Even though both the EU and the UK have good intentions to reach an agreement, there has been no success so far. As things stand now, if there is neither a withdrawal of the United Kingdom with a transition period, nor an extension of the negotiations, the UK will no longer be an EU member state as of Friday the 29th of March, 2019. During the informal summit of Heads of States in Salzburg last month, the President of the European Council Donald Tusk announced that the moment of truth for Brexit negotiations will take place at the EU Summit in October.
Following the July 2018 General Affairs Council meeting, EU chief Brexit negotiator Michel Barnier issued a press statement recognizing the intensity of the UK’s debate presented in the white paper “The Future Relationship Between the United Kingdom and the European Union”, but highlighted issues around economic relations that he saw as incompatible with the single market, customs union, and common commercial policy of the EU. Almost three months later, post-Brexit economic relations between the EU and UK remain controversial.
On the one hand, the EU is rejecting all possibilities of a deal without a solid, operational and legally binding Irish backstop solution for the border between Ireland and Northern Ireland. On the other hand, the UK´s Prime Minister Theresa May stated that the two options the EU is offering are unacceptable. First, the proposal that the UK remains in the European Economic Area and customs union would undermine the referendum, and second, a free trade agreement that would introduce checks at the UK-EU border would economically divide Northern Ireland from the rest of the UK. Without another option, the UK will leave with no deal.
The EU and the UK should ideally find an agreement during the EU summit in October. The transitional deal proposes the UK remains in the single market and customs union until the 31st of December, 2020. In this case, businesses can relax knowing that goods, capital, people, and services will continue to circulate freely. This deal would allow more time for details of the new relationship to be fully hammered out. If this transitional treaty is ratified, the UK will be free to negotiate its own trade deals with non-EU countries beginning January the 1st, 2020.
The deadline to reach an agreement is fast approaching. In the meantime, both the UK and the EU are preparing for all eventualities, including a ‘no-deal’ scenario.
This ‘no-deal’ scenario will result in the UK leaving the single market, customs union, and Court of Justice as of the 29th of March, 2019, with no agreement and no transition period. EU law will be separated from the British law and tariffs and border checks will ensue. It is hard to say exactly what the effects of Brexit happening as-planned would be, however it is broadly anticipated that it will create chaos on both sides, with huge delays at the borders.
Both parties hope to reach an agreement on future relations at the EU summit on October the 17th and 18th, 2018. The EU wants negotiations to be completed before the end of October to give the EU27 time to sign off on the deal. UK Members of Parliament must also vote on the final deal.
As promised, we will continue to follow the Brexit tale closely to keep you informed and inspired. Stay tuned!