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UK prime minister lays out her plans for a clean break from Europe

British Prime Minister Theresa May delivers her keynote speech on Brexit at Lancaster House on January 17, 2017 in London, England.
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British Prime Minister Theresa May delivers her keynote speech on Brexit at Lancaster House on January 17, 2017 in London, England.

The U.K. government will put the Brexit deal it agrees with the European Union to a parliamentary vote, Prime Minister Theresa May said Tuesday.

In a wide-ranging speech on how the U.K. plans to make a clean break from the EU, following the shocking referendum result last June, May said she was seeking a "new and equal partnership" with the rest of the 27-country bloc.

The issue of a parliamentary vote had been hard-fought, with the government initially against putting the negotiations through parliament. The current Conservative government has a small majority in parliament and there are members within the Tories that do not support Brexit, which could make the vote tricky.

"I can confirm today the government will put the deal to a vote in both houses of Parliament before it comes into force," Teresa May told an audience of diplomats and officials in London.

Clearing up Brexit uncertainty

During her 45-minute speech she vowed to make a "truly Global Britain."

"I want this United Kingdom to emerge from this period of change stronger, fairer, more united and more outward-looking than ever before. I want us to be a secure, prosperous, tolerant country, a magnet for international talent," May said.

"I want us to be a truly global Britain, the best friend and neighbour to our European partners, but a country that reaches beyond the borders of Europe too. A country that goes out into the world to build relationships with old friends and new allies alike."

While May sees the U.K. leaving the single market, which would mean the country would gain control over its immigration, the prime minister said that she would nonetheless seek a "bold and ambitious free trade agreement" with the European Union.

May said her first priority is to provide as much certainty as possible to both business and the public sector throughout the process.

She outlined that wants a full departure from the EU's single market, to put a complete end to the jurisdiction of the European Court of Justice as well as to "huge" contributions to the EU's budget. She also vowed to guarantee the rights of EU citizens who already live in the UK and the UK expats who live in other EU countries - a challenge that needs to be addressed "as soon as possible."

May was also clear that she doesn't want a continued membership of the EU's customs union - which sets out common tariffs with partners outside the EU. She wants the U.K. to strike deals with partners outside the EU - something that European institutions do on behalf of their member states.

"President-elect Trump has said the U.K. isn't at the back of the line for trade deal," she recalled during her speech, hinting that she woulwbe looking for a trade partnership with the largest economy in the world.

There have been speculation that the U,.K would work towards a transitional deal first that would allow for a smoother move into Brexit but it could derail the Brexit process as a result. However, Prime Minister May refused such idea. She pledged that the Brexit negotiations will take place within the two-year framework set out in EU laws, which would be followed by an implementation phase, to give business enough time to prepare.

"This is not a game," May told the audience in London. "It is a crucial and sensitive negotiation that will define the interest and success of our country in the years to come."

May said to be confident that she will succeed in creating a new "strategic partnership" with the EU and that a retaliation or punishment approach by the EU would not be in the latter's interest.

"It would be an act of self-harm," she said about such approach.

"No deal for Britain is better than a bad deal for Britain," the prime minister threatened.

Jonathan Herbst, global head of financial services at Norton Rose Fulbright said in an email that leaving the EU single market means the regulatory passport won't be an option for UK financial services.

Market reaction

The FTSE 100 traded negative after the speech. However, the sterling was up by more than 2.8 percent against the U.S dollar, putting it on track for its biggest daily increase since 1998.

Sterling, which has been a proxy for investors' perceptions of UK politics and their fears about the consequences of Brexit, has entered a more dangerous and volatile phase," Nicholas Spiro, partner at Lauressa Advisory said in an email.

Kallum Pickering, senior UK economist at Berenberg said May's speech failed to deliver details on immigration.

"As anticipated May did not really provide any additional detail on her Brexit strategy beyond what we already knew. Critical details on the governments intended future rules for migration, or ambitions for the length and nature of a transitional agreement for Brexit, were missing," he told CNBC via email.