BRITAIN cannot remain in the European customs union after Brexit if it wants to strike free trade deals with other countries, Theresa May has warned.
Ministers are coming under renewed pressure from business leaders to ensure that they can continue to enjoy free access to EU markets once the UK has left the bloc.
In a speech on Thursday, CBI director general Carolyn Fairbairn called for Britain to remain a member of the single market and the customs union until a free trade deal with the remaining 27 member states is finalised.
Speaking at the G20 summit in Hamburg, Mrs May said that she wanted to ensure that the UK continued to enjoy a good trading relationship with the EU.
However, she said that the country could not be a member of "every part of the customs union" and make its own trade arrangements with other non-EU countries.
Mrs May said she wanted to ensure that the UK could trade around the rest of the world.
"That means we can't be members of every part of the customs union. But we want to continue to have tariff-free and as frictionless trade across borders as possible because we want to ensure that we have that good trading relationship with the EU," she said.
In her speech, Ms Fairbairn said it was "impossible" to imagine a deal could be finalised that quickly and called for Britain to remain in the single market and the customs union until there was a trade agreement.
Such a "common sense" approach would, she said, avoid a "cliff-edge" break, with exporters suddenly faced with new tariffs and customs checks, and give firms the stability to carry on investing in the UK after Brexit.
"This would create a bridge to the new trading arrangement that, for businesses, feels like the road they are on," she said.
Her proposal is likely to be treated with suspicion by hardline Brexiteers, who fear that prolonged transitional arrangements could be used by Remainers as a way of reversing the Brexit vote by stealth.
She set out her plan after European Commission's chief negotiator Michael Barnier rebuffed claims that a free trade deal could deliver the "exact same benefits" as membership of the single market.
Mr Barnier warned the British government that it would be impossible to avoid border checks with the Republic if Britain left the single market after Brexit.
He told an EU committee in Brussels that there will be "negative" consequences to Brexit, which will result from the Britain's decision to vote Leave in last year's referendum and not from any attempt by the EU to "punish" the UK.
