Brexit Question Now Settled, but Uncertainty, Potential for No-Deal Remain
European Union leaders may delight in the long-sought clarity brought by the United Kingdom’s decisive re-election of Prime Minister Boris Johnson, but more Brexit uncertainty may be on the horizon as they prepare to hammer out final details with the U.K. over the coming year on what Brexit will actually look like in the long term.
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U.K. Conservatives’ promise not to extend a one-year transition period for negotiating a permanent post-Brexit relationship means a “new cliff edge” awaits at the end of 2020, when the period will end under a U.K.-EU deal now set for approval in the U.K. Parliament, according to former German diplomat Rainer Rudolph writing in a Dec. 13 article in the Berlin Policy Journal. “Most of the decisions that will shape the relationship between the UK and the EU -- probably for decades -- have yet to be taken,” Rudolph said.
The difficulty of those decisions was underlined by comments from French President Emmanuel Macron after the election. He said that any “ambitious trade deal” between the EU and the U.K. must be accompanied by “very ambitious regulatory convergence,” and highlighted the importance of ensuring that U.K. and EU companies are on a level playing field, according to a report in The Guardian.
Any extension to the transition period, which may be until the end of 2021 or 2022, must be announced by June 2020, creating “enormous time pressure,” Rudolph said. A failure to extend the transition period in June means increased uncertainty for businesses, which could take steps to protect themselves from a failure between the EU and the U.K. to subsequently reach agreement by the Dec. 31 deadline, U.K. academic Chris Grey said in a blog post. The Independent published a report that EU Chief Negotiator Michel Barnier recently said that wrapping up talks by the end of 2020 is “unrealistic,” and that EU negotiators “will do all we can to get what I call the ‘vital minimum’ to establish a relationship with the UK if that is the time scale.”
The worst-case scenario would be “’No Deal 2.0,’ whereby the UK leaves the EU with a withdrawal agreement but does not conclude a trade agreement in time,” said a Dec. 11 post on University College London’s Brexit blog. “This would present many of the same economic, political and social problems as leaving the EU without a withdrawal agreement.” Alternatively, a bare-bones trade agreement could be reached that “covers only limited parts of the economy,” the UCL researcher said. “There is insufficient time for anything else, unless Johnson accepts most EU demands and pivots towards a close relationship characterised by high levels of alignment, which is unlikely.”
Of course, Johnson may choose to violate his campaign pledge and request an extension. “However, it is unlikely that Johnson would request this by the June 2020 deadline,” the UCL blog said. “If the request for an extension came after June, we would be in legally murky waters. All in all, the easiest phase of the negotiations may well be behind us.”