Theresa May has reportedly raised the prospect of the UK entering a transitional Brexit arrangement with the rest of the European Union in 2019 rather than going through a total rupture.
She told the CBI today that UK businesses wanted to avoid a “cliff edge” in two years’ time.
A Downing Street spokesman later said that a “range of issues” are being explored by officials - although they later tried to dampen speculation about what these were.
But what would a transitional deal with the EU look like and what would it mean in practical terms?
What is a transitional deal?
We don’t know for sure since the Prime Minister is still playing her cards extremely close to her chest, giving zero detail away.
But such a deal is widely presumed to involve Britain leaving the EU, as planned, in 2019 but immediately entering a close trading relationship with the rest of the bloc, such as Norway has as part of the European Economic Area [EEA].
This should be reasonably straightforward since the institution of the EEA already exists and the UK would not have to invent it from scratch.
This arrangement might last for a set period of time, perhaps a couple of years.
Such a transition plan was recommended by the think tank Open Europe in August.
Raoul Ruparel, the former head of Open Europe, is, perhaps significantly, now an adviser to the Brexit Secretary, David Davis.
What would be the point?
It would mean Britain would remain part of the single market.
So goods could be sold tariff free to the Continent.
And, importantly, services could also continue to be sold unimpeded to Europe.
Banks based in the UK would retain their “passport”, meaning they would not have to move large numbers of staff out of London to ensure the continuity of their Continental operations.
The UK would also be able to sign free trade deals with other countries around the world - and it would regain full control on fisheries and agriculture.
But what about free movement of people?
That would continue.
Norway allows free movement with the EU, as do other EEA members.
There would also probably have to be annual payments to the EU Budget from Britain.
But that sounds a lot like being in the EU...
It’s actually more restrictive.
On top of the free movement and budget payments the UK would have to accept and implement the single market rules without having any influence over how they are formulated since we would no longer be in the European Council, or the European Parliament and we would have no European Commissioner.
Wouldn’t that be political suicide for Theresa May?
The way she and her ministers might try to frame it is that we would be, technically, out of the institution of the EU.
And she might emphasise the temporary nature of the transition.
And the practical advantages are clear.
Many trade experts are highly doubtful of the feasibility of the UK negotiating not only the terms of the Brexit divorce with the EU by 2019, but also a comprehensive new trade deal with the bloc by then.
1/26 Brexit will put British patients at 'back of the queue' for new drugs
Brexit will put British patients at the “back of the queue” for vital new drugs, the Government has been warned – forcing them to wait up to two years longer A medicines regulator has raised the alarm over a likely decision to pull out of the European Medicines Agency (EMA), as well as the EU itself. ealth Secretary Jeremy Hunt dropped the bombshell , when he said he expected the UK would quit the EMA – because it is subject to rulings by the European Court of Justice.
2/26 London to lose status as 'gateway to Europe' for banks
One of Germany’s top banking regulators has warned that London could lose its status as “gateway to Europe” for the banking sector after Britain quits the European trading bloc. Andreas Dombret, who is an executive board member for the Bundesbank—Germany’s central bank—told a private meeting of German businesses and banks earlier this week in Frankfurt that even if banking rules were “equivalent” between the UK and the rest of the EU, that was still “miles away from [Britain having] access to the single market”, the BBC reports.
The number of financial sector professionals in Britain and continental Europe looking for jobs in Ireland rocketed in the months after the UK voted to leave the European Union
4/26 Brexit is making FTSE 100 executives richer
Pay packages of many FTSE 100 chief executive officers are partly tied to how well share prices are doing rather than the CEO’s performance -- and some stocks are soaring. ritish equities got a boost since the June vote because the likes of Rio Tinto, Smiths Group and WPP generate most sales abroad and earn a fortune when they convert these revenues back into the weakened pound. Sterling’s fall also made UK stocks more affordable for overseas investors.
5/26 Theresa May: UK to leave single market
Theresa May has said the UK "cannot possibly" remain within the European single market, as staying in it would mean "not leaving the EU at all".
Lead campaigner Gina Miller and her team outside the High Court
Raymond McCord holds up his newly issued Irish passport alongside his British passport outside the High Court in Belfast following a judges dismissal of the UK's first legal challenges to Brexit
SDLP leader Colum Eastwood leaving the High Court in Belfast following a judges dismissal of the UK's first legal challenges to Brexit
Migrants with luggage walk past a graffiti on a wall as they leave the 'Jungle' migrant camp, as part of a major three-day operation planned to clear the camp in Calais
Migrants leave messages on their tents in the Jungle migrant camp
The Adventist Development and Relief Agency (Adra) which distributes approximately 700 meals daily in the northern Paris camp states that it is noticing a spike in new migrant arrivals this week, potentially linked the the Calais 'jungle' camp closure - with around 1000 meals distributed today
Migrant workers pick apples at Stocks Farm in Suckley, Britain
Many farmers across the country are voicing concerns that Brexit could be a dangerous step into the unknown for the farming industry
Bank of England governor Mark Carney who said the long-term outlook for the UK economy is positive, but growth was slowing in the wake of the Brexit vote
The Dow Jones industrial average closed down over 600 points on the news with markets around the globe pluninging
Immigration officers deal with each member of the public seeking entry into the United Kingdom but on average, 10 a day are refused entry at this London airport and between 2008 and 2009, 33,100 people were detained at the airport for mainly passport irregularities
A number of global investment giants have threatened to move their European operations out of London if Brexit proves to have a negative impact on their businesses
Following the possibility of a Brexit the UK would be released from its renewable energy targets under the EU Renewable Energy Directive and from EU state aid restrictions, potentially giving the government more freedom both in the design and phasing out of renewable energy support regimes
A woman looking at a chart showing the drop in the pound (Sterling) against the US Dollar in London after Britain voted to leave the EU
Young protesters outside the Houses of Parliament in Westminster, to protest against the United Kingdom's decision to leave the EU following the referendum
Applications from Northern Ireland citizens for Irish Passports has soared to a record high after the UK Voted in favour of Leaving the EU
NFU Vice President Minette Batters with Secretary of State, Andrea Leadsome at the National Farmers Union (NFU) took machinery, produce, farmers and staff to Westminster to encourage Members of Parliament to back British farming, post Brexit
The latest reports released by the UK Cabinet Office warn that expats would lose a range of specific rights to live, to work and to access pensions, healthcare and public services. The same reports added that UK citizens abroad would not be able to assume that these rights will be guaranteed in the future
A British resident living in Spain asks questions during an informative Brexit talk by the "Brexpats in Spain" group, about Spanish legal issues to become Spanish citizens, at the town hall in Benalmadena, Spain
The collapse of Great Britain appears to have been greatly exaggerated given the late summer crowds visiting city museums, hotels, and other important tourist attractions
The U.K. should maintain European Union regulations covering everything from working hours to chemicals until after the government sets out its plans for Brexit, said British manufacturers anxious to avoid a policy vacuum and safeguard access to their biggest export market
And if the clock runs down without a successful agreement the UK will face having to trade with the rest of the UK on World Trade Organisation terms, meaning our goods exporters would face damaging tariffs.
And then there are 50 plus EU trade deals with countries around the world, from South Korea to Mexico.
The UK would need to negotiate its own pacts with each of these by 2019.
It's a hell of a lot of work for just two years.
Ms May might argue this is all simply impossible and that the only way to take Britain out of the EU by 2019 and to avoid a “cliff edge” for British exporters is to go for the transitional deal.
Except the pro-Brexit media, hardline Conservatives and UKIP would probably sense a betrayal if this deal was seriously on the table.
They will fear a transitional deal becoming permanent – or maybe even a prelude to the UK returning to the EU in due course if public opinion on Brexit changes.
That is why they are already lobbying for a hard Brexit without any delay - and why Ms May is so reticient about laying out a transition deal even as a possibility.
She may want to keep the transition plan in reserve; to be deployed if the negotiations appear to be going badly or too slowly once Article 50 has been triggered.Reuse content