With little over a year before the UK leaves the EU, a ‘decisive step’ has now been taken by Brexit negotiators Michel Barnier, the EU's chief negotiator, and David Davis, the UK's Brexit secretary. Both have stated that they have agreed on a ‘large part’ of the arrangements for the UK to leave the EU. A joint legal agreement has been reached however, in reaching this, the UK has made significant concessions. 

One of the main aspects both sides were keen to reach a conclusion on was a suitable transition period for business. Following discussions, a 21 month transition has been agreed from 29 March 2019 to 31 December 2020, allowing the UK to retain the benefits of the single market and customs union for this period. This announcement was largely seen as progress by UK businesses, answering at least one of the big questions and removing the much publicised concerns about a potential 'cliff-edge exit'.

However, such a short transition period appears to have been poorly received by HMRC, They are currently developing a very sophisticated electronic system for managing customs declaration processes that will be expected to process five times as many customs declarations as currently processed; but the probability of having this up and running within the required timeframe appears low.

Despite Theresa May's original challenges, Mr Barnier further confirmed that all EU citizens arriving in the UK within the transition period would be afforded the same rights and guarantees as those who arrived before the day of Brexit. 

Industry discussions

It was confirmed that the the UK’s fishing waters will remain under the control of the EU during the transition period. This has faced harsh criticism from the industry and, clearly, if the transition period has to be extended, the likelihood of the UK regaining control will be pushed back. Industry experts have expressed their concerns that the EU will not look after Britain’s fishing industry during this period.

While the UK will surrender its ability to negotiate for its fishing industry, the EU has signalled that, during the transition period, the UK will be allowed to sign and implement trade deals with other countries.

For financial services, the Bank of England has now stepped in to say that finance companies operating in Britain will have more time to meet a Brexit deadline, hoping to stabilise the industry and stop widespread moves of people and operations to more certain economies.

What businesses will now be turning their attention to is putting pressure on the Government for the finer details and implications of the Brexit transition still to be agreed.  How long this will take is anyone’s guess and we will keep you updated.

Preparing for Brexit

Establishing a view on the risks and opportunities Brexit poses to your organisation is a good way of preparing. To assist with this we have created a Brexit planning tool.

We are on hand to help you and your business. Visit our Brexit Hub below where you can read some of the latest Brexit insight from our team.