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Updated: 19th February 2020

Brexit day has been and gone but we’ve only taken the first step in our estrangement from the European Union. Complex negotiations for a new trade deal with Europe commence straight away, and with just 11 months until the transition period ends, what happens now?

What changes can we expect to see in the coming year and beyond – essentially, what are the Brexit next steps?

Trade talks during transition 

Because the Brexit deadline was extended to the end of January 2020, the official transition period lasts only 11 months and ends on 31st December 2020. The Prime Minister has declared his intention not to extend this period, and stated that negotiators will be able to agree and ratify a trade deal with the EU in this timescale. Should his plan falter, the government can extend this transition period by one or two years, but must do so by 30th June 2020.  

The possibility of ‘no deal’ remains

If the transition period isn’t extended and the government and EU negotiators can’t agree a deal by 31st December 2020, the default position is that we leave the transition period without an agreement on trade. World Trade Organisation (WTO) terms would then apply.

This isn’t the same as the ‘no deal’ scenario of March and October 2019, however, as the Withdrawal Agreement still protects the rights of citizens, but it would affect trade and security.

No voting rights or representation in EU parliament

During the transition period the UK remains in the customs union and single market, but has no representation in the European parliament. Essentially, we have no voting rights on matters pertaining to the EU or ourselves, but where matters directly relate to the UK we can participate in policy meetings – when discussing fisheries, for example.

Common Agricultural Policy (CAP)

The UK left the Common Agricultural Policy on Brexit day and has introduced new legislation to support farmers under the Agriculture Bill. This doesn’t take effect until 2021, but the government has provided almost £3 billion until the new Bill comes into being. This funding covers the 2020/21 and 2021/22 financial years for England, Scotland, Wales, and Northern Ireland.

"If the transition period isn’t extended and the government and EU negotiators can’t agree a deal by 31st December 2020, the default position is that we leave the transition period without an agreement on trade."

Agreements with non-EU countries

The UK must honour the international agreements made when we were part of the EU. Non-EU countries have also been advised by the EU that, with regard to existing trade agreements, they should treat the UK as if we were still part of the EU until the transition period ends, although they may not have to comply with this.

Some ‘continuity agreements’ have already been negotiated by the UK government with international trade partners, and we’re free to ratify new deals but again, they can’t come into effect until the transition period ends.

Are businesses leaving the UK because of Brexit?

Contingency planning for some businesses has included the potential for a move away from the UK, or setting up subsidiary companies in Europe, but professional services company PwC has stated that actual relocations from the UK to Europe have been “relatively low.”

How will ‘passporting’ change for financial services firms?

As an EU member state, regulated UK financial services firms could sell their services across the EU in what was essentially a single market for financial services. This was known as ‘passporting.’

It’s possible that another concept known as ‘equivalence’ may take its place, which means that non-EU countries’ regulatory and supervisory frameworks are recognised, making trade of financial services easier, but this doesn’t incorporate all financial services.

If you would like more information on what might happen after Brexit, please contact one of our experts at RBR Advisory. We can provide professional insight tailored to your own organisation or situation, and offer free same-day consultations at any of our nationwide network of offices.

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