back to top
Politics

Here’s Why Politicians Are Fighting About A Brexit "Transition" And Why It Seems To Be A Total Mess

Theresa May has to avoid crashing the economy without provoking a backlash from Tory MPs and voters. She doesn't have many options, and time is running out.

Posted on

The government is very clear: Britain will leave the European Union and immediately take back control of its borders, laws, and economic affairs – just as voters intended when they voted Leave in last summer’s referendum.

Statements in recent days from 10 Downing Street, the Home Office, the Treasury, and the Department for Exiting the EU (DExEU) were unambiguous about what exactly lies in store for businesses and citizens the day after the UK leaves the union.

Or not.

Over the past week or so, a complicated argument between politicians from different government departments about the nature of a transitional period – between Britain formally leaving the EU and a new regime taking full effect – has added to impressions of a cabinet deeply divided and confused about the UK’s position on Brexit.

For months, experts and Whitehall officials have been saying there will have to be an interim phase during which the UK's current legal and economic setup is maintained so the country doesn't suffer a catastrophic jolt when it leaves the bloc in March 2019. Britain simply won't be ready, and a trade deal with the EU won't be finalised, in time, the experts say. And cabinet ministers now appear to agree.

But a series of apparently contradictory statements has left pundits and analysts struggling to make sense of exactly what the government wants a transition period to look like. And for the ordinary citizen, the position has been almost impossible to fathom.

On migration, comments by home secretary Amber Rudd and chancellor Philip Hammond seemed to leave open the possibility of EU citizens living and working unrestricted in the UK for several years after Brexit. But 10 Downing Street insisted that free movement of EU citizens will definitely end in March 2019. And Liam Fox, the trade secretary, told the Sunday Times he hadn't been party to any cabinet agreement on extending free movement, which would not "keep faith" with the referendum.

Freedom of movement will end, the government insisted, but Europeans might still be able to move freely. Huh?

If that was clear as mud, so was the position on trade.

During a transition, goods will move back and forth to the EU as easily as they do now, Hammond told the BBC, even though Britain will immediately withdraw from the EU's single market and customs union. That is hard to square with the emphatic insistence by Michel Barnier, Europe’s chief negotiator, that “frictionless” trade is impossible outside the single market.

Another apparent contradiction: The chancellor told business leaders he was seeking a quick, “off-the-shelf” transition deal that would preserve the status quo for several years, according to the Financial Times. There wasn't time to negotiate anything else, Hammond reportedly told the business leaders. But Downing Street and DExEU pushed back on that, saying the UK would not settle for anything less than a bespoke deal.

And while Fox and Boris Johnson, the foreign secretary, championed the opportunities for Britain to strike free-trade deals with countries like Australia and the US, Hammond said such agreements won't come into force until a transitional period finishes. One of the main reasons Leave campaigners gave for leaving the EU, in other words, won't take effect for years after Britain leaves.

BuzzFeed News tried to clarify the apparent contradictions with several government departments, but they didn't shed much light. One government spokesperson said: "As the prime minister and [David Davis, the Brexit minister] have made clear, we believe an implementation period is in the interests of both the UK and the EU, to ensure we avoid any cliff edge as we move to our future partnership. While the precise nature of this period will be subject to the negotiations, we will not be seeking some form of unlimited transitional status. That would not be good for the UK nor for the EU."

The debate about transition has arisen now because the Treasury is desperate to reassure big companies that it has a plan to stop the UK falling off a cliff in March 2019. Hammond is worried that companies will stop investing in the UK, because the political, economic, and legal outlook for the next few years is far too volatile and unpredictable.

But, as the mixed messages emerging from the government this week illustrates, it is politically extremely tricky.

Theresa May's fragile government is boxed into a corner.

On one hand, she is running out of time to secure a deal that would avoid economic chaos. Most experts say that crashing out of the EU without interim measures to smooth the transition would be disastrous.

A recent report by the UK in a Changing Europe, a think tank, portrayed a bleak scenario: British businesses would suddenly face customs checks and tariffs. Supply chains would be disrupted. Ports would be clogged with cargo. Planes would be grounded because they would no longer have the legal right to fly into the EU. A “hard” border would go up in Northern Ireland.

On the other hand, the prime minister is hamstrung by powerful Eurosceptics in the Conservative party who are deeply suspicious about a transition. Some Tories fear it could even be used by Remainers as a Trojan horse to frustrate Brexit and keep the UK within the orbit of Brussels.

“They’re concerned the UK might end up in an indefinite transition, locked in a limbo half-in and half-out."

On top of that is the expectations of millions of people who voted Leave last summer thinking the UK would “take back control” on day one, especially on immigration. If the Tories appear to be softening on Brexit, senior people in the party worry, they could be punished by their core supporters, the majority of whom voted for Leave, at the next election.

Initially, May hoped she would be able to negotiate fully a new economic relationship with the EU before the two-year time limit set down by Article 50 of the Lisbon Treaty. But none of the MPs, government sources, or independent experts who spoke to BuzzFeed News believe that this is realistic.

In Whitehall, officials involved with the Brexit process have long believed there will have to be a prolonged transition period while the UK disentangles itself from the union. This was always going to be a lot “softer” than the Brexit path May set out, according to sources with detailed knowledge of the Brexit planning: Britain will continue paying substantial sums toward the EU budget, abide by the rulings of the European Court of Justice, accept the oversight of EU agencies, and allow EU citizens to live and work freely in the UK.

Some believe that this transitional period will last five years, beyond the next election in 2022, according to those sources.

Whitehall officials have looked to Norway as a model.

Norway is not a member of the EU, but belongs to a body known as the European Economic Area, or EEA. So do Iceland and Liechtenstein. Effectively, it allows Norway to trade freely within the EU single market in return for accepting the EU's core principles of free movement of people, capital, goods, and services.

The strong view of some of the Whitehall officials who have been working on the Brexit plans is that a “Norway-plus” model would be sensible, practical, and achievable in the limited time Britain has to negotiate. The UK could slide out of the EU in March 2019 and stay in the EEA for a period of time, continuing to trade in the single market without impediment, while the government works out the complicated details of new free-trade deal and new immigration and customs systems.

The EEA option would satisfy Hammond’s desire for a quick, “off-the-shelf” solution and would reassure business leaders that there won’t be a sudden lurch into the unknown. It wouldn’t be as good for the economy as staying in the EU, but it could limit the damage and disruption.

This week, James Chapman, a former Daily Mail political editor who served as Davis’s senior political adviser at DExEU until June, tweeted that the EEA was the only practical option.

This is madness. We cannot expend limited negotiating time trying to sort out some new kind of transitional deal… https://t.co/LnC77znedH

On the Labour benches, Remainers are plotting to force the government to adopt the Norway model, which they see as the best way of keeping Britain in the single market after Brexit. They will lay down an amendment calling for continued EEA membership when the government’s repeal bill comes before parliament for debate in September.

However, some analysts think the EEA option is impractical. Membership wouldn’t be automatic and would have to be negotiated, which could in itself be too complicated in the limited time available. This isn’t insurmountable, but “could pose very significant challenges,” the Institute of Directors, a think tank, said in a paper on Friday. Also, it doesn’t provide an automatic solution to the dilemma of establishing a new customs regime.

Some observers argue that the only feasible option is for Britain to agree to preserve the status quo by extending the EU’s laws and obligations – referred to as the “acquis” – for a few more years. “This would be far more comprehensive and likely simpler to negotiate with the EU, and has been explicitly floated in the [European] Council’s original negotiating guidelines,” the IoD said.

Simon Nixon, the Wall Street Journal’s chief European commentator, wrote on Thursday that prolonging the EU acquis was “the only transitional deal that has ever made sense”. A link to the column was retweeted favourably by Sabine Weyand, the number two in the EU’s negotiating team, and Martin Selmayr, chief of staff to EU president Jean-Claude Juncker.

well worth the read: https://t.co/8JUP0M2oVM

But any transition deal will be tricky to sell domestically.

Eurosceptic Tories – still the most powerful bloc within the party – are wary of anything that smacks of backsliding. They’re willing to compromise to some extent, but don’t trust that temporary arrangements would remain temporary.

“They’re concerned the UK might end up in an indefinite transition, locked in a limbo half-in and half-out,” said Henry Newman, director of the think tank Open Europe and a former adviser to Michael Gove, now the environment secretary.

The EEA option, in particular, is strongly opposed. Steve Baker, a Brexit minister and prominent Leave campaigner, said it would be like “putting blood in the water” to Eurosceptic MPs. These critics see the Norway-plus model as the worst of all worlds, in which Britain would not have the full economic benefit of being in the EU while accepting substantial constraints on its autonomy, including allowing EU citizens to move freely.

Many voters will also oppose the idea of extending the status quo, said former senior Conservative advisers.

An extended transition period that looks too much like EU membership will be deeply unpopular with the Conservatives’ core supporters, many of whom backed Brexit because they wanted a more restrictive immigration policy and for Brussels to stop having a say over the UK’s affairs.

Senior Tories worry that the party will lose its claim to being the champions of Brexit if the UK makes too many concessions and gets mired in a lengthy transition period.

A soft, five-year transition, which some in Whitehall believe is inevitable, would mean a new Tory leader going into the next election having to explain why Britain hadn’t yet taken back control – which could be punished at the ballot box.

“It won’t be seen as respecting the result of the referendum,” Joe Twyman, head of political and social research at the polling company YouGov, told BuzzFeed News.

There’s another huge factor that has so far been missing from the debate about transition: what the EU thinks.

Any transitional deal will have to be agreed by the other 27 EU member states. Senior figures in those governments insist that the same rules that apply to EU membership will also apply during an interim phase. Free movement of people, capital, goods, and services would continue. Britain would still have to pay into the EU budget, and accept European Court of Justice rulings.

The UK can't pick and choose elements of EU membership it wants and discard those that it doesn't, European officials say. Britain's hope of leaving the single market and customs union and still having frictionless trade, like it does now, is unachievable, says Barnier, the EU's chief negotiator.

Right now, the view in Europe is that Brussels has the stronger hand in the negotiations – that Britain will suffer more than the EU if it crashes out without an agreement in March 2019. At this point, they’re expecting Britain will have to make most of the compromises in the negations and holding firm to their core principles.

British politicians might try to spin an extension of the status quo as a bespoke deal. One senior EU official told BuzzFeed News early in the Brexit process that Britain would want to portray any arrangement as unique, even if in substance it’s not, and EU officials have privately indicated they’re happy to help Downing Street spin a deal if it gets UK voters on side.

But the transition, they're adamant, will be on Europe’s terms.

European politicians and officials told BuzzFeed News that Britain is getting ahead of itself by debating transition now.

EU negotiators have been clear about the order in which they will discuss Britain's exit. We're still in the first stage of their timetable, haggling over the withdrawal terms – the rights of expats, the Irish border, the so-called divorce bill. The other 27 EU member states want "significant progress" on these matters before they move on to talking about the UK's future economic relationship with the EU.

Brussels doesn't even want to start negotiating interim arrangements until all this has been sorted out. As it sees it, you can't talk about transition until you know what you're transitioning to.

Alex Spence is a senior political correspondent for BuzzFeed News and is based in London.

Contact Alex Spence at alex.spence@buzzfeed.com.

Alberto Nardelli is Europe editor for BuzzFeed News and is based in London.

Contact Alberto Nardelli at Alberto.Nardelli@buzzfeed.com.

Got a confidential tip? Submit it here.