What to expect from Brexit in 2020
16 December 2019
The size of the Conservative majority earned in Boris Johnson’s general election win is extremely significant for UK politics, but what will it mean for Brexit and the UK’s future relationship with the EU?
The winter election of 2019 will undoubtedly be looked back on as a turning point in terms of the UK’s trading relations with the EU and the rest of the world and businesses now really do need to properly prepare for Brexit – it’s going to happen.
The UK is now going to leave the EU on January 31st, initiating a transition period in which the terms of the future trade relationship are to be negotiated.
However, uncertainty does remain as to the nature of the UK’s future relationship and the length of the upcoming transition period.
Here are some key moments for us all to either look forward to or brace ourselves for over the coming year…
January 2020: Passing the Withdrawal Agreement Bill
A much-changed Parliament returns on December 17th, with all of the 365 sitting Conservatives having pledged to vote through Johnson’s Withdrawal Agreement Bill. They will first vote through the Prime Minister’s Queen's Speech, setting out the agenda of the Conservative Government, and will likely vote through the Withdrawal Agreement Bill in early January.
The country will then enter a transition period with the EU, in which all existing EU rules remain in place, until the end of December 2020. During this transition period the UK will be negotiating its future trade relationship with the EU.
Businesses should also note the January 31st deadline to apply for grant funding towards training that gives you the Customs skills you will need in a post-Brexit Britain.
An extension to this deadline is not out of the realms of possibility and we will update our members on any updates to this, but we do advise you to apply now for this funding, as whether it is extended or not, it is now almost certain that you’ll need this training to ensure a smooth continuation of trade into the EU for the years ahead.
Spring 2020: Initial Negotiations
The UK and EU will then finally begin to negotiate the terms of its future trading relationship. Given the tensions and gridlock caused by the negotiations for the UK’s withdrawal from the EU, you should probably brace yourself for much more debate and anxiety as trade relations are notoriously arduous to negotiate. Most trade deals take multiple years and Johnson’s government is tasked with negotiating its most important trade deal with its current closest trading partner within a year.
However, unlike his predecessor Theresa May, Johnson is now in a position of strength, boasting his significant majority which will give him some leeway in relation to factions within his party like the European Research Group.
He will initially need to pass his negotiating objectives through Parliament, which will be the first test of how strong a grip he has on his party. Despite party unity on the need to do Brexit, unity on how close the UK should remain to the EU in terms of standards and regulations remains to be seen.
According to Joe Mayes, the Brexit correspondent for Bloomberg:
“The contradiction Johnson will have to resolve in the trade deal is his desire for both autonomy from EU rules and access to the single market. The EU has indicated it is willing to give Britain a zero-tariff, zero-quota deal -- on condition the U.K. doesn’t become a lightly-regulated Singapore-on-Thames.
“The EU is also likely to take a tough line on key priorities for big member states like France and Spain. Expect to hear more on access to fishing waters and the status of Gibraltar, the tiny British territory to which Madrid lays claim.
“If Johnson wants access to the bloc’s single market, he will have to give up control in some areas -- in particular taxation, labour and environmental standards. Hard-liners in his party are likely to object to that, and push for a clean break at the end of the year.
“But a big majority could allow him to marginalize them and cut a deal that keeps the U.K. more closely aligned with the EU.”
July 2020: Decision on extending the Transition
A decision on whether an extension needs to be made to the transition period must be made by July 1st. Throughout the campaign the Conservative leadership has made it clear that it would not seek an extension, such was the conviction of its ‘Get Brexit Done’ motto.
However, should the negotiations be fraught with debate and disagreements – as trade negotiations often are – an extension may suit both sides, and the EU has already indicated that it is strongly considering one.
Again, Johnson’s strong majority in Parliament may allow him to pass an extension despite hard-line opposition within his party, and he would have plenty of time in this parliamentary term to withstand any voter backlash to another delay on Brexit.
If the UK declines the extension, it will then be left with six months to scramble for a deal or we will all be bracing ourselves for a repeat of the ‘No Deal Brexit’ deadline saga at the end of the year.
January 2021: Done Deal Brexit?
January 1st 2021 could be the start of a new era, should a deal be agreed or ratified.
Alternatively, it could mark the introduction of WTO rules as the UK’s basis for trade with the EU, or we could still be a period of months or years away from Brexit should an extension be made to the transition.
A Year of Greater Certainty Ahead?
A potential benefit of such a strong government is that there should be greater certainty for businesses, allowing for better planning and increased confidence. We probably won’t be as embroiled in parliamentary process as we have been throughout 2019, in which we’ve had a minority government hamstrung by division within its party.
The major uncertainty of the year will likely centre on whether an extension will be made to the Brexit deadline, but even if it isn’t, businesses will have six months to prepare for a pretty clear either-or situation of last-minute deal versus WTO rules.
The major result of the election is that Brexit will almost certainly happen, so things will change. As such, the need for British businesses to prepare for a changed trading situation is now paramount.
The government grants for training in key Customs processes, such as completing Customs Declarations, already provide a fantastic opportunity for businesses to gain the trade skills that will be essential in the years to come.
The deadline to apply for these grants is currently January 31st so we really suggest that you prioritise applying for them either before or straight after the Christmas break.
We will continue to update members on this grant funding, and we will be providing training courses that will enable you to plan for post Brexit throughout the year.
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