The United Kingdom and the European Union struck a deal to unlock divorce negotiations, opening the way for talks on what businesses are keenest to nail down—the nature of the post-Brexit future.
The deal, made before dawn last Friday after rushed talks through the night, clears the path for discussions to start next year on the new terms of trade between the UK and its biggest commercial partner. The EU was quick to put down a marker of where it thinks those talks are headed and it’s far short of what May has said she wants.
The agreements outlined last Friday, including a €45-billion ($53- billion) divorce bill and vague promises on the sensitive issue of the Irish border, will come back onto the table if trade talks turn sour. While the European Union made some concessions, the United Kingdom did most of the running.
Businesses have won some time, as the EU said it was prepared to move quickly to discuss the terms of a transition period that Britain wants to put in place for two years after the divorce.
In reality, commission officials expect it to be longer—the transition could be twice as long as Prime Minister Theresa May says—and a final accord signed and ratified by 2025, according to a person familiar with the EU’s thinking.
Negotiations about the transition deal can start in January, although trade talks won’t start until February or March, according an EU official. That’s not necessarily a bad thing for the UK government, which is still to work out its common position on what it’s after.
After eight months of haggling, which, at times, has been bitter, EU officials warned that the hardest part of the Brexit process lies ahead.
Trade deals don’t usually cover the service industries that make up about 80 percent of the UK economy. May has agreed to pay the bill and make other concessions in order to secure a good trade deal, but the country wants that accord to include its crucial financial services.
The risk is that if trade talks run into trouble, political support at home for those concessions might drain away. May has already faced down one attempted coup and there’s a sense she’s one crisis away from losing her job.
Once the euroskeptics realize what kind of trade deal is on offer, their hesitant support of May’s concessions may disappear, Eurasia’s Mij Rahman said.
“The rubber will hit in the road in phase two,” he added.
The agreement May came to Brussels to sign covered the rights of EU citizens, the financial settlement, and a solution to keep the border between Northern Ireland and the Republic as open as it is now after Brexit. Bloomberg News