Brexit Business Brief | Are we nearly there yet?

Written on 9 Oct 2018

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What's happening?

The procession of sector-focused Brexit papers from industry groups has stopped, and the UK Parliament has been in almost continual recess since late July. So in this update, we look briefly at the Withdrawal Agreement and how the period up to March 2019 might play out in the UK government's best case scenario, and finally at the UK no deal notices.

The Withdrawal Agreement

We are waiting to find out whether the EU and the UK can settle the terms of the Withdrawal Agreement and the framework for the future relationship.

The mood music coming out of the negotiating teams seems suddenly to have become more positive, suggesting that we may be nearly there as the intensive work on the Withdrawal Agreement reaches a climax.

As a reminder, the Agreement has three principal parts relating to the UK's exit:

  1. The exit bill that the UK pays to honour its existing obligations as a member of the EU club. That part is done.
  2. Detailed provisions on the status of EU citizens in the UK, and vice versa, after Brexit. It seems that is done too.
  3. A "backstop" designed to ensure a soft border between Northern Ireland and the Republic of Ireland, irrespective of the long-term relationship between Great Britain and the EU. This is not done.

Those three parts must be legally binding and so set out in clear and unambiguous language in the Withdrawal Agreement.

Another legally binding part of the Agreement is the section on the "status quo" transition period that would run from exit day – 11.00 p.m. UK time on 29 March 2019 – to the end of 2020.

The Agreement will also have an annexure setting out a declaration on the future relationship between the EU and the UK. The declaration is not intended to be binding in a legal sense, but to carry political and moral suasion. We don’t really know what will be in the declaration, given the EU's rejection of the UK's Chequers paper.


And then what?

The current plan, as briefed by the UK government, seems to be that the two major outstanding issues – the Irish backstop and the future relationship declaration – will be settled at the European Council summit on 17/18 October.

From that summit until a special Council meeting in mid-November, the detailed wording on those two issues will be honed.

At the November summit, the EU27 and the UK would formally agree the legal text of the Withdrawal Agreement.

Over to the UK Parliament

The Withdrawal Agreement would then be ready to be presented to the UK Parliament. Under section 13 of the European Union (Withdrawal) Act 2018, the House of Commons must approve the Withdrawal Agreement and the text on the future relationship on an amendable motion, and that motion must (so far as practicable) be voted on before the European Parliament votes on the Withdrawal Agreement.

It is being reported that the UK government will move quickly to get to the House of Commons vote as soon as the Withdrawal Agreement is ready. That will be controversial because MPs will argue they want sufficient time to consider what has been agreed (could that include, for example, time-consuming Select Committee investigations and reports?).

But let's assume the government decides it does have sufficient numbers to win the vote, possibly having to rely on some Labour MPs, and pushes it through. That means that by early December the House of Commons could have approved the Withdrawal Agreement.

(I am leaving out here other UK Parliamentary requirements around the Constitutional Reform and Governance Act 2010 which seem to me largely academic if the House of Commons has approved the Withdrawal Agreement.)

And then to the European Parliament

All that would then be outstanding for the Withdrawal Agreement to be done and dusted would be the consent of the European Parliament. It is hard to get a grip on when that might be forthcoming – it might well not be until February 2019 – but rejection by the European Parliament would seem to be a low probability event if the European Council, the Commission, the UK government and the UK legislature have all signed off.

So when will business know that there will definitely be a transition period?

Well…that depends on what we mean by "definitely"! The purist answer is not until the European Parliament consents and the Agreement is ratified. But more helpfully, the realpolitik is that if the UK House of Commons approves the Withdrawal Agreement in early December then that is when we would finally be able to say that a transition period is practically certain.

And the reverse is also true: if the Commons does not approve the Agreement, then we would be into a period of true unknowns, in which a halt to the Article 50 timetable and a UK election or a second referendum, or a no deal cliff edge Brexit, might happen.


No deal notices

The UK government published its latest batch of no deal notices on 25 September. That makes 76 to date. They are all here. No doubt you will have seen many articles written about these notices, but really they do no more than summarise the notices. There's no substitute for reading the originals, most of which are quite short and some of which are quite helpful.

Having said which, the best publication I have seen on the no deal notices is this short Institute for Government post, which has an excellent table capturing what the UK government intends to do, and what businesses need to do, in each subject area covered by a no deal notice.

We're promised another dozen or so no deal notices in the next few days, including one on the rights of EU citizens in the UK. The European Commission is also planning to publish details of contingency measures that it would take in the event of a cliff edge Brexit.


Bored of Brexit?

I guess it is possible. Here are some other things that Osborne Clarke is thinking about at the moment:

 


How Osborne Clarke can help

Take a look at