Brexit: where are we now?

We take stock four years on from the EU referendum

Even before the coronavirus pandemic, the deadline of the 31st of December to agree a trade deal with the EU seemed a tall order…yet despite the inevitable hold-ups due to the crisis, the UK government looks to be adamant on sticking to it. Four years on from the EU referendum, where are we with Brexit? By Marta Portocarrero & Sarah Bradbury.

Watch our video explainer:

Hang on, remind me what’s happened up till now?

Although the UK has officially already left the EU on 31st January – yes, ICYMI Brexit has happened! – transitional arrangements were put in place until 31st December to give us time to negotiate our future trade deal with the EU.

During this period we still had to make contributions continue to the EU budget and European regulations applied.

Of course, in the meantime – newsflash! – the pandemic happened.

Arguably, while still thigh-deep in tackling coronavirus, and all that that entails in terms of protecting the country’s health as well as the economy, now might not be the time to also try and tackle the terms of our divorce from the EU.

Luckily, it was written into our withdrawal agreement we could request an extension…

So are we sticking with the 31st of December deadline?

Actually, after several virtual rounds of negotiations, it seems like it.

Within the terms of current agreement, we’re allowed to extend the transition period for up to two years give more time for negotiation. The formal deadline to make the request to extend is at the end of June.

However, on the 15th of June, the UK government agreed that there will be no prolongation and the UK has legislated to that effect.

This was despite many voices calling on the UK to seek an extension, such as Kristalina Georgieva, Head of the IMF, The European People’s Party and Anti-Brexit campaign group Best for Britain.

They say the 31st December deadline is too short to conclude a deal and suggest a simpler, more “bare-bones” trade deal be struck, leaving other policy areas to be sorted later.

Furthermore, a survey for the Health Foundation found that 54% of people would prefer the transition period to be extended.

So where does that leave us?

Well, the next important stages are as follows:

29th of June: A “restricted round” of discussions will begin between UK negotiator David Frost and the EU’s Michel Barnier.

July, August and September: Weekly meetings will take place between Brussels and London. 

Undefined end-of-summer date: A final deadline for a trade deal is yet to be set but once it is, it will mark the next most important occasion between the gov and the bloc. If an agreement cannot be reached by then, the UK will leave the EU with no deal.

What are the main stumbling blocks?

Fisheries: The EU wants to maintain the status quo for fishing access and quotas, but the UK wants Britain to have control of its own waters.

Level playing field: The EU wants to prevent the UK from undercutting EU standards on issues including workers’ rights, environmental protection and state subsidies. However, the UK gov believes Brussels is trying to bind the UK to EU law.

Due to the coronavirus crisis and these sticking points, experts believe a full deal won’t emerge until at least the autumn.

What happens if no deal is reached?

Then the UK will default back onto World Trade Organisation (WTO) rules on 1st January 2021.

While currently UK-EU trade is tariff-free, WTO rules would mean the UK would have to apply WTO tariffs to goods coming in from the EU. Conversely, when we sell products to the EU, they would apply their “third-country” tariffs. The Confederation of British Industry (CBI) reckons as much as 90% of UK exports to the EU could be hit with tariffs in a no-deal scenario.

This could be damaging for the British economy, impacting industries such as car manufacturing and agriculture, which would be hit with large taxes. That would compound the already heavy blow the economy from the pandemic, and make potentially make our recovery slower.

The EU would start imposing border checks on UK products which could result in lengthy border queues. The FT reported that HMRC estimates UK businesses would spend £15bn extra a year on paperwork under no-deal.

It could also interrupt trade with any of the 72 countries that have trade deals in place with the EU but we don’t yet have an agreement with.

What do you think? Will we reach a deal by the end of the year? Should we have requested an extension?