Time to prepare for no-deal?
Negotiations between the UK Government and the EU continue with rumours of progress often being countered hours later by suggestions of new setbacks. The same sticking points which have presented a barrier to agreement during the talks for the last 11 months continue to hold up the negotiations. The political interventions of Prime Minister Boris Johnson and Commission President Ursula von der Leyen have ensured the negotiations continue to work towards finding an agreement.
However, as the clock ticks down (there are now just eight days until the end of the transition period at the time of writing), whilst a deal is still possible, all eyes are now on preparing for a no-deal outcome when the transition period ends at 11pm on 31 December 2020.
“It would mean a no deal on trade, no agreement on aviation or other transport links, no agreement on fishing nor on security and judicial cooperation. It might also mean that the UK is not given the go-ahead on data adequacy or on equivalence for financial services – both decisions that are down to the EU to make alone, and that it has linked to the overall negotiations over the future relationship.”
A no-deal outcome would have many consequences, from a change in the trading relationship, to the future security relationship and of course the UK and EU fisheries relationship. Yesterday, SPICe published three blogs examining the impact of a no-deal Brexit on trade, justice and fisheries. Our final blog on the potential impact of no-deal examines what might happen in terms of the EU-UK relationship after a no-deal outcome.
What’s happening with the negotiations?
At the time of writing, the negotiations are continuing. Briefing from both sides continues to suggest that whilst progress has been made, there is still work to be done to reach an agreement. Some progress on agreeing terms on the level playing field and fisheries appears to have been made in recent days but nothing will be agreed until everything is agreed, and so even the smallest obstacle could still derail the discussions. RTE’s Europe Editor, Tony Connelly tweeted an in-depth update on the negotiations yesterday evening (22 December). The most eye-catching revelation was perhaps that the current draft text is 2,000 pages long including annexes!
In the event of a deal being agreed at this late stage, it could be provisionally applied by the EU (meaning the deal will be operational ahead of being formally ratified in January) and the UK Government may seek to ratify the deal by taking a Bill through the UK Parliament in one or two days. The potential need for legislative consent from the devolved legislatures is a further potential issue which would need to be addressed.
However, the biggest barrier to an agreement coming into force at the end of the transition period may now be time, with only eight days to go to the end of the year. It may be that time will simply run out for the negotiators to reach a deal and an accidental no-deal may occur as a result.
If this is the case, what would be likely to happen next?
A no-deal outcome
The biggest outcome of time beating the negotiations is that the UK would leave the transition period without any overarching agreement with the EU to replace it. As a result, it would be a no-deal outcome, the implications of which are discussed in the other SPICe blogs in this series.
If the UK and EU simply run out of time to ratify any deal, it’s possible there may be just a short period of no-deal in early January whilst the two sides finalise the deal and ratify it.
In contrast, a situation where a deal simply has not been agreed by the end of transition may create bigger challenges for both the UK and the EU.
What happens next?
What comes next following a no-deal may largely depend on how the negotiations end.
If the negotiators simply run out of time, it is possible that the negotiations may pick up again in the New Year and efforts continue to find common ground. Of course, by that point both sides will be coming to terms with the no-deal outcome. The implications of which might provide encouragement for a deal to be done or provide belief that the new relationship can operate effectively without a deal.
In contrast, if the negotiations break down in an acrimonious manner with both sides blaming the other for the failure to reach an agreement, then it is possible that a resumption of negotiations in January may not be as easily forthcoming.
Throughout the negotiations it has taken the political intervention of the Prime Minister and the President of the European Commission to get things going when discussions have stalled. In the event of a no-deal on 1 January, it will again likely require a similar intervention if discussions are to resume quickly following New Year.
As a result, if there is no agreement on the future relationship, the key question in January will be whether talks quickly resume or whether acrimony about the consequences of no-deal lead to a stand-off between the two sides.
Finally, if and when negotiations did resume, how would the two sides seek to reach agreement on issues which they have already been negotiating on for nine months without reaching a shared understanding.
Iain McIver, SPICe Research