BIRMINGHAM, England—British Prime Minister Theresa May said the U.K. would trigger the process of disentangling itself from the European Union by the end of March, signaling she would pursue a clear break from the bloc.

Setting the stage for Britain to leave the EU by 2019, Mrs. May gave the clearest indication of her priorities for an exit deal to date, saying she wanted to win British companies "the maximum freedom" to operate in Europe's single market, but not if it meant relinquishing the right to curb immigration to the U.K.

"Let me be clear: We are not leaving the European Union only to give up control of immigration again," she said Sunday. "We are going to be a fully independent, sovereign country—a country that is no longer part of a political union with supranational institutions that can override national parliaments and courts."

Mrs. May's announcement, made at her Conservative Party's annual conference, provides some clarity for businesses and European politicians who have pressed her government for more details on its exit plan. It also ratchets pressure on the British leader to set the U.K.'s negotiating position in the coming months.

Once Britain invokes Article 50 of the EU's Lisbon Treaty— the mechanism that officially kicks off the divorce proceedingsâ "the U.K. has a two-year window to negotiate its new relationship with the EU. That process is likely to be further complicated by elections in France and Germany next year.

Since the June referendum vote, the British government has sought to persuade business executives to continue investing in the U.K. To what extent Britain preserves its access to Europe's single market—which EU leaders say would require it to abide by the bloc's free-movement principle—is likely to be a critical factor in companies' plans.

Mrs. May has pointed to SoftBank Group Corp.'s $32 billion acquisition of U.K.-based ARM Holdings PLC, announced in July, as a sign of confidence in the country post-Brexit.

Last week, though, the chief executive of Nissan Motor Co., the owner of the U.K.'s largest car factory, said it might scrap a major investment in the U.K. without more clarity on Britain's future trade relations. Nissan "will not make an important investment decision in the dark," CEO Carlos Ghosn said.

Economic data since the June vote show the U.K. economy—the world's fifth-largest in 2015—appears to be regaining its footing. Official data released on Friday showed Britain's powerhouse services sector posted strong growth in the month immediately after the vote.

Many economists, however, say it is too early to say whether the economy will avoid a slowdown and uncertainty around the U.K.'s future with its biggest trading partners could weigh on its growth.

Since Mrs. May was appointed prime minister in July, divisions have emerged among U.K. politicians and within her own party over whether Britain should break off entirely from the bloc or maintain close ties at the cost of agreeing to abide by some EU laws.

Mrs. May said on Sunday that the U.K. wouldn't be open to negotiating away its sovereignty and that she would seek to end the jurisdiction of Europe's highest court, the European Court of Justice in Luxembourg, over the U.K.

"I think, as a whole, the speech seemed to suggest the U.K. would leave the single market," said Raoul Ruparel, co-director of think tank Open Europe.

Mrs. May faces growing pressure from her party to spell out how she sees Britain's future outside the EU. Her first two months in office have been dominated by the aftermath of Britain's historic Brexit referendum, but she hasn't detailed her plans or publicly outlined her vision for the U.K.'s new relationship with the EU. On Sunday, she said she wouldn't give a running commentary on negotiations as that would put the U.K. at a disadvantage in talks.

The toughest element of the coming negotiation will likely be to what extent the U.K. can access Europe's free-trade zone. Under EU law, countries can be members of the single market only if they agree to Europe's free-movement principle, which allows EU citizens to live and work anywhere in the bloc.

Britain's economy is closely tied to its European neighbors and trade barriers between them could be costly. The U.K. sent some £ 230 billion ($297 billion) in exports to the EU in 2014, compared with £ 88 billion to the U.S. and £ 18.7 billion to China.

Maltese Prime Minister Joseph Muscat—whose country is holding the rotating presidency of the Council of the EU in the first half of 2017—said in a Twitter post on Sunday that freedom of movement and access to free trade "cannot be decoupled."

Mrs. May told the British Broadcasting Corp. earlier on Sunday she hoped informal, preparatory talks could start now, given that EU leaders have a better idea of when the government would trigger Article 50.

But Germany, Europe's leading power, believes there is no reason to start talks until the article is invoked, according to people familiar with Berlin's stance. Once the two-year window for talks formally begins, Germany and other EU countries will have strengthened negotiating positions since the U.K. has more to lose if there is no deal after two years.

German Chancellor Angela Merkel sees no reason to relinquish her bargaining power by allowing substantive talks before Article 50 is invoked, said people familiar with her thinking. ​

That echoes previous statements from other EU leaders that there will be no informal discussions on the broad outlines of Britain's future relationship with the bloc until it triggers Article 50. Donald Tusk, president of the European Council, tweeted that while he welcomed clarity from Mrs. May, the other European members states wouldn't engage with the U.K. until the formal treaty provision was triggered.

By committing to invoking Article 50 by spring, Mrs. May now faces the possibility of being forced into the two-year negotiating window with no clarity on what kind of relationship the other 27 EU governments are willing to accept.

If the other 27 member states deem her government's proposals on Britain's future trade, financial, security and defense ties with the EU as unacceptable, Mrs. May will have only a limited time to pivot. At that point, the clock will be ticking on the two-year timeline—a deadline that can be extended only if all EU countries agree.

Laurence Norman, Gabriele Steinhauser, Marcus Walker and Jason Douglas contributed to this article.

Write to Jenny Gross at jenny.gross@wsj.com and Nicholas Winning at nick.winning@wsj.com

 

(END) Dow Jones Newswires

October 02, 2016 21:25 ET (01:25 GMT)

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