Release of the European Commission’s 120 page Draft Withdrawal Agreement for the UK
March 1, 2018

As the Beast from the East weather hits the UK, another beast from the east in the form of the European Commission’s 120 page draft withdrawal agreement for the UK was published yesterday (see:  The continuing uncertainty in respect of what Brexit will actually look like is becoming acute for businesses that are now becoming desperate for some indication of what the next steps post-March 2019 will be.

While negotiations continue, the possibility of a ‘hard’ Brexit have increased again.  No one expects that this will be the eventual outcome, but clearly the EU27 appear to be misreading the political climate in the UK and, perhaps more crucially, the general public attitude towards the EU.  The suggestion of retaining Northern Ireland in the EU’s customs union has led to some very predictable responses against this proposal.

Any outcome, even if it is no outcome is becoming a critical factor for business to plan their development and operations post-March 2019.  In Germany, the German regulator has announced that businesses wishing to apply for new regulatory permissions must do so by June underlining the fact that time is indeed running short to get clarity on the future relationship between the UK and the EU.  Opposition in the UK to being a ‘rule taker’ during any transition period is also increasing.  One possible option would be to agree to abide by new regulations, but not to implement any new ‘directives’ – the former being directly applicable as a matter of UK law.  Whether that compromise would be accepted is yet to be seen.

The EU27 have backed Michel Barnier as the sole negotiator which in many respects is good news and opens a door to the possibility of making additional progress this month.  Indeed, the HM Government was initially targeting March as a month in which to agree the general shape of the UK’s future relationship, which was also the subject of a marathon Cabinet meeting last week at Chequers (the Prime Minister’s country retreat).  Theresa May will be meeting with current European Council President Donald Tusk today and a major speech is planned for tomorrow that it is hoped will more fully articulate the UK’s current position.  Other recent speeches by Cabinet members have not provided much detail on what to expect going forward.

Meanwhile, Jeremy Corbyn, the leader of the UK’s main opposition party, has backed calls for the UK to remain in a customs union, but with the proviso that the UK must be able to have sovereignty over new rules and regulations.  It is almost certain, absent a major change in position, that the EU27 would not countenance this type of alternative arrangement.

This also comes against the backdrop of local elections in London due in May, the outcome of which may also alter the political situation in the UK.  Clearly this month will see more significant developments which we will report on as they happen.

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