Should UK and EU be considering a five-year Brexit transition?

The Labour Party’s autumn conference on Tuesday overwhelmingly passed a motion to keep the option of a second Brexit referendum on the table. The resolution, which might ultimately be a vote on the terms of any eventual exit deal, rather than whether Britain should remain in the EU per se, has nonetheless electrified the debate after Theresa May’s Salzburg debacle.

May was humiliated by fellow European leaders last week, when her “Chequers plan” for Brexit was roundly criticized at the informal EU summit in Austria. The diplomatic disaster has left May very vulnerable in Downing Street once again, and critics who favor different EU exit outcomes are growing in their defiance.

The current intense UK political uncertainty has brought new drama to the traditional political conference season. In Liverpool this week, Brexit has been a major topic of discussion at the opposition Labour Party’s event. This culminated with members supporting a resolution that stated: “If we cannot get a general election, Labour must support all options remaining on the table, including campaigning for a public vote.”

This raises the political pressure, even higher, for May at the Conservative conference in Birmingham next week. There she will be under intense pressure from many critics — including former Foreign Secretary Boris Johnson — who want her to ditch Chequers and move instead toward a turbo-charged version of the free trade deal Canada agreed with the EU. 

The political mess that May finds herself in comes at a moment when — under current timelines — there is only about six months to deliver on a final exit framework. The limited window offered by the two-year Article 50 process is why May wants a transition period to try to agree a framework for the future UK-EU relationship.

Yet, before the parameters of a newly defined UK-EU relationship can be secured, there are huge issues not resolved in the divorce discussions. These include the future of the Irish border, which remains a vexed issue with no clear solution in sight.

Even with goodwill from both sides, it is therefore now uncertain whether as little as a fudged exit deal can be secured. Partly, this is because such an agreement would need ratification in the UK Parliament, which could be an insurmountable undertaking for May.

With fears growing in Brussels about the slow pace of exit negotiations, there is even growing speculation within the EU-27 about whether the UK’s formal leaving date may be postponed from March. If the two sides fail to reach an exit deal by the spring, many presume Britain would crash out of the Brussels-based club without any transition. But there are different scenarios here, including the possibility of extending Article 50 to allow more time for negotiations to take place. 

There have also been media reports in recent weeks saying that May is set to ask the EU for an additional number of years of Brexit transition post-March. Under the deal provisionally agreed, the UK is already set for a 20-month transition period from March 2019 to December 2020, if London and Brussels resolve all divorce matters beforehand. 

However, this less-than-two-year transition could — in practice — not be nearly long enough. Not just because of the need to prepare and implement new systems, including potentially for migration and customs, but also because any final, complex future UK-EU framework may not be ratified (and possibly not even be concluded) by all the European national parliaments and assemblies in that timeframe.

Some politicians, including in Ireland, have therefore proposed a five-year transition period from March 2019. Yet neither London nor Brussels are prepared to talk openly about this possibility; for now.
Part of the reason is that the EU-27 has yet to agree any budgets from 2021 onwards. This explains why the transition length proposed in negotiations by Brussels would be until the end of 2020. EU negotiators are well aware that any talks over a period lasting beyond this point would be shrouded in additional uncertainty.

The reluctance of Brussels to highlight this dovetails with May not wanting to raise a longer transition now either, as many Brexiteers are opposed to making significant, ongoing payments to the EU. And she is, anyway, simply too politically weak to face down the hardliners in her party on this issue.

Yet, kicking this transition length issue down the line could ultimately cause even bigger headaches, potentially even threatening any final Brexit settlement. This is because it may mean any transition that finishes at the end of 2020 would need to be extended, which could be politically toxic for London and Brussels alike.
The stakes at play in securing solutions are therefore big and growing for all parties. At this critical time for Europe, delivering a smooth Brexit increasingly needs high-level statesmanship and diplomatic ingenuity so all parties can move toward a new constructive partnership into the 2020s.