearest neighbors.”

 

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