What’s going on?
The UK has left the EU on 31 January 2020.
What happens now?
The UK has entered into a transition period from 31 January that is scheduled to end on 31 December 2020.
During this period, the UK effectively remain in the EU’s customs union and single market but is outside the political institutions and there are no longer any MEPs.
The Government’s first priority is to negotiate a trade deal with the EU. Ideally, the UK wants to preserve as much access as possible to the common market in order to sells its goods and services, while also exiting the customs union, single market and ending the overall jurisdiction of the European Court of Justice. Meanwhile, the EU itself must agree a formal negotiating mandate between all of the remaining 27 member states and the European Parliament. This could take weeks; formal talks may not be ready to begin before March and time is already short, as these negotiations need to produce a final agreement by the end of June.
Why does a final agreement have to be ready before June?
The end of June is the point at which the UK has to decide whether or not to extend the transition period, which can be extended for up to two years, if necessary.
However, the Government has already ruled out any form of extension, with the Prime Minister arguing that, as the UK is completely aligned with EU rules, the negotiation should be straightforward. Critics have pointed out that the UK’s desire to diverge from EU rules to allow it to do deals with other countries is likely to make negotiations more difficult.
As well as a trade deal, the UK must also agree with the EU how they will collaborate on the issues of security and law enforcement – the UK is due to leave the European Arrest Warrant scheme and will have to agree on a replacement. The UK and EU must also agree on numerous other deals in various other spheres which require cooperation between the two.
What happens if a deal is not agreed by the end of June?
If no trade deal has been agreed upon by the end of June, the UK will exit the EU at the end of December 2020 with no deal and all the attendant issues that that may bring.
If a deal has been agreed, it will also have to be ratified by both the UK and the EU before coming into force and that process could also take several months. No trade deal of this size and complexity has ever been agreed between the EU and an external country anywhere within a timeframe as short as the one proposed by the new Government.