On leaving the EU in March 2019, the PM says, "neither the UK or EU will be in a position to implement smoothly new arrangements" to underpin the new relationship both sides seek.

This is why she is proposing a transitional period after Brexit, she says, adding that during the implementation period access to one another's markets should continue

How long the period is should be determined by how long it takes to implement the new arrangements, although she believes it could be around two years.

The UK PM says: "It's our ambition to work as closely as possible with the EU protecting our people, promoting our values and the future security of our continent," adding that the UK post-Brexit will continue to offer aid and assistance to European nations in times of terrorism or disasters.

Ben Wright
BBC political correspondent

Big emphasis on new security partnership between UK and EU. But negotiations are currently a long way off this discussion.

The UK should be as "open-minded as possible" on security ties with the EU, Theresa May says.

She argues that the UK and EU have shared values, but as the threats evolve faster than ever "it's vital that we work together on new dynamic arrangements" that go further than current ones.

She says Britain proposes "a bold new strategic agreement... a treaty" on security issues between the UK and EU.

Theresa May says a strong dispute resolution mechanism needs to be established to help when "disagreements arise" between the EU and UK, though this would not be governed by the European Court of Justice.

Ben Wright
BBC political correspondent

The key issue is how the UK will shadow EU regulations in the future while allowing UK to set its own standards when it wants to.

Theresa May says new dispute mechanism will be needed.

Theresa May says the UK will not adopt a partnership with the EU that others, such as Canada, have adopted.

"Let us be creative as well as practical in designing an economic partnership" that respects the EU and UK, she says.

The UK is one of the EU's largest trading partner and "the EU is our largest trading partner", so "there is no need to impose tariffs", she adds.

Ben Wright
BBC political correspondent

Theresa May unsurprisingly says the UK cannot be a rule taker in its new trading relationship with the EU (so, no single market / EEA membership).

But she also wants more than a Canada style free trade agreement.

“We can do so much better,” says May.

“We need a creative solution”.

Is the EU up for it? David Cameron was hoping for a creative solution during his renegotiation.

Theresa May says Britain will adopt the same rules and regulations as the EU, adding that the question is in building a new economic partnership - "what we do when one of us wants to make changes".

Ben Wright
BBC political correspondent

The PM says UK courts should be able to take account of European Court of Justice rulings in disputes about the rights of EU citizens in the UK post-Brexit. Enough of a concession for EU?

Theresa May says she wants a deep and special partnership with the European Union.

"The UK is leaving the EU, we will no longer be members of its single market or customs union," she says.

Reassuring the 600,000 Italians living in the UK and others, Theresa May says: "We want you to stay, we value you and we thank you for your contributions to our national life."

The UK PM adds that the guarantee she is giving on their rights "is real".

Negotiations on Brexit have been "difficult", Theresa May says, but praises the diligence of Brexit Secretary David Davis during the process.