At its core, Brexit is a formal process of laws, treaties, timetables and deadlines. But this formal process is a bit like a medieval castle surrounded by a shanty town of often raucous informal pressures from politics, the media, interest groups and civil society. This week there is a classic illustration of the dangerous disconnection between these parallel worlds. In the formal part, the European Union on Monday issued its official guidelines for a transition period between Brexit in 2019 and the start of a negotiated future trading relationship. Meanwhile in the informal part, the Conservative party continued to be preoccupied by a stormy doctrinal argument about real and imagined threats from the formal process, all fired by the heady home brew of prejudice, ambition and self-interest.

A direct challenge to Theresa May’s leadership is a real possibility amid all this chaos. It is the talk of the fleshpots outside the castle walls. The argument within the Tory party at Westminster is also increasingly visceral and acrimonious. At any moment it might spill out into a full-scale brawl. But the decisive event on Monday was not at Westminster. It was in Brussels, where the EU took two minutes to agree its directives for the negotiations about a post-Brexit transition period.

The transition question is not as fraught as phase one of the Brexit talks, dealing with the so-called divorce issues (which was signed off in December), or as phase two, dealing with the future trading relationship (scheduled for completion in the autumn), is likely to be. But it is important nonetheless, for two big reasons: first because the transition period holds the key to the phase two talks that follow, and second because there are substantive issues at stake in the transition that have to be dealt with sensibly and not jeopardised. All the signs are that Britain is handling this latest part of the process as ineptly as it embarked on phase one.

The experience of phase one was that what the EU wants is likely to be at the heart of the eventual deal. The UK failed to make clear what it wanted at the start, because it was incapable of doing so, since to do so would split the Tory party. As a result, it always made sense during phase one to refer to the directives for those talks issued by the EU in April 2017; these duly ended up as the bulk of the deal signed by Mrs May in December. Similarly, this week’s document on transition is likely to become the basic reference point for the conclusion of the stage that is about to begin. David Davis made a speech last week in Middlesbrough pressing for the UK to be consulted about new EU laws during this period. But the effort was too little, too late, and too unserious in the light of the government’s consistent failure to set out its Brexit goals. Michel Barnier had no difficulty dismissing the idea on Monday.

A transition period is indispensable to lay the ground for the prosperous and peaceful relationship that Britain needs with the EU after Brexit. Even the government grasps this in principle. In practice, however, ministers are unable to translate that into anything sensible for British jobs and trade. Mrs May is increasingly focused simply on getting the UK out of the EU next year at the expense of the terms on which it happens; to her, Brexit really does now just mean Brexit, and little else. Hardline Brexiters seemed to go along with that until recently, at the expense of Britain’s best interests in the talks, of course, since they are not concerned about that. Now, though, their fear about a soft Brexit or even a reversal of Brexit – plus their sense that Mrs May cannot survive – is luring them into recklessness.

Jacob Rees-Mogg’s and Sir Bill Cash’s complaints about Brexit “in name only” are designed to wreck the kind of transition period that would be good for the British economy and pave the way for a softer eventual landing. Mrs May is too weak to make the counter-argument; her next planned speech on Brexit seems to have bitten the dust. Only the chancellor, Philip Hammond, makes the case on the Tory side; yet even he is cautious. The situation is ready-made for Labour to articulate an alternative approach that speaks for Britain’s interests. That alternative has been too long absent; it has never been more needed.