The UK will have even less time to prepare for life outside the EU than it wants

Peering over the edge.
Peering over the edge.
Image: Reuters/Simon Dawson
We may earn a commission from links on this page.

When the Brexit process was triggered and it was determined that the UK would formally leave the European Union in March 2019, many worried a regulatory and operational nightmare was awaiting businesses. The fear: that on March 31, 2019 the UK would be subject to all the rules and regulations of the EU. Then, on April 1, 2019, business would fall off a cliff-edge as new rules, trade agreements, and regulations wouldn’t have been completed. Since then, it’s been widely agreed that the UK would enter into a “transition period” after Brexit in 2019 to allow time for a new trading relationship to be worked out with the EU.

The EU’s chief negotiator Michel Barnier said today that this transition period will end no later than Dec. 31, 2020, three months earlier than the UK has said it wants the period to end. Three months might not seem like much in the scheme of things, but the transition period is already much shorter than the four-to-five-year timeline (paywall) some businesses in the UK had hoped for.

The December 2020 date is the EU’s opening position (pdf) on the transition period as the two parties head into the second stage of Brexit negotiation. The period could change, pending the outcome of those negotiations.

The time it takes to work out trade agreements and the complexity of rewriting the UK’s 40-year relationship with the EU had lead to some calls for the transition period to be a multiyear process. Plans for a fully-fledged trade agreement earlier than that were “not realistic,” politicians in Ireland have said.

During the transition period, the UK will still remain subject to all the EU’s rules. This means that it can’t negotiate and sign free-trade agreements with other countries. That said, Barnier does expect the UK to begin exploratory talks with other nations. The UK will also remain in the European customs union and single market and rulings by the European Court of Justice will continue to apply, the EU said. Barnier also said that the UK shouldn’t expect any special treatment, referring particularly to a bespoke deal for the City of London, due to the outsized contribution of financial firms to the UK economy.

A shorter transition period will be welcomed by eurosceptic British politicians, who feared the transition would lead to a never-ending period of Brussels control that would be in place during the next election in 2022. Ending the transition period in December 2020 would also coincide with the end of the current seven-year EU budget period, for which the UK is expected to pay all of its previously agreed commitments.