LOCAL business organisations have given a wary response to Theresa May's speech on Brexit today in which she warned fellow EU nations she will walk away from talks rather than accept a "punitive" deal.

In a speech setting out her 12 key objectives for EU withdrawal, Mrs May announced that Britain will leave the European single market but will seek a "bold and ambitious" free trade agreement to allow it to continue trading with its 27 former partners.

Mrs May confirmed that she wants to take Britain out of the jurisdiction of the European Court of Justice and restore control over immigration.

And she gave her strongest hint yet that the UK could leave the European customs union (CU), stating that she wanted to ensure "frictionless" cross-border trade but had an "open mind" on whether that should be done through associate membership of the CU or a completely new customs agreement.

She announced that MPs and peers will be given a vote on the final deal reached with the EU in talks under Article 50 of the treaties, due to be triggered by the end of March.

But she did not make clear whether a vote against any agreement would mean the UK staying in the EU or crashing out without a deal.

Mrs May said she was "confident" that a deal and a new strategic partnership between the UK and the EU can be achieved within the two-year deadline set out in Article 50, insisting that a good deal for Britain will also be good for Europe.

But she warned: "I know there are some voices calling for a punitive deal that punishes Britain and discourages other countries from taking the same path. That would be an act of calamitous self-harm for the countries of Europe. And it would not be the act of a friend.

"Britain would not - indeed we could not - accept such an approach. And while I am confident that this scenario need never arise - while I am sure a positive agreement can be reached - I am equally clear that no deal for Britain is better than a bad deal for Britain."

Mrs May said that her plan would create "a truly global Britain ... a great, global trading nation that is respected around the world and strong, confident and united at home".

Matt Griffith, Business West’s policy director, said: “Business had three big questions that needed answering from May's Brexit speech today: some answers were given, but plenty more were raised.

"Firstly, what is the UK government’s position on remaining in or out of the Single Market and the Customs Union? Secondly, will there be a 'transitional arrangement' and what will this look like? And finally, what will be the proposal for future immigration controls?

"Each issue contains a host of difficult details that the Government needs to work through - but which businesses will also face as they figure out how to navigate what could be a choppy couple of years.

"The EU is the UK’s largest market, accounting for just less than 50% of our exports. How we trade with the EU in future is therefore critical for businesses in order for them to plan and adapt. Leaving too abruptly means potentially more barriers to trade, which exporting businesses will feel first and foremost.

"Theresa May set out in her speech quite clearly that the UK is leaving the Single Market. She also said the UK will seek the fullest possible access to the single market through a Free Trade Agreement ( FTA). Membership is out; aiming for ‘access’ becomes the negotiating position.

"Leaving the Single Market most obviously means we leave a common set of regulatory standards. We will go from a situation where the default assumption from Europe is that UK exporters comply with all EU regulation, to a default assumption from Europe that UK exporters don’t comply with EU regulation.

"For companies this means they will have to prove they comply – not just to EU regulations, but to new UK regulations too.

"If we reject ECJ oversight completely, how can the EU trust us and our exporters to be telling the truth? How will this work in the medium and long term as our standards start to diverge? How will this not put individual firms at a competitive disadvantage when accessing the EU market?

"It is hard not to see leaving the Single Market as throwing up a host of barriers to trade in the short term, and we had few immediate answers as to how UK exporters are going to be expected to navigate these.

"A bigger step would be leaving the EU Customs Union. This would give us greater flexibility to strike new trade deals, but mean we were out of the EU’s common external tariff, and companies would have to potentially pay customs duties and fill in plenty of customs paperwork, including on things like rules of origin.

"This will be a big change from paperwork-free trade, and UK exporters will need help preparing for it. Again, it potentially puts UK businesses at a competitive disadvantage in pan EU supply chains and markets.

On any transitional arrangements he said: "At present, a new world beckons two years after the triggering of Article 50. Businesses will therefore have to be ready for this new world by March 2019.

"Given the impact on supply chains, on trade processes, on exporters regulatory and customs compliance, this doesn’t feel such a long time. Hence many businesses want to see a ‘transition deal’ to help make the change manageable. This could be remaining in the Single Market or the Customs Union for a set number of years.

"In her speech, May left the door open to a transitional arrangement, or a 'phased process of implementation' as she put it. However this still leaves many questions – what will the interim arrangement be and when will business know about it?

"There is little point learning that we have a transition deal in March 2019, because businesses have to make critical investment decisions now."

And on immigration he said: "The Government plainly sees the need to retain control of immigration as politically the over riding priority in these negotiations. But there are many questions as to what this new immigration regime would look like – and what wriggle room it could give the UK in retaining a decent level of market access into Europe.

"This is critical for businesses. Our region is close to full employment and we have pressing skills shortages across the economy: from fruit pickers to skilled engineers.

"What happens to existing EU employees? Can businesses be confident they can hire skilled people in order to grow? Are we confident that, after years of failure, the UK can start producing people who fill these shortages in just two years' time?"

Terry Scuoler, CEO of EEF, the manufacturers’ organisation, said: “The Government must now work tirelessly to deliver a comprehensive new trade and customs agreement with the EU.

"As part of that process ministers must listen to businesses and support them in building viable bridges to carry the economy through a carefully managed and orderly transition.

“In order for the Government to lay the foundations of a globally competitive Britain, it must bring forward a clear and far-reaching industrial strategy that will enable businesses to seize the many expected opportunities the Prime Minister believes will arise after we leave the EU.

"In the end it’s the detail of the final agreement that will matter and it is important that this will be open to parliamentary scrutiny. Parliament and business will want to see a very clear, evidence-based plan to ensure the UK economy avoids collateral damage arising from our departure.”

Labour leader Jeremy Corbyn said the PM appeared to be warning that she was ready to turn the UK into a "low-corporate taxation, bargain basement economy off the shores of Europe" if the EU did not give her everything she wanted.

And Liberal Democrat leader Tim Farron said: "Theresa May has confirmed Britain is heading for a hard Brexit. She claimed people voted to Leave the single market. They didn't. She has made the choice to do massive damage to the British economy."

However the markets reacted positively to the PM's speech, with the pound soaring more than 2% to over $1.23, after slumping below $1.20 in the past few days as speculation grew that the UK would be leaving the single market.

European Council president Donald Tusk said Mrs May's speech meant the EU had a "more realistic" view of Britain's hopes and said the remaining 27 states were "united and ready to negotiate".

In a message on Twitter, Mr Tusk said: "Sad process, surrealistic times but at least more realistic announcement on Brexit. EU27 united and ready to negotiate after Article 50."

Ukip leader Paul Nuttall said Mrs May's address "sounded like a Ukip conference speech".

But he added: "I am concerned that what we're getting is some sort of slow-motion Brexit where she is speaking about interim measures, or a transitional period, which will only begin after April 2019.

"She has given no end date to these transitional measures. I challenge the Prime Minister: let's have this all done and clean before the next general election in 2020."

Molly Scott Cato, Green MEP for the South West of England and Gibraltar, said: “The massive impact on businesses of leaving the single market means the Tories can no longer claim to be the party of business. And surveys have shown the public would rather keep the UK in the single market than cap immigration.

“The speech also failed to offer any guarantees on maintaining the high standards of environmental protection that EU membership provides, while the threats of a new low tax economic model are a slap in the face to the many people on the Left of British politics who voted to Leave.

“It is clear that the May government has no political, let alone popular, mandate for the hard Brexit she intends to pursue. The Tory right is taking our country by the throat, cheered on by the more unsavoury forces of the far right.

"This is not a plan to bring the country together; the hard Brexit May has chosen to follow means it will continue to be torn apart.”