Time is moving swiftly on, and it looks like not even COVID-19 could cause a transition period extension. So, where is Brexit now?
Words by Akriti Gupta, Public Policy Officer, Chartered Accountants Ireland
Despite the global economy and society being in turmoil because of worldwide lockdowns, Brexit has not gone away. With the COVID-19 crisis hanging over Brexit talks, most policymakers initially believed that the economic uncertainty caused by the pandemic would force the UK to request an extension to the transition period. However, the UK has now confirmed that it will not be seeking such an extension.
Four weeks of intensive negotiations later, it is also clear that little progress has been made in key areas of divergence. With a stand-off arising between the EU and UK negotiators once again, the clock is rapidly winding down to the 31 December 2020 end of transition period deadline. The language being used by negotiators on either side also shows increasing levels of frustration, with words used such as "backtracking on commitments" and "regretting the remote format".
Both sides have so far outlined sharply contrasting positions as they continue to make their individual positions clear. EU leaders maintain their position as "ambitious" and seeking a wide-ranging agreement – subject to conditions. Setting out the EU's position, chief negotiator Michel Barnier said there could be no trade deal unless the UK agreed to a "level playing field" and did not undercut EU regulations. Meanwhile, UK ministers and officials continue to maintain that being able to diverge from EU rules and standards was the essence of Brexit and the UK's "new footing as an independent sovereign nation".
At the moment, it's clear that there is little intention to compromise on the key sticking points; namely the so-called "level playing field", fishing rights in UK waters, legal oversight of the European Court of Justice and binding commitments on financial markets. All these engagements can be found in the revised Political Declaration on the shape of the EU-UK relationship, designed to form the basis for a future trade agreement. However, this declaration is legally non-binding, as opposed to the Withdrawal Agreement, which has the force of an international treaty. This, in turn, highlights how the commitments made may not be fully impermeable, especially given that the UK government has also made it clear that, from their perspective, there will be no full regulatory alignment with the EU after Brexit.
Although a recent meeting between UK Prime Minister Boris Johnson and senior EU officials shows a commitment from both sides to reach a viable agreement, an impasse in the negotiations still remains. The benefit of time has ebbed away because of continuous delays to the process and further disruptions caused by the COVID-19 pandemic. With the outcome of Brexit negotiations a mystery yet again, all signs point to the prospect of a 'no deal' situation still being on the table. Although experts believe that an agreement is possible, it may be several months before meaningful compromises take place.
Once again, it is going to be down to the wire.
You can learn more about the current state of Brexit and what it means for members on the Accountancy Ireland Podcast, found on www.accountancyireland.ie, Apple Podcasts and Spotify.
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