8 November 2019

As the election campaign gets underway, attention is turning to the key Brexit decisions that will need to be made after the results come in. In particular, a Conservative Government that ratifies the Withdrawal Agreement will quickly need to decide whether it will need an extension to the transition period – which has been eaten into by the successive extensions to Article 50. The transition is due to end in December 2020, with the option to extend it by up to two years. If that option is not taken, the UK and the EU will have just 11 months to negotiate the future relationship.

This week, ministers Michael Gove and Liz Truss appeared to rule out extending the transition, arguing that it would not be needed. Whether this commitment will stand in the next phase remains to be seen, especially as 11 months is unlikely to be long enough to negotiate anything other than a very basic trade agreement with the EU. That is not to say the negotiations will take as long as previous EU FTAs, which have often taken over five years. The unique importance of the UK-EU relationship and the pressure of multiple deadlines are likely to add a sense of urgency that will hurry the process along. Nevertheless, this only goes so far. As well as the negotiations themselves, both sides will need to agree internally on negotiation mandates before talks begin, and will also need to ratify and implement the deal – all of which will take time.

Any transition extension would require the UK to make a financial contribution to the EU budget, though the amount would be subject to negotiation. The cost of the original transition is the same as the UK’s net budget contributions as an EU member – around £8-10bn a year. However, the cost of an extended transition could well be lower. For example, the Common Agricultural Policy (CAP) will not apply to the UK after 2020 even if the transition is extended. The cost of CAP ought, therefore, to be subtracted from any UK contribution for 2021 and 2022 – reducing the net annual figure by around £2bn.

If the transition is not extended and an FTA is not in place by December 2020, the default is that the UK would fall back onto trading with the EU on World Trade Organisation terms from January 2021. However, this would not be the same as a 2019 ‘No Deal’ Brexit. Although the long-term consequences for trade between the EU and Great Britain would largely be the same (albeit with an extra year to prepare), the Northern Ireland Protocol would remain in place, as would provisions to protect citizens’ rights. The financial settlement or ‘divorce bill’ would also not be in doubt – indeed, much of it would already have been paid by this point. More broadly, the political atmosphere between the UK and the EU might be less acrimonious – potentially making sectoral deals on issues like aviation and data more feasible than in a ‘No Withdrawal Agreement’ scenario.

While 2020 under the Conservatives would be dominated by future relationship talks and the question of transition extension, a Labour-led Government would face a different set of issues. They would seek to extend Article 50 for at least six months, renegotiate the Brexit deal with the EU, and then put it to a referendum against Remain.

Labour’s deal would likely keep most of the Withdrawal Agreement intact, though they might seek to return to the backstop negotiated by Theresa May and would also need to adjust the dates of the transition period (which in turn has implications for the financial settlement). They would also look to rework the Political Declaration to commit to a customs union and “alignment” with the single market. Though there are potential flashpoints on state aid and what exactly “alignment” means, Labour’s deal is largely negotiable from an EU policy perspective. The problem is political, as this deal would be negotiated by a party that largely supports Remain and then pitted against Remain in a referendum. Such a referendum may have little political legitimacy with Leave voters, especially if Labour’s deal is seen as Remain in all but name.

Whoever wins this election, Brexit will not be “done” any time soon; the UK will simply move to the next phase, whether that is negotiating the future relationship or preparing for a further referendum.

News in brief

1. Parliament dissolves as election campaign gets underway
Parliament was officially dissolved on Tuesday, as the five-week campaign period for the 12 December election gets underway. The latest YouGov poll on voting intention puts the Conservative Party in the lead on 36%, ahead of Labour on 25%, the Liberal Democrats on 17%, and the Brexit Party on 11%.

Before dissolution, MPs voted to appoint Sir Lindsay Hoyle as the next Speaker of the House of Commons, after his predecessor John Bercow stood down. Hoyle was the Labour MP for Chorley and has been Deputy Speaker since 2010.

Shortly after Parliament dissolved, the Welsh Secretary Alun Cairns resigned from the Cabinet amid a scandal involving his former aide. Separately, Labour’s Deputy Leader Tom Watson resigned his position on Wednesday evening, and will not stand as an MP in the election.

2. Ministers say transition period will not be extended
Cabinet ministers Michael Gove and Liz Truss have said that the UK will not seek to extend the transition period beyond December 2020, claiming that the UK will be able to strike a free trade deal with the EU in that time. Truss said, “We will not be extending the Brexit transition period beyond 2020. The British people have waited long enough for Brexit. We will be able to negotiate a good free trade deal with the EU and other partners in that timeframe.”

3. Pro-EU parties set up Remain Alliance for 60 seats
The Liberal Democrats, the Green party and the Welsh nationalist party Plaid Cymru yesterday announced a “Remain Alliance” for December’s election. Only one of the three parties will run as the “Remain” option in 60 seats in England and Wales – giving a clear run for the Liberal Democrats in 43 seats, the Greens in 10 seats, and Plaid Cymru in 7 seats. The Liberal Democrats are also standing down in three seats currently held by anti-Brexit independent MPs.

Separately, parties in Northern Ireland have also established electoral pacts in a limited number of seats. Sinn Fein and the Social Democratic and Labour Party (SDLP) have each stood down in three seats in an attempt to maximise votes for pro-Remain parties. The Democratic Unionist Party (DUP) and the Ulster Unionist Party (UUP) have also stood down in favour of the other in one seat each.

4. Von der Leyen: UK must nominate an EU Commissioner “rapidly”
The incoming President of the European Commission, Ursula von der Leyen, has written to Prime Minister Boris Johnson asking him to propose a candidate for the UK’s EU Commissioner “rapidly, in the shortest possible time.” The appointment of a UK Commissioner would allow von der Leyen to take office on 1 December, though the Commissioner would then have to stand down on 31 January unless another extension was agreed.

5. Macron: Europe has to reassess the value of NATO
The President of France, Emmanuel Macron, has said that Europe is “currently experiencing… the brain death of NATO.” In an interview with the Economist, Macron said, “I’d argue that we should reassess the reality of what NATO is in the light of the commitment of the United States.” The German Chancellor, Angela Merkel, said that Macron “used drastic words – that is not my view of co-operation in NATO.”

Open Europe in the media

Open Europe’s Dominic Walsh spoke to German broadcaster ZDF about the UK’s General Election. He was also quoted in the Express, saying, that “No deal is very much on the table legally,” though it has become “politically less likely now than before as Johnson has a deal. In my view, there is the scenario where no deal comes back into play if there’s a hung Parliament.”

Pieter Cleppe was interviewed by Slovak media during a panel debate on Brexit in the European Parliament, where argued that “it’s key to respect the outcome of the 2016 referendum, from a democratic perspective”.