Could we still have a “no deal” Brexit in 2020 at the end of the transition?
Update: We updated this piece when the Brexit deadline was extended to 31 January 2020, to include that new information.
The past day has seen numerous claims that the revised withdrawal agreement negotiated between Boris Johnson’s government and the European Union allows for a new “no deal” scenario in just over a year’s time at the end of the transition period.
“It’s false to suggest voting for Johnson’s deal stops no deal. All he needs to do is fail to present a Free Trade Agreement to parliament next year, the transition lapses, and then we have no deal. Parliament will NOT be able to stop it then.”
Sam Gyimah MP, 18 October 2019
“And when transition ends in Dec 2020, likely no trade agreement agreed & hard right will get their dream of crash out No Deal Brexit”
Caroline Lucas MP, 18 October 2019
“There’s been a fundamental improvement in this deal because what it means is, is that... if there’s no deal struck in the transition period up to December 2020, the UK has the right, with the Northern Ireland provisions in place to leave on no deal terms. Now, none of us want that, we’d prefer a good deal to no deal.”
John Baron MP, 17 October 2019
“There we have it. Tomorrow doesn’t get ‘Brexit done’ and Tory MPs are getting ready to push us out on disastrous no-deal terms as we head into the next stage of trade negotiations.”
Jonathan Ashworth MP, 18 October 2019
“Tory Right-wingers dropped a bombshell by saying that the PM’s deal would allow them to cause Britain to crash out on “no deal” terms in a year’s time even if it is passed.”
Evening Standard, 18 October 2019
The claim that no deal remains a possibility is broadly correct, although it’s important to emphasise that this is a different type of “no deal” to the one that’s commonly discussed.
That refers to leaving the EU without a withdrawal agreement in place; this new “no deal” refers to not having agreed details of the UK and EU’s future trading relationship by the end of the transition period, which could be in December 2020 at the earliest.
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The transition period
Under the terms of the Withdrawal Agreement agreed by the government and the EU in October 2019, the UK will enter a transition period when it leaves the EU. This was the same in the Withdrawal Agreement negotiated by Theresa May’s government which was voted down by parliament three times.
The purpose of the transition period is to provide time for the UK and the EU to negotiate on what their future relationship will look like.
During the transition period the UK won’t be a member of the EU but will still have to abide by its rules. For example, the UK would still have to contribute to the EU budget until 2020 along with paying for any other financial commitments made as an EU member. The latest estimates put the total ‘divorce bill’ at £33 billion. If the transition period is extended then extra payments may need to be made and these would be decided on by a joint UK-EU committee.
As with the agreement Theresa May’s government put forward, the end date for the transition period is set at the 31 December 2020. It is possible the transition period could be extended for one or two years—provided that is settled before 1 July 2020.
As for how likely that will be, Jill Rutter at UK in a Changing Europe says: “At the moment, no one is talking about an extension to the transition period, but with so much of the negotiating time already eaten up, and the need to get all the new arrangements for the NI border with GB in place, it may prove unavoidable.”
Some version of “no deal” could still happen in a number of different scenarios.
For example, if there is no further extension to the Brexit deadline MPs have until 31 January 2020 to pass a withdrawal agreement. If that’s not done in time then the UK could leave the EU with no deal by default. This is still the same “no deal” scenario that’s been widely discussed over the past few years.
If the Withdrawal Agreement is passed by parliament and the transition period kicks in that doesn’t mean the possibility of no deal is removed entirely—it just means a different kind of no deal.
While there would be a transition period in which to negotiate a future relationship with the EU, there is no guarantee that these negotiations would be successful. As we’ve already said the transition period lasts until the end of 2020, or 2022 at the very latest—after that if no future relationship deal was agreed then Great Britain’s relationship with the EU would be on World Trade Organisation (WTO) terms.
But, Northern Ireland would still be aligned with some EU rules even if this kind of “no deal” happened, and the rest of the UK moved to WTO terms at the end of the transition period.
One of the key differences between the Withdrawal Agreement drawn up by this government and the EU, and the previous one signed off by Theresa May’s government, is the Northern Ireland protocol. This piece from the Institute for Government outlines what will happen to Northern Ireland in the event of a no deal Brexit, and we’ve written elsewhere about what this would mean in terms of the different rules and regulations this would create between Northern Ireland and the rest of the UK.
In that scenario this new arrangement agreed between the government and the EU means that, beginning four years after the end of the transition period, the Northern Ireland Assembly “will periodically vote on whether to consent to the continued operation of the protocol for as long as it remains in force. The frequency of the vote will depend on how the decision is made.”
Update 29 October 2019
We updated this piece when the Brexit deadline was extended to 31 January 2020, to include that new information.