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Brexit update

Published: 08 February 2018
Area of Law: Brexit

Just how useful can a Brexit transition deal be?

Almost one year since Article 50 was triggered and the official Brexit process began, negotiations continue to be turbulent.

Currently, the deadline of 29 March 2019 remains, and whilst recent headlines appear to deem it an inevitable next step in the process, a transition deal has not yet been officially secured. 

How useful would a transition deal be?

Most of the debate in the UK has so far focussed on what terms would be acceptable to the competing wings of the political parties. Contrastingly, the EU has been clear in the conditions the UK would have to meet to secure a transition deal, and at the end of January 2018 published its negotiating mandate.

Regardless of whether these conditions are satisfied, it is clear that the UK and EU are still adopting fundamentally different approaches.  Whilst the UK is holding out for a “deep and special partnership”, the EU’s ambition is, perhaps less excitingly, “to the extent necessary and legally possible… to determine transitional arrangements which are in the interest of the Union and, as appropriate to provide for bridges towards the foreseeable framework for the future relationship in the light of progress made.”

What does this mean for businesses?

Even if the conditions for a transition deal are met, conflicting objectives between the UK and EU remain that will continue to hinder progress. An agreed transition period is unlikely to deliver much in the way of practical help for business.

Businesses should continue to plan for a difficult Brexit. In particular, you should be looking at your exposure in relation to your workforce, your direct and indirect supply chains, and your specific regulatory regimes. You should also prepare resilience to a potential financial shock.

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