Brexit Day is finally here. What will actually change?
Late Friday evening in the U.K., a momentous event will take place: the country’s long-awaited departure from the European Union.
Well, sort of.
Brexit will definitely take place at 11 p.m. local time—or midnight on the European mainland—but because there will be a transition period over the rest of 2020, in many respects the event will be more symbolic than practical. During those 11 months, almost all EU rules will still apply in the U.K., rulings from the bloc’s Court of Justice must still be enforced there, and there will be no immediate change to how business is conducted across U.K.–EU borders.
So what exactly will change Friday night?
One of the main battle cries of Brexit proponents is that the U.K. will once again be free to negotiate its own trade deals—something that, as a member of the EU, it has for decades been forced to do collectively.
This is perhaps the most visible change that will take place at the end of this week, when the U.K.’s team of negotiators will be able to spring into action. It remains an open question as to how advantageous their deals will be, given that the U.K. is a lot smaller than the EU, but they will certainly be able to operate independently.
According to a recent report in The Sun, the first objective will be to strike a trade deal with Japan by the end of 2020, and to start negotiating with the U.S., Australia and New Zealand. The U.K. will also seek trade talks with its former bloc; it will be a major strand of the discussions during the transition period, in order to establish the future U.K.-EU relationship.
Loss of control
The trade-deal aspect of Brexit is about “taking back control,” as the Brexiteer slogan went, but the opposite will also occur on Friday evening. During the 11-month transition period, the U.K. will find itself having to obey EU rules, without the ability to influence the rule-making process.
Prime Minister Boris Johnson ensured that U.K. members of the European Parliament (MEPs) had minimal presence there in the last few months, but now they won’t be there at all. There is already no Brit sitting in the European Commission, and the country will be no more than an occasional observer in the Council of the European Union, which represents the EU’s member states.
Being outside the club, the U.K. had better hope the rest of the year involves no big EU decisions that will affect it in new and interesting ways—because if there are, it will just have to toe the line.
As far as business is concerned, Brexit’s most damaging effect so far has been the uncertainty that it has imposed on operations—a problem that manifested in the repeated stockpiling that many firms used to hedge against the possibility of the “no-deal Brexit” that would have occurred if the U.K. and EU had split without first negotiating a future relationship.
In some respects, Brexit uncertainty is now a thing of the past. After Friday, there will no longer be any possibility of the U.K. cancelling Brexit; if it wants to rejoin the EU, it will have to apply to do so. This is why Simon Usherwood, a politics professor at the University of Surrey in England, says Friday evening will be “a huge deal.”
“It’s the point at which this process becomes fixed in a very real sense,” he says. “There’s no longer [a question of], ‘Can the U.K. change its mind and say sorry, we didn’t mean to do that?'”
The problem is that the transition period will be uncomfortably brief. Trade deals typically take years to negotiate. The U.K. and EU have the advantage of starting from a common point—the U.K. already adheres to EU rules and standards, having been a member for decades—but again, the scope of their future relationship will be extremely wide, and the U.K. will want to diverge from EU rules in the future. Ironing out the details will take a lot of work.
And they only have 11 months in which to achieve this—actually, a few months less, given the need for the deal to be ratified by the British and European Parliaments, plus the legislature of each remaining EU member state.
“[Friday is] the end of the first part of this process, and it’s likely to be the easier part—stopping doing something, rather than starting doing something else,” says Usherwood. “That’s a problem for a lot of people who think it’s done and dusted and haven’t really appreciated that there’s still an awful lot of ground to be covered.”
Although there is now no longer any way to delay Brexit itself, the British government does have the option of extending the transition period by up to two years. This can only be done once—unlike the repeated postponements of Brexit Day that took place in the last couple years—and doing so would also be a major embarrassment for the government, which swears blind that the transition period will end on December 31. But the option is there.
So, businesses will ask with good reason, what’s going to happen at the end of the year? Will there be a comprehensive deal that describes the new landscape in detail? Will there be a bare-bones deal that leaves many questions unanswered until further negotiations take place? Will there be no deal and therefore a return to stockpiling towards the end of the year? Will the transition period be stretched out into something more manageable?
On Friday night, there will be no answers to those questions—though Usherwood has an inkling. “There’s good reason to think an extension is necessary,” he says. “I don’t think anybody is going to be totally surprised if it is actually used.”
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