The UK will leave the European Union at precisely 11pm GMT on the 29th of March 2019. Why this precise time? Well, 11pm GMT is midnight in Central European Time, the time by which the European Commission sets its administrative clock.
The agreement reached between the UK and the European Commission on 19 March this year was indeed a breakthrough, but most of the text consisted of the UK agreeing to terms that the Commission had set out months ago.
When the Commission said that it wanted the transition period following the exit to conclude on 31 December 2020, politicians in the UK engaged in lengthy debate about whether this date was suitable or not. In the end, the UK agreed to the Commission’s date.
When the Commission said that free movement of people must continue during the transition period, we again indulged in a prolonged internal debate about this. The Prime Minister herself said it would be unacceptable. In the end, we accepted this principle.
The EU’s position on the Northern Irish border has been fixed for months, while the UK’s position has ebbed and flowed. The UK has now agreed to the Commission’s backstop position, but still hopes to find an innovative solution which allows the border to remain open to trade and people while also allowing market regulatory divergence from Brussels.
There was one politically significant concession though from the EU side – the UK will be allowed to begin trade negotiations with third countries during the transition period. This is politically significant as it gives the government a tangible “win”. But the economic significance is less clear.
The UK currently benefits from over 30 trade agreements that the EU has negotiated with third countries and groups – some of which, like the Canadian FTA, took many years to negotiate. It is not clear how long it will take post-Brexit Britain to renegotiate these deals. Deals with smaller countries may be achieved quickly as those countries will be keen to retain access to the British market. But deals with major trading nations like Canada or Mexico could take a lot longer.
So what can we expect to see over the next year? The so-called “divorce bill” will have to be fixed – but there is already broad agreement between the two parties on the principles of this calculation, and we can expect the amount owed to the Commission to be around €35 billion. The status of Gibraltar’s access to the mainland European economy will need to be clarified. And the EU Withdrawal Bill will have to pass through Parliament (the current schedule has the Lords’ debate on the Bill concluding in May 2018).
Of particular interest to industry will be the UK’s relationship with European regulatory bodies such as the European Medicines Agency and the European Banking Authority. As my colleague Sabine Tyldesley has pointed out, an association model might be the way forward for these and other relationships – and there is already a clear precedent for this in the EU’s relationships with countries such as Turkey and the Ukraine.
In short, there is a lot more still to be worked out, but with one year to go, there is already a significant amount of certainty and agreement already in place. Unlike a few months ago, businesses are now less likely to complain about a lack of certainty on the big issues. It is now up to the negotiating parties to get the details right.