Brexit Business Brief | Everything is possible

Published on 31st Oct 2019


Welcome to Brexit Business Brief, our regular newsletter looking at Brexit developments in a legal and business context. You're receiving this newsletter because you've subscribed for Brexit Insights from Osborne Clarke.

Where Brexit stands as the general election kicks off

The EU and the UK have agreed (here's the European Council decision) to a third extension of the Article 50 period. This extension will last until 31 January 2020.

Under the terms of the Council decision it is possible, but unlikely, that the UK could leave on 31 December 2019. That would require the House of Commons – when it returns after the election – to pass the Withdrawal Agreement Bill into law, and for the UK and the EU then to ratify the Withdrawal Agreement before the end of December.

That's conceivable if the Conservative Party wins a workable majority in the election.

But even if that happens, there could be logistical issues with leaving on 31 December. So let's assume that the transition period ends on 31 January 2020. In that case, what could happen on 1 February 2020?

What could happen on 1 February 2020?

One of four things:

1. The UK leaves with a deal and enters the transition period

This would need the Withdrawal Agreement Bill to be passed into UK law and the Withdrawal Agreement to be ratified by the end of January 2020.

On 1 February 2020 the UK would enter into the standstill transition period set out in Part Four of the Withdrawal Agreement.

In that transition period, the UK remains for all practical purposes within the Single Market and the Customs Union, and continues to benefit from trade and sectoral agreements between the EU and third countries around the world. EU law would also be directly applicable in the UK as it is now.

The transition period lasts to December 2020 but can be extended to either the end of 2021 or 2022 by a joint decision of the EU and the UK. Any decision to extend has to be taken by 1 July 2020 and can only be taken once. So at the end of June 2020 the parties can decide to extend to either the end of 2021 or 2022, but that decision is then closed and final.

If there is no decision to extend the transition period:

  • then if the UK and the EU have agreed the terms of their future relationship by the end of 2020, the transition period ends and the terms of that future agreement take over…
  • but if the future relationship has not been agreed, the parties face a no deal exit at the end of 2020.

That's why there is already concern that a no deal exit could happen at the end of 2020, even if the Withdrawal Agreement is ratified.

2. The UK leaves on no deal terms

If the Withdrawal Agreement has not been ratified by 31 January 2020 and there is no further extension to the Article 50 period requested by the UK and agreed by the EU, then there is a no deal exit.

We covered the UK government's latest no deal guidance in this edition of Brexit Business Brief.

3. The UK requests a further extension and the EU agrees

It's quite possible that the new House of Commons will not have passed the Withdrawal Agreement Bill by the end of January 2020, and so the Withdrawal Agreement can't be ratified before the current extension runs out.

The UK would then be in broadly the same position as it has been for the last weeks of this October, and events could play out in the same way, with another extension being requested. Would the EU's patience finally be at an end at that point, and such a request refused? That's possible, but history suggests not.

If that extension request was for a specific purpose, in particular for the UK to hold a second referendum, then it is pretty certain the EU would agree to a fourth extension.

4. The UK revokes its Article 50 notice and remains in the EU

The cards of British politics could fall in such a way that the new UK government (perhaps instructed to do so by the new House of Commons) revokes the Article 50 notice served back in March 2017 and the UK simply remains a Member State of the EU.

Position of the parties on Brexit going into the election

Conservatives: Pass the Withdrawal Agreement Bill into law, ratify the deal and leave as soon as possible. As I discuss above, under the terms of the latest extension, if that happens the UK's exit from the EU could be as early as 31 December 2019.

Labour: Renegotiate the deal, then a referendum with the choice being Labour's renegotiated deal or remain.

Liberal Democrats: Revoke Article 50 in the event of a Lib Dem majority government. If not, a referendum.

SNP: 'Halt or revoke Article 50.'

The Brexit Party: 'A clean-break Brexit.'

Brexit reading

This Brexit Business Brief won't be published during the election period. In case you're missing Brexit (!), here is some reading I've recently found useful on the legal side:

The House of Commons Library published a good explanation of the latest Withdrawal Agreement and Political Declaration, looking in particular at the differences from what the May government agreed.

The European Commission produced a short factsheet on the new Withdrawal Agreement.

On the complex things that the Withdrawal Agreement Bill would do to UK law, the Explanatory Notes published by the UK government are the essential starting point, though deeply heavy going.

If like me you struggle to remember the twists and turns of Brexit, the House of Commons Library publishes an enjoyably deadpan timeline from January 2013 to now. It starts with Prime Minister Cameron's speech of that month in favour of a referendum: "It is time for the British people to have their say. It is time to settle this European question in British politics."

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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