Brexit in a post-general election world - what happens next?

19.12.19

The general election result puts the UK on a clear course to leave the EU on 31 January 2020, on the terms of the withdrawal agreement negotiated by the Prime Minister. The Bill giving legal effect to that agreement will be reintroduced to Parliament on Friday and, with the Conservatives’ new majority, should pass with relative ease.

The UK and the EU will then enter into a ‘transition’ or ‘implementation’ period that will see the UK formally leave the EU but otherwise preserve the legal status quo until the end of 2020, while the UK and EU seek to negotiate an agreement on their future relationship (including trade). This will require the UK to continue to abide by EU laws and regulations throughout 2020.

Reports suggest the Bill will be amended to ‘rule out’ any extension of the transition period, which the withdrawal agreement would allow to be extended once, for either one or two years, by the end of July. Presumably that will mean a provision prohibiting the Government from extending the period, which it could otherwise do without further reference to Parliament. While this is an almost entirely symbolic move, in that the Government could subsequently use its majority to repeal that prohibition before the ‘point of no return’ in July, it perhaps shows a determination to fulfil the Conservative Party’s manifesto commitment not to extend the transition period.

Businesses that put in place contingency plans for a ‘no deal’ Brexit (whether that was anticipated to happen in March, October or January) can therefore stand them down for now, though they should not lose sight of them given the risk of the transition period ending without a trade deal. Businesses that have never made contingency plans should identify when they might need to start doing so to be ready in time for the end of 2020 if necessary, and keep a close eye on the trade negotiations in the meantime.

Another important issue to watch in 2020 will be progress towards new UK-wide ‘frameworks’ to replace the current EU-harmonised rules in various key sectors, such as agriculture, fisheries, the environment and public procurement. Scottish businesses in particular should keep in mind that such matters will (at least in principle) become the Scottish Parliament’s responsibility post-Brexit.

The Scottish Parliament’s powers in these areas are currently limited by EU law, which requires a broadly identical approach across the EU, but are not otherwise restricted (for example by being ‘reserved’ to Westminster under the Scotland Act, in the way that matters such as the constitution and defence are reserved). Accordingly, once the EU law restrictions disappear at the end of the transition period (and subject to any agreement that might be reached with the EU), the Scottish Parliament and the UK’s other devolved legislatures will each be able to adopt very different approaches in these important areas.

Negotiations are therefore ongoing between the UK and devolved governments on new UK frameworks, to ensure the harmonisation that flows from the common EU rules is not replaced by competing regulatory regimes that could create new barriers to intra-UK trade. The UK Government has the power to make orders preventing the devolved institutions from doing anything they could not have done pre-Brexit, intended to preserve the status quo while these frameworks are negotiated, but the Scottish Government regards those powers as illegitimate and has threatened to withdraw from negotiations if they are used. The possibility of divergence will not arise as long as we are in the transition period but, unless the framework negotiations go well, cross-border political relations could become even tenser as 2020 progresses.

The general election result puts the UK on a clear course to leave the EU on 31 January 2020, on the terms of the withdrawal agreement negotiated by the Prime Minister. The Bill giving legal effect to that agreement will be reintroduced to Parliament tomorrow (Friday) and, with the Conservatives’ new majority, should pass with relative ease.

The UK and the EU will then enter into a ‘transition’ or ‘implementation’ period that will see the UK formally leave the EU but otherwise preserve the legal status quo until the end of 2020, while the UK and EU seek to negotiate an agreement on their future relationship (including trade). This will require the UK to continue to abide by EU laws and regulations throughout 2020.

Reports suggest the Bill will be amended to ‘rule out’ any extension of the transition period, which the withdrawal agreement would allow to be extended once, for either one or two years, by the end of July. Presumably that will mean a provision prohibiting the Government from extending the period, which it could otherwise do without further reference to Parliament. While this is an almost entirely symbolic move, in that the Government could subsequently use its majority to repeal that prohibition before the ‘point of no return’ in July, it perhaps shows a determination to fulfil the Conservative Party’s manifesto commitment not to extend the transition period.

Businesses that put in place contingency plans for a ‘no deal’ Brexit (whether that was anticipated to happen in March, October or January) can therefore stand them down for now, though they should not lose sight of them given the risk of the transition period ending without a trade deal. Businesses that have never made contingency plans should identify when they might need to start doing so to be ready in time for the end of 2020 if necessary, and keep a close eye on the trade negotiations in the meantime.

Another important issue to watch in 2020 will be progress towards new UK-wide ‘frameworks’ to replace the current EU-harmonised rules in various key sectors, such as agriculture, fisheries, the environment and public procurement. Scottish businesses in particular should keep in mind that such matters will (at least in principle) become the Scottish Parliament’s responsibility post-Brexit.

The Scottish Parliament’s powers in these areas are currently limited by EU law, which requires a broadly identical approach across the EU, but are not otherwise restricted (for example by being ‘reserved’ to Westminster under the Scotland Act, in the way that matters such as the constitution and defence are reserved). Accordingly, once the EU law restrictions disappear at the end of the transition period (and subject to any agreement that might be reached with the EU), the Scottish Parliament and the UK’s other devolved legislatures will each be able to adopt very different approaches in these important areas.

Negotiations are therefore ongoing between the UK and devolved governments on new UK frameworks, to ensure the harmonisation that flows from the common EU rules is not replaced by competing regulatory regimes that could create new barriers to intra-UK trade. The UK Government has the power to make orders preventing the devolved institutions from doing anything they could not have done pre-Brexit, intended to preserve the status quo while these frameworks are negotiated, but the Scottish Government regards those powers as illegitimate and has threatened to withdraw from negotiations if they are used. The possibility of divergence will not arise as long as we are in the transition period but, unless the framework negotiations go well, cross-border political relations could become even tenser as 2020 progresses.

 

This article first appeared in the Herald

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