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The Brexit negotiations are taking place between the United Kingdom and the European Union for the withdrawal of the United Kingdom from the European Union following the United Kingdom European Union membership referendum in June 2016. The negotiating period began on 29 March 2017 when the United Kingdom served the withdrawal notice under Article 50 of the Treaty on European Union. The period for negotiation stated in Article 50 is two years from notification, unless an extension is agreed.
Negotiations on the withdrawal agreement (which includes a transitional period and an outline of the objectives for a future relationship between the UK and the EU) were concluded in November 2018, with the European Union indicating that no further negotiation or changes before the UK legally leaves the EU on 29 March 2019 will be possible. If the withdrawal agreement is ratified by the UK and other EU state governments and comes into force, future negotiation might also need to address Free Trade Agreement treaties between the European Union and its members (including the UK) for one part and third countries for the other part, and the tariff-rate quota, which might be split or renegotiated.
|articles on the British exit from the European Union|
According to the European parliament, "For the moment, it appears that the two sides have different views on the sequencing and scope of the negotiations, and notably the cross-over between the withdrawal agreement and the structure of future relations, and this divergence itself may be one of the first major challenges to overcome."
The Department for Exiting the European Union is responsible for overseeing the negotiations to leave the EU and for establishing the future relationship between the UK and EU.
The United Kingdom's proposed principles were set out in the Article 50 notification:
The Prime Minister's formal letter of notification was delivered in Brussels on 29 March 2017. It included withdrawal from the European Atomic Energy Community. The letter recognized that consequences for the UK of leaving the EU included loss of influence over the rules that affect the European economy, and UK companies trading within the EU aligning with rules agreed by institutions of which the UK would no longer be part. It proposed agreeing to seven principles for the conduct of the withdrawal negotiation. These are for:
The constitutional lawyer and retired German Supreme Court judge Udo Di Fabio has stated his opinion that separate negotiations with the EU institutions by Scotland or Northern Ireland would constitute a violation of the Lisbon Treaty, according to which the integrity of a member country is explicitly put under protection.
The start of negotiations was delayed until after the United Kingdom general election, which took place on 8 June 2017. Antonio Tajani, speaking on 20 April said that the early election should bring stability to the UK, which would have been good for negotiations. In the event, the election led to a hung parliament which has reduced the Prime Minister's room for manoeuvre; in particular in respect of the Irish border question due to her dependency on a confidence and supply agreement with Northern Ireland's Democratic Unionist Party.
Following the United Kingdom's notification under Article 50, draft guidelines for the negotiations were sent to EU delegations of the 27 other member states (the EU27). The draft, prepared by the President of the European Council, states that the guidelines define the framework for negotiations under Article 50 and set out the overall positions and principles that the Union will pursue throughout the negotiation. It states that in the negotiations the Union's overall objective will be to preserve its interests, those of its Member States, its citizens and its businesses, and that, in the best interest of both sides, the Union will be constructive throughout and strive to find an agreement. The draft sets out two Core Principles:
According to the European Parliament, the withdrawal agreement and any possible transitional arrangement(s) should enter into force "well before the elections to the European Parliament of May 2019", and the negotiations should focus on:
On 18 April 2017, a spokesman for Donald Tusk said "We expect to have the Brexit guidelines adopted by the European Council on 29 April and, following that, the Brexit negotiating directives ready on 22 May". On 29 April the EU27 unanimously endorsed the draft guidelines with no debate.
In a speech to a plenary session of the European Committee of the Regions in Brussels on 22 March 2017, Barnier, as EU Chief Negotiator for the Preparation and Conduct of the Negotiations, said that the EU wanted to succeed by reaching a deal with the British, not against them.
On 22 May the European Commission Council, following the approval of negotiating directives which had been adopted by strong qualified majority (72% of the 27 Member States, i.e. 20 Member States representing 65% of the population of the EU27), authorised the opening of Article 50 discussions with the Commission appointed as the negotiator. It further confirmed that all agendas, EU position papers, Non-papers and EU text proposals will be released to the public and published on line.
Intergovernmental organizations also involved in Brexit uncertainty considerations include the World Trade Organization (WTO) and the International Air Transport Association (IATA). IATA expects an agreement to avoid disruption.
EU27 guidelines include:
within the withdrawal phase.
The second phase, covering the post-Brexit relationship between the EU27 and the UK, was to begin "as soon as the European Council decides that sufficient progress has been made in the first phase towards reaching a satisfactory agreement on the arrangements for an orderly withdrawal". The earliest opportunity for this decision was 19 October 2017, at a summit of EU leaders. although at that meeting it was agreed to start negotiations during the December meeting.
"The United Kingdom's exit from and new partnership with the European Union" (PDF). UK Government. February 2017. p. 9.
Some effects of the UK withdrawal could emerge before the UK and the EU27 conclude the Article 50 negotiation, as a result of policies existing when the negotiation begins, or some change of policy later. At the outset policy provisions binding on the EU include principles, aspirations and objectives set out in the TEU (Treaty on European Union) Preamble and Articles, of which
Policies mentioned in the Preamble include:
UK policy was stated in a white paper published in February 2017: The United Kingdom's exit from and new partnership with the European Union. In the white paper, UK negotiating policy was set out as twelve guiding principles:
A meeting at 10 Downing Street took place on 6 April 2017 between Theresa May and Donald Tusk to discuss "the way ahead on Brexit". Another meeting took place in London on 20 April 2017, this time between Theresa May and Antonio Tajani to discuss the rights of EU citizens. After 20 April meeting, Antonio Tajani said that the UK and EU27 timetables fitted well together, with a two-year exit deal negotiation followed by a three-year transition phase. A 10 Downing Street meeting between Theresa May, Michel Barnier and Jean-Claude Juncker took place on 26 April to discuss the withdrawal process. May reiterated the UK's aim for a "deep and special partnership" after Brexit.
At a meeting on 29 April 2017 the EU27 unanimously endorsed the draft guidelines with no debate. A meeting took place between Michel Barnier and both houses of the Irish parliament on 11 May, where Barnier assured members of Dáil Éireann and Seanad Éireann that Europe would "work with you to avoid a hard border". Barnier went on to say that "the Irish border issue would be one of his three priorities in the negotiations," and that "there is always an answer".
The UK retains its full EU rights until Brexit, and the EU is seeking to increase their budget, leading to the possibility that Britain may veto EU budget increases, which in the immediate term amount to 4 billion euros. A continued British veto would have far-reaching consequences and "will hurt us" according to German MEP Jens Geier.
On 19 June 2017, David Davis arrived in Brussels to start negotiations with Michel Barnier. Terms of reference were agreed, and dates were set for four-week cycles, to culminate in a fifth round of negotiations in the week commencing 9 October. Negotiating groups were established for three topics: the rights of EU citizens living in Britain and vice versa; Britain's outstanding financial obligations to the EU; and the border between Northern Ireland and the Irish Republic.
Four days of talks, largely between officials, were held in Brussels on 17–20 July. Progress was made in understanding each other's positions.
On citizens' rights, a joint paper compared the positions of the two parties in tabular form. On Irish border issues, both parties stated that they remained committed to the Good Friday Agreement. Michel Barnier called for clarification from the UK in the August round on the financial settlement, citizens' rights and Ireland, including on how the UK intends to maintain the Common Travel Area.
Talks were held in Brussels on 28–31 August. Agreement was reached on points including protecting the rights of frontier workers (those living in one country and working in another); recognition by the UK of social security contributions made both before and after exit; and continuation of healthcare reimbursement for UK citizens who are in the EU27 on exit day and vice versa. The joint paper comparing the two parties' positions was updated.
Speaking at the conclusion of the talks, Michel Barnier highlighted two areas of disagreement: the role of the European Court of Justice in enforcing citizens' rights, and the extent of the UK's financial obligations. He stated "Time is passing quickly" and added that "at the current speed, we are far from being able to recommend to the European Council that there has been sufficient progress in order to start discussions on the future relationship".
On 7 September the EU Task Force published guiding principles for the dialogue on Ireland / Northern Ireland which reiterated and expanded the principles given in 29 April guidelines, in particular the protection of the Good Friday Agreement and the continuation of the Common Travel Area.
The fourth round of talks began on 25 September, having been delayed by one week as Theresa May was due to deliver a speech in Florence on the 22nd. She proposed a transitional "implementation period" of "around two years" and said that the UK "will honour commitments" so as to not make other EU countries pay more or receive less during the current EU budget period.
The programme for the round of talks arranged for meetings between the "Principals" and for three negotiating groups covering citizens' rights, financial settlement and other separation issues, while Northern Ireland issues would be addressed by the "Coordinators", and governance of the withdrawal agreement was also for discussion at technical level.
David Davis repeated Theresa May's request for a time-limited implementation period. The UK offered to incorporate the Withdrawal Agreement into UK law and ensure the UK courts can refer directly to it, but there was no agreement on the role of the European Court of Justice and the standing of future ECJ case law.
Mr Barnier welcomed the UK's commitment regarding payments into the current EU budget plan, but expressed reservations about obligations beyond 2020. Mr Davis said the UK was not yet in a position to quantify its commitments.
There were constructive discussions on the Irish border, but no substantive progress.
The UK accepted the EU's definition of 'citizens lawfully resident before the cut off date', although that date was not agreed. There was agreement on the definitions of permanent and temporary residence. The UK offered a more generous "right of return" (after absence for longer than two consecutive years) than the minimum rights under current EU law. Rights of future family members remains a point of disagreement. The joint paper comparing the two parties' positions was again updated.
The fifth round of negotiations was held on 9, 10 and 12 October. There was technical progress on citizens' rights, although divergences remained on aspects of family reunion and the export from the UK of social security benefits. The UK stated an intention to offer a simple process for registration of EU citizens. On the Irish border, work continued to map out current areas of cooperation and build a picture of the future challenges.
On the financial settlement, Michel Barnier welcomed the commitment made by Theresa May in her Florence speech, but no negotiations took place because the UK was not ready to give details of what it would pay. Barnier said this issue had reached an impasse.
Further talks were held in Brussels on 9 and 10 November. Speaking at the closing press conference, Michel Barnier confirmed that clarification on financial commitments by the UK was required within the next two weeks. If the informal deadline is not met, the next phase of negotiations will not start in December, said Barnier. EU diplomats have described the situation as a "chicken and egg dilemma", as the EU will only start working on transition guidelines if Britain makes progress on financial issues by the end of November 2017. By 17 November, however, Donald Tusk said there was no deadlock in talks between Britain and the EU following a meeting with Theresa May in Gothenburg, Sweden and that he was optimistic that negotiations could move on to the next phase in December.
Negotiations between officials led to a draft agreement which was expected to be finalised at a meeting between Jean-Claude Juncker and Theresa May in Brussels on 4 December 2017. There was progress on the financial settlement and citizens' rights, but the meeting was abandoned after Northern Ireland's Democratic Unionist Party objected to arrangements for the Irish border; the agreement had earlier received the support of Leo Varadkar, Ireland's Taoiseach (prime minister).
Talks continued on the following days, leading to publication on 8 December of a joint report setting out the commitments to be reflected in the Withdrawal Agreement. "Agreement in principle" was reached on the three areas:
A joint technical note gave details of the consensus on citizens' rights. Topics postponed to a later phase included:
Juncker described the agreement as a "breakthrough" Brexit deal. The second phase of negotiations – concerning Britain's post-Brexit trade with the EU – would now be able to take place as a result of the agreement. The second phase was to cover the arrangements for transition towards the UK's withdrawal, together with the framework for the future relationship.
On 15 December, the European Council adopted guidelines for the second phase of the negotiation covering arrangements for transition towards the UK's withdrawal, together with the framework for the future relationship. The document confirmed that progress in the first phase was "sufficient", while stating that commitments made in that phase must be "translated faithfully into legal terms as quickly as possible"; and notes the UK's proposal for a transition period of "around two years". On 20 December, the European Commission published a draft of the negotiating directives stating a transition period should not last beyond 31 December 2020. During the transition the United Kingdom would not be part of agreements the EU made on behalf of its members with third countries, such as CETA.
Discussions on the outstanding issues continued and were described as "low-key".
On 29 January 2018, the European Council adopted and published negotiating directives. These stated that the whole of the EU acquis (the rights and obligations binding on all member states) would continue to apply to the UK during the proposed transition period, and the UK would continue to be within the customs union and the single market, while no longer participating in EU decision-making. The UK's position was outlined in speeches and interviews.
Due to the ambivalence of UK on the Irish border question, Tusk declared in March 2018 "We know today that the UK Government rejects a customs and regulatory border down the Irish Sea, the EU single market, and the customs union." Tusk said that talks cannot proceed around this issue, that it must be resolved first.
In March 2018 resolution, the MEPs expect an EU-UK agreement which safeguard the framework of existing commercial relationships between the EU and third countries with consistency for keeping a tuned tariff and quota system and rules of origin for products vis-à-vis third and a countries, and also a transitional arrangements fully compatible with WTO obligations to not disrupt trade relations with third countries.
On 19 March, the transition period was agreed, but it would not be considered legally binding until after ratification of the wider agreement on withdrawal: "Nothing is agreed until everything is agreed,".
A curious development with this release was the avoidance of mentioning what will happen with the free movement rights of UK citizens living abroad on the basis of those rights. The section which previously stated that those rights would be removed, article 32, was removed from the agreement, although references to it remain in other parts of the document.
The European Union (Withdrawal) Act 2018 that became law in the United Kingdom on 26 June 2018, and two bills that were then progressing through Parliament relating to world and cross-border trade after the withdrawal, allow for various outcomes including no negotiated settlement. The two bills passed from the House of Commons to the House of Lords in July 2018.
On 6 July, the UK Government announced that the May Cabinet had agreed that it should propose a "UK-EU free trade area which establishes a common rule book for industrial goods and agricultural products" [but not services] after Brexit. A few days earlier, senior EU officials had intimated that a proposal for "partial" membership of the European Single Market would not be welcomed. Before the Cabinet meeting at Chequers on 6 July, Barnier stated that the EU would accept a trade agreement with the UK if it does not damage the European Single Market. However, he said the EU would not shift its own red line on the single market, which he said was "not and never should be seen as a big supermarket; it is economic, cultural and social life, it should be developed in all its dimensions". On 10 July 2018, Barnier announced that 80% of the Brexit deal was now complete.
The government published the "Chequers plan" on 12 July. In response to a statement about it by the Secretary of State, the opposition spokesman said that it was a disgrace that it had been shown to the media from 9 a.m. that morning but it had not been shown to MPs until hours later.
While the President of the United States Donald Trump was on a visit to the United Kingdom on 13 July, his comment – made in an exclusive interview with The Sun – that the UK would probably not get a trade deal with the US if the prime minister's plan went ahead, was widely published in the media. Later the same day he stated, in a joint press conference with May at Chequers, that the Prime Minister was "doing a fantastic job" as prime minister, and contrary reports were "fake news", but he only asked for an "even" deal with the UK, and, complaining about EU trade barriers and tariffs on cars, he said that the US lost $151 billion to the EU. The Sun, which had conducted the interview with Trump that was the original source of the comment, afterwards denied that it produced fake news and published the interview verbatim.
While the negotiations continued, the UK government confirmed in the House of Commons on 19 July that the UK would be leaving the EU on 29 March 2019, as stated in the withdrawal act and the white paper. The first meeting of Dominic Raab, the newly appointed UK Secretary of State for Exiting the European Union, with the EU's chief negotiator, Michel Barnier, was later on the same day (19 July 2018) in Brussels. Raab offered to meet Barnier throughout August to "intensify" talks, while both the UK and EU were insisting that reaching agreement by the autumn on the UK withdrawal in March 2019 was still very much on the cards.
On 20 July, May repeated her opposition to the EU's proposals for the Irish border question during a speech in Belfast, stating that the EU must "evolve" and that there would be no further compromises over the issue. Just hours after the Prime Minister's remarks, Barnier expressed skepticism towards the Chequers plan. On 24 July, May announced that she would now lead the Brexit negotiations with the EU and that Raab was now only "deputizing" on her behalf.
On 26 July, Barnier held another meeting with Raab and both stated afterwards stated in a joint press conference that "sufficient progress" had been made in the trade negotiations. Raab also stated during the joint press conference that "a lot has been achieved." Barnier also stated that both sides wanted a wide-ranging free trade deal and that he would meet again with Raab in mid-August. However, he also acknowledged that obstacles remained due to the White Paper's proposal to allow Britain to collect custom duties on behalf of the EU and that the proposal would never be accepted for any non-member. Barnier also stated that the only other challenge in the trade negotiations was finalizing an agreement between both sides concerning a backstop that guarantees a frictionless border between Ireland and Northern Ireland. Barnier stated that the EU holds "no objections in principle" to the backstop, but has "doubts that it can be done without putting at risk the integrity of our customs union, our common commercial policy, our regulatory policy and our fiscal revenue."
On 2 August 2018, Barnier announced the EU was "ready to improve the EU proposal" on the issue of the Ireland border. Barnier stated that the EU was willing to be flexible on the details of the proposed backstop, but will "not change the substance". The backstop was originally proposed by the EU and has been a source of tension in the negotiations with Britain, which has viewed the backstop as a threat to the union with Northern Ireland. However, Barnier also stated the White Paper's customs proposal still remains an issue.
On 9 August, The Times and Business Insider said that EU had made concessions and agreed to accept, among other things, a free trade deal which does not include free movement of EU citizens. Under the proposal, the EU would also accept the terms outlined in the White Paper if Britain agreed to abide by the EU's social, environment and customs rules. However, this would also include keeping Britain in the European Single Market for a longer period, which is a matter of concern for the British government. Agreeing to the single market proposal could potentially mean that Britain will be unable to change laws in order to give it a competitive edge against the EU and could hinder any chance of signing additional trade deals.
On 16 August, EU and British officials began two days of talks to resolve the issue concerning the Irish border. However, Barnier and Raab did not attend the talks and both sides indicated there would be little chance of a breakthrough. On 16 August, leaked documents obtained by Buzzfeed News showed that May had now set plans for a "no-deal" Brexit for "84 areas of life." The May government intends to start publicly disclosing the plans in the following week as a warning to the EU. On 18 August, The Daily Telegraph reported that the first batch of the papers detailing a no-deal Brexit are due to be published on 23 August.
On 21 August, Barnier said that the EU and Britain would not reach a trade deal by the October EU summit and that an emergency summit would have to be held in either November or December. Both sides still disagree over a hard border between Ireland and Northern Ireland. While there is a possibility that there could be a summit in December, this is highly unlikely to occur and November would be the most likely month to hold an emergency summit. Gabriele Zimmer, a leftist German member of the European Parliament who deals with Brexit, told Reuters "we didn't see any concrete proposal that would work on the Irish border issue. November is the last moment. December is already too late for us." Despite the setback, however, Raab and Barnier both agreed to hold "continuous talks" in an effort to resolve the deadlock. Barnier stated that talks had previously been held in "rounds" every few weeks.
The first batch of "no-deal" Brexit advice was published by Raab on 23 August.
On 29 August, Barnier announced in Berlin that the EU would now offer a trade deal which would ensure close ties between the EU and Britain following Brexit. Barnier described the proposed trade deal as a partnership "such as there never has been with any other third country." Though "red lines" still remained between the EU and Britain, Barnier also stated that the EU would also respect Britain's red lines, such as the Northern Ireland border, so long as Britain did not undermine the European Single Market. The same day, Raab announced to a House of Lords committee that a post-Brexit trade deal with the EU was now "within our sights." Raab also stated that a vote at the EU October summit was still possible and that only "a measure of leeway" remained over the precise timetable for the agreement.
On 31 August, Raab and Barnier held a joint press conference in Brussels. Both stated that progress was made in the negotiations. Raab stated that Britain was now committed to a vote on a Brexit trade deal at the SU October Summit and that he was "stubbornly optimistic that a trade deal was "within reach." Barnier stated that the EU was also committed to an October EU Summit vote and that the "building blocks" of a trade deal were now falling into place. Certain issues are still being worked out.
On 4 September 2018, Raab stated to other MPs that he was now "confident" that the White Paper's proposals, dubbed the Chequers plan, would serve as the basis of the UK-EU trade deal. Raab also described the feedback from the EU as "positive." The same day, the cross border trade bill passed its second reading, committee stages and third reading in the House of Lords; it later became law after receiving Royal Assent on 13 September. On 5 September, German Chancellor Angela Merkel dropped a key demand and announced that Germany would now accept a trade deal that is not fully detailed. Merkel also stated that Germany would work to preserve good and close relations with Britain following Brexit. On 5 September EU Commission spokesman Margaritis Schinas stated that the EU saw some "positive element" in the Chequers plan and urged journalists to wait for a transcript to be published before making assumptions about how the EU feels about it.
On 7 September, it was revealed that Barnier had made a concession to a group of British MPs and stated that the EU will allow the trade agreement to be linked to the Brexit "divorce bill." The EU Commission had long insisted that any trade agreement between the EU and Britain could not be linked to payment of financial settlements. This bill will amount to approximately £39 billion. During the meeting with the delegation of MPs, which took place in Brussels on 3 September, Barnier described May's White Paper as "useful." Also on 7 September, British Finance Minister Philip Hammond stated that he was now "sure" that a trade deal would be reached by the original October deadline. On 13 September, Raab published a second batch of no-deal Brexit documents, this time containing 80 papers.
On 4 October 2018, Irish officials announced that Ireland would back May's "all UK" customs union proposal with the EU. On 5 October, Barnier stated that the post-Brexit EU-Britain trade deal was now "very close." On 6 October, European Commission President Jean Claude Juncker stated that the post-Brexit trade deal between the EU and Britain was now "close." The same day, European Council President Donald Tusk stated that a trade agreement between the EU and Britain would be reached, "if not finalized," at the EU summit between 17 and 18 October. Juncker also stated that he was optimistic that the trade deal would be agreed to in time for approval at the summit. Irish government sources also issued a statement claiming that a deal over the Irish border was now "very close." Irish Taoiseach Leo Varadkar also stated that the deal should be reached "sooner rather than later."
On 9 October, Raab stated that he was now "confident we will reach a deal this autumn." The same day, DUP leader Arlene Foster, whose party has the largest number of seats in the Northern Ireland Assembly, travelled to Brussels and warned EU officials that she would not support any EU backstop proposal which would create greater economic barriers between Northern Ireland and the rest of Britain.
On 10 October, Barnier stated that a trade deal at the start of the EU summit on 17 October was now "within reach." Despite hinting that a deal would earn early approval "if we have the negotiations on October 17," Barnier still insisted that a customs union would prevent border checks at the Irish border. The trade deal was also welcomed by Merkel and Dutch Prime Minister Mark Rutte, though each also stressed caution until its details were published. The EU also cancelled plans to publish its version of documents pertaining to the possibility of a no-deal Brexit. The same day, Britain's FCA published more documents pertaining to the possibility of a no-deal Brexit.
On 11 October, The Daily Telegraph reported that the EU and Britain had made further concessions and agreed to an "all-UK" backstop at the Irish border which will have "no time limit." The same day, EU and British diplomats involved the negotiations stated that a trade deal was now expected by 15 October. May also informed members of her cabinet that a "historic" Brexit deal was now "close." One official who was familiar with the meeting backed the Prime Minister's claim and stated that a trade deal agreement between Britain and the EU was "practically done." Despite the progress which was made in achieving a compromise over the Irish border, May, addressing concerns from the DUP, later spoke with reporters from Northern Ireland and stated that talks concerning the backstop would still continue until November. Barnier also made another concession and offered to allow Britain's stay in the EU customs union to be only "temporary" and suggested Britain should continue to apply the EU's external tariffs.
On 14 October, a spokeswoman for Britain's Brexit ministry announced progress "in a number of key areas," but acknowledged that the British government will still not support a backstop at the Irish border. Barnier, who held surprise talks with Raab, stated "some issues are still open." The EU Ambassadors from all the other 27 EU nations were summoned to Brussels as well. It has also been agreed that talks will not resume until the start of the EU summit on 17 October. Also during this day, EU and British diplomats completed negotiating a draft post-Brexit trade deal between Britain and the EU. However, May and Raab rejected this proposed trade deal due to terms which were written regarding the Irish border backstop.
On 15 October, May stated that the British government's difference with the EU now "aren't far apart," but that the EU now had to terminate plans for a backstop at the Irish border. On October 16, May's cabinet officially backed her Brexit strategy. The same day, French President Emmanuel Macron, who is considered to have taken the most hardline stance in the Brexit negotiations, made a concession and offered to support a "temporary" backstop at the Irish border. Before departing for the EU summit on October 17, May stated to reporters that "now is the time" for the deal and that she was also confident that it would move forward at some point "with the full package." The same day, Varadkar announced a major concession over the backstop, agreeing to make it only temporary. Varadkar also stated that he wished to preserve current trade relations with Britain and hinted that another summit would be held in November. The Polish government, which has broken ranks with several other EU governments to support Britain's Brexit stance, also warned other EU leaders not to "play with fire."
During the summit, May rejected another drafted trade deal offered by the EU which would have extended the transition period, due to the fact that it would've resulted in adding around £5bn to the £39bn "divorce bill." On the first day, 17 October, May met with Macron, Varadkar, Tusk and Juncker and also delivered a 30-minute speech to all 27 EU leaders. Following her speech, European Parliament chief Antonio Tajani stated "the tone was more relaxed than in Salzburg, undoubtedly. There was a message of goodwill and readiness to reach an agreement, but I didn't perceive anything substantially new in terms of content as I listened to Mrs May." EU leaders also cancelled their plans to hold an extraordinary summit in November due to lack of progress.
On 18 October, Spain reached an agreement with Britain and agreed to no longer hold any objection to the nearby British coastal peninsula of Gibraltar leaving the EU with Britain. Spanish Prime Minister Pedro Sánchez even stated “Gibraltar will no longer be a problem in arriving at a Brexit deal." Any dispute between Britain and Spain over the status of Gibraltar will also no longer affect a potential trade agreement between Britain and the EU.
On 21 October, it was reported that trade negotiations between Britain and the EU were now 95% complete and that May had managed to not only resolve the issue surrounding Gibraltar's EU departure, but had also managed to develop a protocol concerning the UK's military presence in Cyprus and agreed to a mechanism for resolving any future disputes with the EU. On October 22, May confirmed this during a speech in the House of Commons. The British Prime Minister also laid the four elements related to the remaining 5% which remained unresolved, all of which are related to the Irish border.
On 22 October, Reuters reported that EU sources had told them the EU was "looking at ways to promise Britain a customs deal that could stretch Brussels’ Brexit red lines but might break a deadlock over the Irish border." On 23 October, EU sources informed the Irish RTE news agency that the EU had made another concession and agreed to a separate treaty ensuring a "UK-wide" customs union which is not "Northern Ireland-only." This customs union proposal, which May claimed would further preserve the 1998 Good Friday Agreement which resulted in the implementation of the Northern Ireland peace process, was one of the four steps which the British Prime Minister proposed for breaking the Irish border impasse. When asked if this offer by the EU guaranteed a trade deal, May's spokesman stated that more needs to be done and that "any circumstance in which Northern Ireland could be in a separate customs territory to the UK is unacceptable." The Business Times reported that May was now optimistic that the negotiations for the trade deal would be wrapped up by the end of November. A spokesperson for 10 Downing Street also denied media reports that her Cabinet has been engaged in a "row" over her proposal to end the impasse over the Irish border and that there was merely an "impassioned" agreement that there should be a guarantee of no indefinite extension of the customs union.
On 24 October, May confirmed to reporters that there was now a proposal to extend the transition period "by a matter of months." However, May also stated that this proposal "is not expected to be used." Leaked papers also revealed that May wanted an agreement from her Cabinet on the next phase of negotiations by the following week and that the proposal was at best a one-year extension of the transition period. Tusk afterwards stated "if the UK decided that such an extension would be helpful to reach a deal, I am sure that the leaders would be ready to consider it positively.” Tusk also stated that the proposal, which May only considers to be an option if needed, was originally brought up May during discussions at the October EU Summit. The prevention of an indefinite customs union and assurance from the EU that it an extension would only be an option were two of the four steps which May cited to the end Irish border impasse as well.
On 31 October, a letter dated 24 October was published revealed that Raab stated to at least one lawmaker that a trade deal would be finalized by the European Union by 21 November and that the end of negotiations was now "firmly in sight" According to Raab, the Prime Minister's four points regarding Northern Ireland were the only issues that still needed to be resolved by this point in time.
On 8 November 2018, it was announced that the EU had made concessions and offered a "level playing field" post-Brexit trade deal if Britain were to agree to the backstop. In a press conference, Foreign Secretary Jeremy Hunt stated that he was "optimistic" that the planned November EU special summit which had been cancelled at the October summit would now take place before the end of November. It was acknowledged differences still remained over the lifespan of this new offer.
On 12 November, Barnier stated that the Brexit deal was almost ready, but still needed political endorsement. Barnier also said that the text would be presented to May's Cabinet on 13 November. The Prime Minister's office denied that May was ready to accept the EU's latest offer. May later delivered a televised speech where she declared that "the negotiations for our departure are now in the endgame" and insisted that she still would not accept a trade deal which hampered Britain's border and economic sovereignty. On 13 November 2018, the UK government and EU agreed on the text of the proposed withdrawal agreement.
On 14 November, following a five-hour Cabinet meeting, May announced that her Cabinet approved the draft agreement. On the same day the government published Explainer for the agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union, stating that negotiations on the future UK-EU were ongoing and that the Withdrawal Agreement would not be signed without an agreed Political Declaration on the future relationship "on the basis that nothing is agreed until everything is agreed".
Also on 14 November, the text of the withdrawal agreement was published. The proposed agreement includes a financial settlement expected to be at least £39bn, and sets forth a transition period lasting until 31 December 2020, but which could be extended for at most two years. During the transition period, UK would be required to comply with EU law, while not being a member of any of its institutions. On the Irish border question, the proposed agreement contains a "backstop", that would come into force if no long-term trade deal is reached before the end of the transition period. The rights to residence and social security rights would be retained by EU citizens in UK and UK citizens in EU. The withdrawal agreement would be governed by a joint UK-EU arbitration panel. A social media campaign was launched by Number 10 Downing Street to convince the public of the deal.
On 15 November 2018, Tusk stated that a new summit would be on 25 November 2018 for EU and that a meeting to discuss preparations for this summit would be held on 20 November. On 17 November 2018 May wrote in The Sun that the proposed deal would end both free movement of people and ECJ rule over Britain, and also protect millions of British jobs. She stated that the November EU summit would go ahead as scheduled. On 18 November, May told Sky News that she would attend a meeting in Brussels during the next week.
On 19 November, EU ministers endorsed the draft agreement. The same day, the deal was endorsed by the Confederation of British Industry (CBI). On 20 November 2018, the deal was endorsed by the Bank of England.
On 21 November, May travelled to Brussels to hold a meeting with European Commission president Jean-Claude Juncker. The Commission released a statement that stated that "very good progress" had been made during this meeting. Juncker also cancelled a planned two-day trip to the Canary Islands in order to work with "the many important events taking place at the moment." Commission Vice-President Valdis Dombrovskis stated that the "sherpas" - officials tasked with doing the detailed work ahead of summits - are scheduled to meet on 23 November to work on the final texts of the withdrawal agreement and the future relationship. On 22 November, European Council President Donald Tusk announced the European Commission's approval of the draft agreement, thus paving the way for the summit which concerns the European Council vote. Tusk also sent a political declaration regarding future EU relations with Britain to the EU27 states and called on their ruling governments to draft it.
On 22 November, Spanish Prime Minister Pedro Sánchez tweeted, following a phone conversation with May over Gibraltar at Juncker's encouragment, that Britain and Spain still remained "far apart." Nevertheless, May stated that she was still "confident" that she and Sánchez "will be able to agree a deal that delivers for the whole UK family, including Gibraltar." On 23 November 2018, the sherpas met, though the dispute with Spain over the issue of Gibraltar ensured that May's meeting with Juncker on 24 November will involve resolving the issue in person. Despite new threats from Sánchez of a veto to the trade deal, it has also been acknowledged, including by Spanish Foreign Minister Josep Borrell, that Spain will have no such power at 25 November summit and that any objection at this summit would merely be a sign of EU disunity. It was also acknowledged that Spain's main dispute with Britain was not Gibraltar's departure from the EU with Britain or future trade deals with Britain, but rather that Britain agree to exclude Gibraltar in future negotiations not related to the Gibraltar dispute. The same day, the sherpas agreed a third Brexit document concerning level playing fields with regards to competition with British companies and use of UK fisheries.
On 24 November, Tusk announced that an agreement had been brokered between Britain and Spain and over the Gibraltar dispute and that the dispute will not cancel the upcoming summit. Sánchez confirmed this and also stated that Spain would vote yes on the withdrawal agreement. On 25 November 2018, all of the leaders of the EU27 nations endorsed the Brexit deal at the summit. On 26 November, May announced that the Parliament vote on the deal will be held on 11 December 2018. US President Donald Trump has objected to the deal. On 29 November, the Bank of England's Mark Carney said, with reference to Bank stress tests in event of Brexit, “In the disorderly Brexit scenario, the term premium on UK government bond yields rises by 100 bp. And as the sterling risk premium increases, sterling falls by 25%, in addition to the 9% it has already fallen since the May 2016 Inflation Report.” 
The House of Lords report published on 5 December 2018, analysing the proposed Withdrawal Agreement and the accompanying Political Declaration, expressed concern (in para.24) about the wide power that Article 164 would give the Joint UK-EU Committee to be established as the primary forum responsible for implementation and application – including any decision on extending the transition period (para.140) – and about the Committee's lack of decision making transparency (paras. 36, 37, 136); and concern about the "Irish backstop" (p.27 "Institutional oversight of the Protocol").
On 10 December, after the government's proposal received a hostile response in the House of Commons debate, mainly, but not only, concerning the Irish backstop that critics feared could continue indefinitely without UK being able to withdraw from it unilaterally, May called off the next day's House of Commons vote on the proposed Brexit withdrawal agreement, saying it "would be rejected by a significant margin" if voted on then. The following day, May held meetings with Merkel, Rutte, Tusk and Juncker to try re-negotiate the deal. However, Merkel said that the deal could not be renegotiated. Under current UK legislation (European Union (Withdrawal) Act 2018, s.13), the House of Commons was required to vote by 21 January 2019 at the latest.
On 14 December, the national heads of Government confirmed that there could be no further negotiations on the terms of withdrawal. On 19 December the EU Commission announced its "no-deal" Contingency Action Plan in specific sectors, in respect of the UK leaving the European Union "in 100 days' time".
On 15 January, 2019, the House of Commons voted against the deal put forward by May's government by 432 votes against to 202 votes for. Shortly afterwards, the Leader of the Opposition, Jeremy Corbyn, tabled a motion of no confidence in the government, a vote which was won by the Government by a margin of 325 to 306. Following the confidence vote, Corbyn voiced opposition to entering talks with the Government on Brexit, until May had ruled out the option of a no-deal Brexit. On 17 January May rejected this offer, stating it would be "impossible" to not include the option of a no-deal Brexit into the withdrawal agreement.
On 28 June 2016, five days after the referendum, Chancellor of Germany Angela Merkel announced to the German parliament the forthcoming EU negotiation position: the UK could only remain in the European Single Market (ESM) if the UK accepted EU migrants. There would be no cherrypicking of the ESM's four conditions (free movement of goods, capital, services and labour). While she expected the UK to remain an important NATO partner, the EU's priority was unity and self-preservation. She warned the UK not to delude itself. The next day, Tusk confirmed that the UK would not be allowed access to the ESM unless they accepted its four freedoms of movement for goods, capital, services, and people.
In contrast, at her October 2016 party conference, Prime Minister Theresa May emphasised that ending the jurisdiction of EU law and free movement from Europe were priorities. She wished "to give British companies the maximum freedom to trade with and operate in the Single Market – and let European businesses do the same here", but not at the expense of losing sovereignty.
In November 2016, May proposed that Britain and the other EU countries mutually guarantee the residency rights of the 3.3 million EU immigrants in Britain and those of the 1.2 million British citizens living on the Continent, in order to exclude their fates being bargained during Brexit negotiations. Despite initial approval from a majority of EU states, May's proposal was blocked by European Council President Tusk and German Chancellor Merkel.
In January 2017, the Prime Minister presented 12 negotiating objectives and confirmed that the UK government would not seek permanent single market membership. The European Parliament's lead negotiator Guy Verhofstadt responded that there could be no "cherry-picking" by the UK in the talks.
The statutory period for negotiation began on 29 March 2017, when the letter notifying withdrawal, signed by the British Prime Minister, was handed to the president of the European Council. The letter called for a "deep and special relationship" between the UK and the EU, and warned that failure to reach an agreement would result in EU-UK trade under World Trade Organisation terms, and a weakening of the UK's cooperation in the fight against crime and terrorism. The letter suggested prioritising an early deal on the rights of EU citizens in the UK and vice versa. In the letter, the Prime Minister reasoned that, as the EU leaders did not wish "cherry picking" of the ESM, the UK would not seek to remain within the ESM. Instead, the UK would seek a free trade agreement with the EU. In response, Merkel insisted that the EU would not discuss future cooperation without first settling the divorce, Verhofstadt referred to the letter as "blackmail" with regard to the point on security and terrorism, and EU Commission president Jean-Claude Juncker said the UK's decision to quit the block was a "choice they will regret one day".
On 29 April 2017, immediately after the first round of French presidential elections, the EU27 heads of state accepted, without discussion, negotiating guidelines prepared by the President of the European Council. The guidelines take the view that Article 50 permits a two-phased negotiation, whereby the UK first needs to agree to a financial commitment and to lifelong benefits for EU citizens in Britain, before the EU27 will entertain negotiations on a future relationship. In the requested first phase of the withdrawal negotiation, the EU27 negotiators demand the UK pay a "divorce bill", initially estimated as amounting up to £52bn and then, after additional financial demands from Germany, France, and Poland, amounting to £92bn. Nevertheless, a report of the European Union Committee of the House of Lords published on 4 March 2017 states that if there is no post-Brexit deal at the end of the two-year negotiating period, the UK could withdraw without payment. Similarly, the Prime Minister insisted to EU Commission President Juncker that talks about the future UK-EU relationship should start early and that Britain did not owe any money to the EU under the current treaties.
On the EU27 side, unflattering details of a four-way meeting between Prime Minister Theresa May, Brexit Minister David Davis, EU Commission President Juncker and his chief-of-staff Martin Selmayr were leaked to the German newspaper Frankfurter Allgemeine Sonntagszeitung, presumably by Martin Selmayr. According to the leaked description, Juncker claimed that Theresa May was "living in another galaxy" when suggesting that British and EU migrant rights could be rapidly negotiated and agreed in the course of June 2017. German Chancellor Angela Merkel concurred the next day by stating that there were "illusions" on the British side. A few days later, Juncker disclaimed responsibility and called the leak a mistake, Der Spiegel magazine reported that Angela Merkel was annoyed with Juncker for the leak, while European Council President Tusk admonished participants to use discretion during the negotiations. The background for German nervousness allegedly is the possibility that Britain may veto EU budget increases, which for example in the immediate term amount to 4 billion euros. A continued British veto would have far-reaching consequences and "will hurt us" according to German MEP Jens Geier.
On 22 May 2017, the European Council authorised its negotiators to start the Brexit talks and it adopted its negotiating directives. The first day of talks took place on 19 June, where Davis and Barnier agreed to prioritise the question of residency rights, while Davis conceded that a discussion of the Northern Irish border would have to await future trade agreements.
On 22 June 2017, Prime Minister May guaranteed, at a European Council meeting in Brussels, that no EU citizen living legally in the UK would be forced to leave, and she offered that any EU citizen living in the UK for more than 5 years until an unspecified deadline between March 2017 and March 2019 would enjoy the same rights as a UK citizen, conditional on the EU providing the same offer to British expatriates living in the EU. The EU leaders did not immediately reciprocate the offer, with Council President Tusk objecting that the European Council is not a forum for the Brexit negotiations, and Commission president Juncker stating "I'm not negotiating here."
The Prime Minister detailed her residency proposals in the House of Commons on 26 June 2017, but drew no concessions from EU negotiators, who had declined to expe agreement on expatriates by the end of June 2017, and who are hoping for European courts to continue to have jurisdiction in the UK with regards to EU citizens, according to their negotiation aims published in May 2017.
The second round of negotiations began in Brussels in mid-July 2017. It is considered the beginning of substantial negotiations, with 98 UK negotiators and 45 EU27 negotiators. Progress is being made on the Northern Irish border question, whereas UK negotiators have requested a detailed breakdown of the "divorce bill" demand estimated at 65 billion euros, while the EU negotiators criticise the UK's citizenship rights offer. At the concluding press conference, David Davis did not commit to a net payment by the UK to the EU with regards to the requested divorce bill, while Michel Barnier explained that he would not compromise on his demand for the European Court of Justice to have continuing jurisdiction over the rights of EU citizens living in the UK after Brexit, rejecting the compromise proposal of a new international body made up of British and EU judges.
On 16 August 2017, the British government disclosed the first of several papers detailing British ambitions following Brexit, discussing trade and customs arrangements. On 23 August 2017, Prime Minister Theresa May announced that Britain will leave the EU Court of Justice's direct jurisdiction when the Brexit transition period that is planned after March 2019 ends, but that both the British courts and the EU Court of Justice will also keep "half an eye" on each other's rulings afterwards as well. One of the UK government's position papers published in August called for no additional restrictions for goods already on the market in the UK and EU.
The third round of negotiations began in Brussels on 28 August 2017. The European Commission president Juncker criticised the UK's Brexit negotiations, saying none of the papers provided so far were satisfactory and that there would be no trade negotiations between the EU and UK until the divorce bill was settled. He had previously claimed that the UK's Brexit bill could be £55bn (which Theresa May's government ministers consider unacceptable) and EU Budget Commissioner Günther Oettinger voiced the view that the UK should make payments until 2023. The Irish Times explained the disagreement as follows: British negotiators referred to the seven-year Multiannual Financial Framework (MFF or Maff) for the period 2014-2020 agreed by member states and the EU parliament as a "planning tool" for the next period rather than a legally-binding financial obligation on member states. The British case is that the MFF sets ceilings on spending under various headings and is later radically revised during the annual budget process when real legal obligations on each state arises. This contrasts with the EU Commission's methodology for calculating the UK Brexit bill which involves dividing the MFF into the shares historically agreed by each member state. On the Irish border question there was a "breakthrough", with the British side guaranteeing free movement of EU citizens within the Common travel area constituting Ireland and the United Kingdom. The BBC's Europe correspondent commented "the British perception of the talks is more positive than the EU's".
At the elite European Ambrosetti Forum on 2 September 2017, Michel Barnier explained his negotiation aims, in that he would "teach the British people and others what leaving the EU means". Although this remark caused controversy in the UK, BBC correspondent Mark Mardell interpreted it in the context of French and Dutch euroscepticism, of the forthcoming German, Austrian and Italian elections, and of the eurosceptic Polish and Hungarian governments.
In a statement to Parliament on 5 September 2017, David Davis said that "concrete progress" had been made over the summer in areas such as protecting the rights of British expats in the EU to access healthcare and over the future of the Irish border, while significant differences over the "divorce bill" remain. He expected that "the money argument will go on for the full duration of the negotiation. The famous European "nothing is agreed until everything is agreed" will apply here absolutely, as anywhere else".
On 6 September 2017, Prime Minister May announced that new immigration controls will be placed on EU nationals when Brexit concludes.
On 9 September 2017, the EU Commission published several negotiating papers, including "Guiding Principles on the Dialogue for Ireland/Northern Ireland". In it, the EU concedes/declares that it is the responsibility of the UK to propose solutions for the post-Brexit Irish border. The paper envisages that a "unique" solution would be permissible here; in other words, any such exceptional Irish solution should not be seen as a template for post-Brexit relationships with the other EU members on border and customs control matters, for example ETIAS.
At the European Council meeting of 19/20 October 2017, the 27 leaders of the EU states were to decide whether or not to start trade negotiations with the UK. However, David Davis has conceded that so soon after the German elections on 24 September, a German coalition government may not be in place in time for making this decision in October, delaying any European Council decision until their December meeting.
On 21 September 2017, Prime Minister May, along with her Cabinet, agreed to a transition deal which would inject 20bn euros to the EU budget over a two-year period. A cabinet source confirmed to the BBC that May's Cabinet was in fact unity around the Prime Minister's two year transition deal.
On 22 September 2017, May announced the details of her Brexit proposal during a speech in Florence, Italy. In addition to offering 20 billion euros over a two-year transition period and continued acceptance of European immigrants, she also offered a "bold new security relationship" with the EU which would be "unprecedented in its depth" and to continue to make "an ongoing contribution" to projects considered greatly to the EU and UK's advantage, such as science and security projects. She also confirmed that the UK would not "stand in the way" of Juncker's proposals for further EU integration. The European Union's Brexit negotiator Michel Barnier welcomed May's proposal as "constructive," but that it also "must be translated into negotiating positions to make meaningful progress;" Similarly, President of France Emmanuel Macron was adamant that the EU would not begin negotiations on future EU-UK relationships until "the regulation of European citizens, the financial terms of the exit, and the questions of Ireland" were "clarified" by the UK, though he also acknowledged that May did give openings in her speech on two of these three points. Ireland Taoiseach Leo Varadkar gave May's proposal a "cautious welcome," saying that while it was good of May to reference the Common Travel Area, the Northern Ireland peace process and that both sides in the negotiations do not want any physical structures at the border, more negotiations were needed for clarification. EU Parliamentary negotiator Guy Verhofstadt responded that "a new registration mechanism for EU citizens going to live and/or work in the UK is out of the question".
EU negotiators have stated that an agreement must be reached between Britain and the EU by October 2018 in order to leave time for national parliaments to endorse Brexit.
The programme for the fourth round of talks beginning on 25 September arranged for meetings between the "Principals" and for three negotiating groups covering citizens' rights, financial settlement and other separation issues, while Northern Ireland issues would be addressed by the "Coordinators", and governance of the withdrawal agreement would be discussed at technical level.
On 16 October, May and European Commission President Jean-Claude Juncker issued a joint statement agreeing Brexit talks should "accelerate over the months to come" following a dinner meeting in Brussels which both described as "constructive and friendly." However, as at a similar dinner earlier in 2017, an unflattering "impressionistic" account of this meeting (between Prime Minister Theresa May, her chief Brexit adviser Olly Robbins, Brexit Minister David Davis, EU Commission President Juncker and the EU's chief negotiator, Michel Barnier) was published in the same German newspaper Frankfurter Allgemeine Sonntagszeitung. Again, Juncker's chief-of-staff Martin Selmayr was accused as the source of the publication and of trying to undermine the negotiations. This time however Selmayr denied the accusation, and Chancellor Merkel reportedly denied her involvement.
On 17 October, Brexit Secretary David Davis insisted that there will be no deal for a transition phase without EU cooperation and that Brexit will happen regardless, even if there is what one Conservative MP described as "a bridge to nowhere."
On 19 October, the first day of the two-day European Council meeting in Brussels, May issued a direct message to approximately three million EU citizens living in Britain, promising she will make it as easy as possible for them to stay after Brexit. On 20 October, Tusk described media reports of the deadlock in Brexit talks as "exaggerated."
On 23 October, May announced to the House of Commons that Brexit talks underwent "important progress" during her recent meeting with the European Council and that Britain was now "in touching distance" of a trade deal with EU countries, while also reiterating that no transition phase will take place following the conclusion of Brexit without a trade deal as well. The same day, Juncker denied reports by the German media that May had "begged for help" during their recent dinner meeting.
In the wake of the German elections (23 September 2017), as of 10 November, negotiations were still ongoing to form a coalition government between Frau Merkel's CDU, the sister party CSU, the economically liberal FDP and the German Greens; politicians from all three factions published an appeal to reach a coalition agreement (rather than risk new elections), in the interest of Germany forming a "stable anchor" to unite with France and defend the EU and the euro in the current situation.
During the sixth round of meetings in Brussels between UK and EU negotiators on 9–10 November, Michel Barnier set the UK a deadline of two weeks to specify a divorce bill that the UK would pay, without which the UK would not be permitted to start trade negotiations in December 2017. Meanwhile, David Davis rejected an EU proposal that Northern Ireland could remain in the EU customs union (thereby creating a customs border "down the Irish Sea" with Great Britain).
After more than 2 months of a caretaker German government since the German federal elections in September, on 7 December 2017 new elections were averted when the German socialist party under Martin Schulz agreed to negotiate a coalition government with Angela Merkel's Christian Democrat party, but on condition that a "United States of Europe" be created by 2025, dismissing those EU member states who were unwilling to participate.
The following day (8 December), the UK and EU negotiators agreed on the principle that "nothing is agreed until everything is agreed" and formally announced to proceed immediately to the next phase of talks on a transition period and future trade relationships.
Two different but incompatible legal approaches would be considered for the Brexit. The EU approach is top down while the British approach is bottom-up. This difference of approach raises a serious problem of confidence. From Michel Barnier's point of view, what was decided by 28 member states, has to be paid by 28 member states till the end.
The issue of payments by the UK to the EU as part of the exit agreement is subject to much conjecture and has been divided into two broad questions. Firstly, whether a leaving state is legally obligated to contribute to the EU budget beyond its membership period or compensate for any financial losses that EU may suffer on account of withdrawal, given that Article 50 does not concern itself with financial ramifications of a withdrawal; and secondly – if the United Kingdom is legally obligated to pay – what should be the due amount.
The leaders of France and Germany have both stated that the UK would need to agree terms regarding the departure before discussing future relationships. This has been reinforced by EU27 guidelines issued to the remaining 27 countries. The UK has signalled that it may consider paying the EU to attain preferential access to the economic Single Market and may offer to pay liabilities, even if not legally obligated, on a moral and co-operative basis to secure a preferential working relationship with the EU.
The highest reported claim by the EU is around €60 billion (£50 billion[when?]). In March 2017 the Bruegel think tank estimated that the UK would need to pay at least €25.4 billion, but the method of calculation is debatable and their calculations using seven different methods produced estimates between €30 and €45 billion. However this £50 billion bill includes the United Kingdom's annual EU contribution (approximately £13 billion annually) for the two years from 2020 and 2021 as agreed in the Multiannual Financial Framework (MFF). The United Kingdom, in accordance with Article 50 and unless otherwise extended, will cease to be a member of the EU from 29 March 2019 and the MFF does have a provision for "unforeseen circumstances".
EU27 is expected to ask the UK to pay its liabilities in euros, including the relocation costs associated with the two EU bodies currently based in London.
Speaking on 20 April, Antonio Tajani said that it was too early to quantify the amount the UK would need to pay and that it was not a bill to leave the EU, it was money needed for farmers and small businesses.
HL Paper 125, 4 March 2017, European Union Committee 15th sessional report, Brexit and the EU budget , Chapter 3, Potential demands.
A March 2017 House of Lords report acknowledges that the EU may claim for (1) part of the current budget (which runs from 2014 to 2020) post March 2019, because it was approved by the UK (2) part of the EU future commitments which amount to €200 billion and (3) a contribution if the UK is to continue with access to some EU programmes. The report concluded that the UK had no legal obligation to make "exit" payments to the EU if there was no post Brexit deal.
Discussing financial and legal complexities involved in negotiating withdrawal, including settlement of outstanding financial liabilities and division of assets, the report mentions (paragraph 15) that the EU budget is funded by revenue drawn from various sources, governed by the EU's Own Resources Decision (ORD), which was made part of UK law by the European Union (Finance) Act 2015. The revenue includes contributions from import duties and VAT collected by member states. The report also mentions the EU Multiannual Financial Framework for controlling the annual expenditure.
The EU has considerable assets including buildings, equipment and financial instruments, and there is a potential claim by the UK for a portion of these assets. Boris Johnson, the UK's Foreign Secretary, commenting on the Brexit "divorce bill" in May 2017 stated that the valuable EU assets the UK has paid for over the years should be properly valued, and that there were good arguments for including them in the negotiations.
The Bank of England (BoE) has invested in the European Central Bank (ECB) amounting to 13.6743%, representing paid up capital of €55.5 billion. The BoE does not participate in any profits (or losses) of the ECB. The BoE has also made loans to the ECB. The ECB set up the European Financial Stability Facility in 2010, which has a borrowing facility of €440bn and in addition used a guarantee from the European Commission and the Budget of the European Union as collateral to borrow a further €60bn. The UK withdrawal will affect the ECB.
The EU has a pension liability of €64 billion.
The EU drafted a 10-page position document regarding the single bill. This position does not define the final cost of the divorce.
Concerns have been raised by UK citizens who live in other EU countries, and by citizens from those countries who live in the UK. In May 2017, Michel Barnier stated: "Currently around 3.2 million EU citizens work and live in the UK, and 1.2 million British citizens work and live in the EU."
Issues include rights of movement, citizenship, abode, education, social support and medical treatment, and the payment of pensions; and the extent to which these rights apply to family members. Considerations for UK citizens resident in an EU27 country include their rights to work or live in a different EU27 country. Beyond the 27 EU countries, workers have certain freedom of movement rights to/from Norway, Iceland, Liechtenstein and Switzerland.
"Associate citizenship", suggested by EU27 negotiator Guy Verhofstadt, would allow UK nationals to volunteer individually for EU citizenship, enabling them to continue to work and live on the continent. Jean-Claude Juncker, president of the European Commission, is not opposed to the idea.
Antonio Tajani spoke after a meeting with Theresa May on 20 April 2017, saying "the issue of reciprocal EU citizen rights should be negotiated 'immediately' with a view to getting an agreement by the end of the year." The European Commission published a position paper on "Essential Principles on Citizens' Rights" on 12 June 2017, proposing that current and future family members of European nationals in the UK would keep their rights to settle in their residence country at any time after Britain's withdrawal. Speaking in advance of publication of the paper, David Davis described the demands as "ridiculously high". The UK government published their policy paper "Safeguarding the position of EU citizens in the UK and UK nationals in the EU" on 26 June. The policy paper proposed that EU citizens living in Britain will be required to apply for inclusion on a "settled status" register if they wish to remain in the country after Brexit.
By the end of September 2017 progress had been made on several of the 60 points which became green, while 13 out of the 60 points remain red. Three points (points #14, #15, and #16 related to monitoring and CJEU) have to be addressed at governance level. Few points remain to be clarified (that is yellow). On this basis European parliament will have to assess if sufficient progress has been made.
As of October 2018, UK residents in the EU have not yet had their fates decided on: On 16 October 2018, just before departing for the EU27-UK summit in Brussels, German Chancellor Angela Merkel, speaking to the German parliament, asked "How do we treat the 100,000 British citizens in Germany on the day after Brexit if there is no deal?", without supplying an answer.
The general rule for losing EU citizenship is that European citizenship is lost if member state nationality is lost, but the automatic loss of EU citizenship as a result of a member state withdrawing from the EU is the subject of debate. The situation of a person acquiring EU citizenship when the UK joined the EU in 1973 compared to a person born in the UK after 1973 and was therefore born into EU citizenship, may differ. It may be necessary for the ECJ to rule on these issues.
In a 2017 decision, the ECJ ruled that the parent/s of a child with EU nationality are entitled to rights of residence, even if both non EU citizens. This may have consequential effects for UK residents who have young children and wish to live in the EU27 territory post Brexit, but this remains to be tested.
Until the UK effectively withdraws from the EU in 2019 or at another agreed date, the current system of free movement of labour between the EU27 and the UK remains in place.
The report of the House of Commons Exiting the European Union Committee on The Government's negotiating objectives, published in April 2017, proposed (paragraphs 20 and 123) that the future system for EU migration should meet the needs of different sectors of the UK economy, including those employing scientists, bankers, vets, care workers, health service professionals and seasonal agriculture workers.
Theresa May, answering press questions on 5 April 2017, commented that the free movement of labour would not end in March 2019; an implementation period of possibly five years would give business and government time to adjust.
The UK currently charges an annual levy of up to £1,000 for each non-EU citizen employed within the UK. Proposals are under consideration to increase this 'immigration skills charge' to £2,000 p.a. and to implement a similar levy on EU citizens employed in the UK.
According to an unconfirmed newspaper report, a leaked Home Office paper has a proposal that the UK will end the free movement of labour of low-skilled workers immediately after Brexit, focusing on highly skilled EU workers instead. The proposal would limit lower-skilled EU migrants' residency permits to a maximum of two years, and the implementation of a new immigration system ending the right to settle in Britain for most European migrants while placing tough restrictions on their rights to bring over family members. Those in "high-skilled occupations" could be given permission to work in the UK for a period of three to five years.
Immigration is one topic requiring partnership between EU and UK, as according to Theresa May, "Mass migration and terrorism are but two examples of the challenges to our shared European interests and values that we can only solve in partnership".
In the context of Brexit, the question of migration might contains two subtopics: on one hand migrations between EU including UK and third countries which might be dealt with at a local level; and on the other hand migration between EU and UK once UK has become a third country which was discussed for the withdrawal agreement.
The concept of European Court of Justice competence creates complications. Some pro-Brexiteers believe the Court of Justice might be completely removed from the UK landscape. Various other opinions consider that the Court of Justice or some equivalent should be able to rule on remaining issues after Brexit (for instance between a European and a British stakeholder), at least in respect of the TEU (Treaty on European Union), European Union citizens, or access to the European Single Market.
After the 2017 negotiations, in February 2018 the European Commission Draft Withdrawal Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community consider for instance that:
Documents setting out how the Brexit will affect parts of the British economy were set up for the government, "the most comprehensive picture of our economy on this issue" containing "excruciating detail" according to Brexit Secretary David Davis. The ministers were reluctant to publish them but in November 2017, a vote in Parliament allowed lawmakers to read them under controlled conditions to avoid news leaks. They were released online on 21 December 2017 but lawmakers were unimpressed: "Most of this could be found on Wikipedia or with a quick Google search", said Labour's David Lammy, "these documents [were made] in a couple of weeks. They look like copy and paste essay crises."
Without a trade agreement in place, UK trade with the EU would be governed by the World Trade Organization's Bali Package. This would lead to common tariffs and non-tariff barriers being imposed by the EU27 upon the UK's access to the European Single Market, because the Market is also a customs union. However, the UK would then have an opportunity to control immigration as well as develop its own trade regulations.
The UK is not permitted to hold trade talks until after Brexit is concluded, however the UK can do preparatory work with other countries regarding the UK's future trading relationships; this is not to the liking of some EU27 countries. Before Britain leaves the EU, they may put trade agreements in place with non-EU countries.
Only the EU can act in areas where it has exclusive competence, such as the customs union and common commercial policy. In those areas Member States may not act independently. The UK can still negotiate its own bilateral investment protection treaties subject to Commission authorization.
Strategic controls on military goods are primarily a Member State competence. As a result, Member States themselves negotiate multilateral or bilateral agreements on the strategic aspects of trade in defense goods.
The EU27 wish to exclude the UK from sitting in on trade negotiations held by the EU during the period ending March 2019, seeing the UK as a competitor. Theresa May rejected this idea, saying "While we're members of the European Union we would expect our obligations but also our rights to be honored in full."
The Geographical indications and traditional specialties in the European Union, known as protected designation of origin (PDO) is applied internationally via bilateral agreements. Without an agreement with the EU27, UK producers of products such as the Cornish pasty, Scotch whisky and Jersey Royal potatoes are at risk of being copied.
The EU27 have stated that UK fish suppliers could lose tariff-free access to the continent unless EU countries have continued access to UK waters after Brexit.
The Irish agricultural sector is heavily dependent on UK markets for its exports.
Investment banks may want to have new or expanded offices up and running inside the EU27 bloc before the UK's departure in March 2019, with Frankfurt and Dublin the possible favourites. Ireland's investment arm, IDA Ireland, witnessed an increase in inquiries from London-based financial groups considering to open up on an office in Dublin by the end of 2016, mostly coming from North American companies. In May 2017, JP Morgan became the first major bank to officially choose Dublin to transfer some of its personnel and operations from its London office.
The situation may be different when it comes to the fund management industry, as British asset owners, notably UK pension funds, often constitute an incommensurate share of total turnover for German, French, Dutch and other Continental European asset managers.
This imbalance could potentially give Britain some negotiating leverage e.g. power of retorsion in case the EU attempts to impose an abrupt cancellation of the mutually-binding obligations and advantages pertaining to the Markets in Financial Instruments Directive 2004 ("fund passporting"). Research conducted by the World Pensions Council (WPC) shows that
"Assets owned by UK pension funds are more than 11 times bigger than those of all German and French pension funds put together […] If need be, at the first hint of threat to the City of London, Her Majesty's Government should be in a position to respond very forcefully."
The London Stock Exchange issued a warning over a proposal by the EU to allow euro-denominated transactions to be cleared only within the EU eurozone, claiming it would increase business costs by €100bn over 5 years and isolate the euro capital market.
The letter of 29 March 2017 giving the UK's notice of intention to withdraw from the EU stated "In security terms a failure to reach agreement would mean our cooperation in the fight against crime and terrorism would be weakened." This was seen by some as a threat. On 31 March, Boris Johnson, the UK Foreign Secretary, confirmed that the "UK commitment to EU security is unconditional".
The call by the United States to other members of NATO to increase their defence expenditure to the 2% of GDP level coincides in timing with Brexit. The UK is the second largest contributor to NATO defence, one of only five to meet the 2% level and one of only two EU members who have nuclear weapons. The possibility of a new Franco-German partnership to fill the vacuum left by Britain has been raised as a possibility and post Brexit an EU military headquarters, previously vetoed by the UK, may be created. The UK is fully committed to NATO.
The UK government's negotiating policy when the negotiating period started on 29 March 2017 included remaining at the vanguard of science and innovation, and seeking continued close collaboration with the UK's European partners.
In the Great Repeal Bill white paper published on 30 March 2017, the UK government stated "The Government is committed to engaging with the Crown Dependencies, Gibraltar and the other Overseas Territories as we leave the EU.":ch.5
Robin Walker MP, a junior minister at the Department for Exiting the European Union, is responsible for managing the relationship between the overseas territories and Parliament in their discussion with the EU27.
Brexit raised issues around sovereignty for Gibraltar, the only British Overseas Territory in the EU. Gibraltarians voted to stay in the European Union by 96%. Spain claims sovereignty over Gibraltar; however, in 2002 Gibraltarians voted 99% to keep British sovereignty.
The EU27 draft guidelines allow Spain a veto over any effect that the Brexit agreement has as regards Gibraltar. The guidelines state: "After the United Kingdom leaves the Union, no agreement between the EU and the United Kingdom may apply to the territory of Gibraltar without the agreement between the Kingdom of Spain and the United Kingdom."
The Crown dependencies are not part of either the UK or the EU. They have a unique constitutional relationship both with the UK and, as encapsulated in Protocol 3 to the UK's Treaty of Accession, with the EU. They have no voting rights in EU or UK referenda or elections and no international voice, the UK government having the responsibility to act for the dependencies on foreign matters. Oliver Heald QC MP is responsible for managing the relationship between the Islands and Parliament in their discussion with the EU27.
If no withdrawal agreement is in place on 30 March 2019 at midnight (European central time) or at 23h on 29 March (British time) (the end of the two-year period under Article 50), the EU Treaties will cease to apply to the UK. In such a "no deal" scenario, there will be no transition period and EU law (in particular, the Single Market) will cease to apply to the UK/EU relationship from that date. However, the EU would prefer a Brexit with an agreed deal rather than with no deal. Nonetheless, even in the case of a no withdrawal deal, the Commission believes that UK and EU may soon relaunch trade negotiations.
A Parliamentary inquiry has concluded that "the possibility of 'no deal' is real enough to justify planning for it. The Government has produced no evidence, either to this inquiry or in its White Paper, to indicate that it is giving the possibility of 'no deal' the level of consideration that it deserves, or is contemplating any serious contingency planning. This is all the more urgent if the Government is serious in its assertion that it will walk away from a 'bad' deal."
The UK government has consistently said that it will aim for the "best possible deal" but that "no deal is better than a bad deal". This position was restated in the Conservative Party manifesto for the 2017 general election. In July, Michel Barnier said that "a fair deal is better than no deal", because "In the case of Brexit, 'no deal' is a return to a distant past".
With the British (UK) white paper, both sides are wondering if the no deal scenario is more likely rather than possible.
A "no-deal" Brexit has been likened by General Council of the Bar, a lawyers' interest body, to "falling over the cliff-edge". According to the IMF, the no deal Brexit could create economic pain across Europe, with no winner. The most affected country would be UK, according to the IMF: the IMF consider that UK and Ireland could lose 4% of their GDP, while close countries such as the Netherlands, Denmark and Belgium could lose 1% of GDP.
In September 2017, the BBC reported that there was little evidence of UK government preparations for a "No Deal" scenario: "our government is not behaving like it is really preparing for No Deal – and the EU27 can surely see it."
In her 4 October 2017 speech at the Conservative Party Conference, UK Prime Minister Theresa May repeated her position that "no deal is better than a bad deal" and emphasized that "It is our responsibility as a government to prepare for every eventuality. And let me reassure everyone in this hall – that is exactly what we are doing." In her 9 October 2017 statement in the House of Commons, May warned that Britain could operate as an "independent trading nation" after Brexit if no trade deal is reached with the EU.
The no deal scenario has been described by Nick Timothy as leaving the EU [with Britain] in "chaos" or not leaving the bloc at all, which he says would be a "national humiliation" on a par with the Suez Crisis.
Sir Martin Donnelly feels that no deal would be dangerous: while no deal makes trade only dependent on World Trade Organisation terms which do not include services—80% of the British economy—he believes that no deal "could mean an awful lot of legal uncertainty and that's very bad for businesses, for jobs, for investment in Britain".
In the Scottish Centre on European Relations paper "Brexit Uncertainty, Scotland and the UK in 2018", a conclusion is reached that the delivery of a no deal Brexit could raise support for a second independence referendum in Scotland.
|* Source, Olivier Wayman report, La Tribune pounds have been converted to euros, on 12 March 2018|
Aviation would be particularly affected if the European Common Aviation Area and EU–US Open Skies Agreement no longer applied to the UK after a "no-deal" Brexit, since World Trade Organisation rules do not cover that sector, implying that the following day a British plane could not land at an EU airport. UK government said in September 2018 that in case of no deal on aviation, UK would allow EU airlines to use British airports anyway, and expect EU countries to reciprocate.
The no deal scenario could create a disruption in transport between the United Kingdom and the European Union: for instance, with delays generated by the customs, sanitary and phytosanitary controls for road transport and ports.
The National Police Coordination Centre has warned that no deal would result in civil disorder at the UK's ports and borders, a "real possibility" of calling upon military assistance, a rise in crime (particularly theft and robbery) and widespread illness and disease following food and drug shortages (including NHS supplies). Police officers who are EU nationals may potentially be unable to hold a warrant card (which would leave the Metropolitan Police 750 officers short), and the ability for the police to deal with criminality from non-UK residents would be undermined as the UK "falls out of the various treaties such as the European arrest warrant, Schengen information system and membership of Europol". Sara Thornton of the NPCC said, "Existing EU tools allow us to respond quickly and intelligently to crime and terrorism in the UK and the EU – they make us better at protecting the public. The alternatives we are planning to use, where they exist, are without exception slower, more bureaucratic and ultimately less effective." Finding out if a suspect has criminal convictions will take much longer.
An EU document on Preparedness outlines the plans related to various issues (with or without withdrawal agreement), and another on Contingency describes measures to answer the consequences of a No deal.
To answer the consequences of a no deal Brexit, some players are involved in contingency planning and preparedness (but not panic).
To limit the consequences of a no deal scenario, some companies, such as Airbus and Rolls-Royce, are stockpiling spares.
In the Netherlands, around 1,000 customs officials are being recruited to manage the border with UK after the no deal Brexit.
In the UK the need for new customs agents is estimated at 5,000.
In Ireland, the need for new customs agents is estimated at 1,000.
The UK is considering converting some part of the M20 motorway into a parking lot for trucks, to manage a possible 17-mile (around 25-kilometer) line of traffic, as planned by the Dover port authority.
The EU Commission has published 68 notices to help various players to be aware of the Brexit consequences. The Commission is also considering notifying its international partners for international agreements that involved the UK as a member state, in case of no deal.
Over the course of August, September and October 2018, the UK Government published a series of technical notices and further guidance on preparing for a "no deal" scenario. The UK Treasury department has used the code name "Operation Yellowhammer" for no-deal contingency planning. On 18 December 2018, the UK Cabinet agreed to proceed with a further phase of "no deal" planning.
Most of the major UK political parties support the idea of a two-year period for applying temporary trade arrangements after the end of the membership of the EU single market, customs union and other EU agreements and before a stand-alone UK.
According to Michel Barnier, the EU might have to define the conditions for a transitional period, if the UK requests one. Such a transition period would begin on 30 March 2019 (European time, as Brexit occurs at midnight the day before).
Following an unprecedented vote on 4 December 2018, MPs ruled that the UK government was in contempt of parliament for refusing to provide to Parliament, the full legal advice it had been given on the effect of its proposed terms for withdrawal. The key point within the advice covered the legal effect of the "backstop" agreement governing Northern Ireland, Eire and the rest of the UK, in regard to the customs border between the EU and UK, and its implications for the Good Friday agreement which had led to the end of the Troubles in Northern Ireland, and specifically, whether the UK would be certain of being able to leave the EU in a practical sense, under the draft proposals.
The following day, the advice was published. The question asked was, "What is the legal effect of the UK agreeing to the Protocol to the Withdrawal Agreement on Ireland and Northern Ireland in particular its effect in conjunction with Articles 5 and 184 of the main Withdrawal Agreement?" The advice given was that:
While negotiations between the United Kingdom and the European Union were in progress, Barnier, as the EU's chief negotiator, speaking in Rome to Committees of the Italian Parliament on 21 September 2017, stated that a future trade deal with the United Kingdom is the trade deal which will be negotiated after sufficient progress has been made on the withdrawal deal. Barnier commented that the EU will want to negotiate a future trade deal with the United Kingdom, because trade with the United Kingdom will continue. At the same time Barnier said "the future trade deal with the United Kingdom will be particular, as it will be less about building convergence, and more about controlling future divergence. This is key to establishing fair competition."
The United Kingdom's prime minister, in a speech at the Santa Maria Novella church in Florence on 22 September 2017, proposed an economic partnership between the UK and the EU which respects both the freedoms and principles of the EU, and the wishes of the British people. At the same time she re-affirmed that after the UK leaves the EU a period of implementation would be in their mutual interest, to be agreed under Article 50 for a strictly time-limited period.
The European parliament voted a Brexit resolution (the European Parliament resolution of 14 March 2018 on the framework of the future EU-UK relationship (2018/2573(RSP)) with 544 MEP against 110 (with 51 abstentions). The 14 page  document states that an association agreement between EU and UK could be an adequate framework for the future. This resolution proposes that the agreement address four domains: trade, interior security, foreign and defense policy collaboration, and thematic cooperation (for instance for research and innovation). The resolution also urges the UK to present a clear position on all outstanding issues pertaining to its orderly withdrawal.
On 13 November 2018, the UK and EU reached an agreement on the wording of the trade deal. On 14 November 2018, May's Cabinet approved the draft agreement. Shortly after it was approved by the British Cabinet, the European Commission published the 585 pages draft withdrawal agreement.
In order to succeed we need discretion, moderation and a maximum of goodwill.