Photo Illustration: Tom Hall/Bloomberg


Brexit Bulletin: Asking for the Impossible

  • Transition may not be all it’s cracked up to be
  • Businesses are going to have to wait for legal certainty

Sign up to receive the Brexit Bulletin in your inbox, and follow @Brexit on Twitter.

Businesses may be asking for the impossible when it comes to the long-awaited and much longed-for Brexit transition.

The transition is a two-year period that the U.K. wants to put in place immediately after Brexit during which all the rules will stay the same so businesses can carry on as usual while all the complex new detail of the future trading relationship with Europe is hashed out. It’s often spoken of as if it were a panacea.

But as we approach the key summit where the transition deal is expected to be sealed, the limits of the arrangements are becoming clearer.

If a deal is reached at the March 22-23 summit, it will be just a political commitment with no legal basis. It won’t be legally binding until the full withdrawal agreement is reached – a point that chief EU negotiator Michel Barnier has made repeatedly in recent weeks. And when will the final withdrawal deal be agreed? Barnier is shooting for October, as are the Brits in theory, although Bloomberg reported last week that U.K. officials in private consider January 2019 the real deadline for getting a deal – just two months before exit day.

If there’s no exit deal, there’s no transition – so the transition deal reached in March would amount to nothing if there’s a messy walkout later this year. Nothing is agreed until everything is agreed.

Chancellor of the Exchequer Philip Hammond addressed the flimsiness of the transition in his speech last week. He suggested that regulators across Europe could work together to help put some legal flesh on the political bones of the agreement – so that “businesses, especially regulated businesses, are able to plan on the basis of it.” It’s not clear if European regulators will agree to such an idea.

Hammond is reflecting what businesses want. Most companies want a transition deal with “legal certainty” by April this year, and consider that more important than a more comprehensive future trade deal later on, according to KPMG. “Whilst the public is more fixated on the final deal, the CEOs we’re speaking to are often willing to accept a more modest deal in exchange for certainty so they can make investment decisions now,” said James Stewart, head of Brexit at KPMG.

That isn’t looking likely.

Brexit Latest

Power Grab | Theresa May is facing threats from her political opponents in Scotland and Wales that could derail the prime minister’s crucial Brexit legislation, Tim Ross reports. The Scottish and Welsh devolved governments want May to guarantee that when the U.K. leaves the EU, powers that return to London are automatically passed on to them. But May’s government says it might not be possible to deal with all legal complexities in the available time and is proposing an interim arrangement instead. The devolved administrations say it amounts to a power grab and the matter could end up in the Supreme Court.

No Secrets | Hackers have stolen a file on Brexit from Germany’s Foreign Ministry, the country’s Brexit coordinator Peter Ptassek tweeted on Sunday. Ptassek wonders why. “All public on this issue. If there is one secret, it is that there is none :-),” he wrote.

What the ERG Chats About | BuzzFeed has published a leak of WhatsApp chats from the hardline pro-Brexit European Research Group, which shows the depth of the animosity between warring factions of the Conservative party.

Brexit Means Cheaper Houses | London house prices are falling at the fastest pace since the depths of the recession almost a decade ago, with the capital’s most expensive areas seeing the biggest declines, David Goodman reports. London prices fell 0.8 percent in January alone and 2.6 percent from a year earlier, according to a report published by Acadata.

Aviation Discord | Airline CEOs can’t agree on just how bad Brexit will be. At one extreme are dire flight-cancellation warnings by Ryanair CEO Michael O’Leary and at the other is nonchalance by his counterpart at British Airways owner IAG, Willie Walsh. The dissonance suggests some carriers sense the possibility of a Brexit accord that would prevent hassles for tens of millions of air travelers while ushering Britain, home of Europe’s busiest airport, out of the European single aviation market, Jonathan Stearns reports.

On the Markets | Pound traders are taking a break from Brexit, Charlotte Ryan reports. Sterling barely moved last week on Brexit speeches by European Union President Donald Tusk and U.K. Chancellor Philip Hammond. This week sees Hammond in the spotlight as he delivers his Spring Statement.

Coming Up | Dominic Grieve, a leading Brexit rebel, speaks at an event at 8:15 a.m. Officials from the EU27 meet this week to discuss the bloc’s negotiating position on the future relationship, with a view to signing off on it on Thursday. 

Read more: How Brexit May End Up Creating Accidental Borders in Europe

And Finally...

The London Underground has banned an ad designed to lure British businesses to northern France after Brexit.

The ad, commissioned by the Normandy Development Agency, urged entrepreneurs concerned about the U.K.’s departure to “vote with their feet” and open offices or production sites in Normandy, just across the English Channel. Transport for London, the local government body that runs the Tube, considered it too controversial, Joe Mayes reports.

The ad “did not fully comply with our advertising guidelines,” a TfL spokesman said by email. TfL doesn’t allow images or messages that “relate to matters of public controversy or sensitivity,” the spokesman said.

So what do all the best campaigns do? Get a bus instead, of course. The message will be plastered on a bus and sent on a tour of major cities, and ads will run in national newspapers.

Credit: Normandy Times

For more on Brexit follow Bloomberg on Twitter, Facebook and Instagram

    Before it's here, it's on the Bloomberg Terminal. LEARN MORE