This year will decide Britain's future. Will there be a transition period after Brexit? What will the UK's economic relationship with the EU look like? And will all be "smooth and orderly," as Theresa May has promised?
Image: picture-alliance/Daniel Kalker
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Phase I: Early January to late March — The transition period
During this period Britain would still be under all the obligations of an EU member: it would have to continue to pay contributions and to guarantee freedom of movement, and it would remain a member of the single market. However, the UK would lose its voting rights in the EU, meaning its status would be similar to that of Norway.
Norway’s EU deal a model for UK?
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Brussels is prepared to make one concession concerning the new trade agreements the UK would like to establish for its post-EU future: During the transition period Britain would be allowed to negotiate and make agreements, but not implement them.
At the same time the EU Commission wants to hold a series of seminars for member states, during which they would present their respective economic relationships with the United Kingdom and formulate their preferences on what these relationships should be like in future. Individual interests would then be combined to create a mandate for the EU’s chief negotiator, Michel Barnier, to proceed. Fundamental European principles and treaties must be upheld going forward.
London: The British Cabinet held its first detailed discussions about the country’s post-Brexit trading future with the EU just before Christmas 2017. Broadly speaking, the Cabinet is still divided into two opposing camps. The Brexiteers want to leave the single market and the customs union, and to abruptly ditch all EU legislation. They dream of a “free Britain,” signing international trade agreements and standing up to the EU in economic might. Foreign Minister Boris Johnson, Trade Secretary Liam Fox, and hardline Conservative MP Jacob Rees-Mogg are some of the politicians belonging to this faction.
In the other camp, Finance Minister Philip Hammond, Interior Minister Amber Rudd and their supporters want as soft a Brexit as possible. They fear a collapse of the British economy. They want to retain as much EU regulation as possible in order to protect access to Britain’s biggest export market. They only support Brexit out of loyalty to the Conservative party.
Prime Minister Theresa May has announced that she will make another speech at the beginning of the year in which she intends to outline what Britain wants. In principle, she and Brexit Minister David Davis want a tailor-made solution that would allow the British to retain many of their rights while freeing them of their European Union obligations.
This is where the transition phase will be decided, the divorce bill legally drawn up and Michel Barnier given a mandate to negotiate the EU’s future relationship with Britain.
What is still not clear is whether or not the British government will have defined a realistic position by then. It is also not a given that EU member states will remain as united as they have so far: Conflicts of interest may arise.
Phase II: April 2018 to late October 2018
Brussels: The goal for October 2018 is to finalize a withdrawal treaty governing the UK's departure from the EU as well as a political framework agreement covering the future relationship between the two entities. In order to achieve this goal in just six months, the British side will have to get involved in much more intensive and frequent negotiations than it has up till now. A joint declaration of principles of this kind would need to define the basis for subsequent trade talks, which would start in 2019.
The EU heads of government recently said that the aim is to guarantee a level playing field and fair competition. If the EU-UK relationship is seen as a sliding scale, then the more EU regulation the British side retains, the more access it will retain to the single market, and vice versa. However, Brussels has warned that there can be no cherry-picking, i.e. the British will not be able to pick and choose its preferred rules for crucial business sectors. The EU is under pressure not simply to give away the advantages of membership. German Chancellor Angela Merkel has emphasized that Britain’s situation in relation to the EU will be worse after it leaves.
To date, Michel Barnier has been describing the EU’s offer as "Canada Dry." This reference to Brussel's economic relationship with the North American nation indicates a simple trade agreement with broad exemption from duty for goods, but with no market access for services.
Barnier is offering a "Canada Dry" deal but the UK would like a "Canada plus plus plus" dealImage: Reuters/Y. Herman
London: Much depends on whether Theresa May remains head of government. At present, the majority of Tories want to keep her in office because she balances out the Brexit contradictions. However, the political situation in London could change.
Until now, May’s government, including Brexit Minister David Davis, have been seeking an agreement that he describes as “Canada plus plus plus” — market access for goods and services, including the financial market. The British want to make their own rules, and they want the EU to recognize these rules as equivalent to its own. This essentially corresponds to the promise of prominent Brexiteer Boris Johnson, who claimed that the British could have their European cake and eat it too. This possibility is categorically rejected by Brussels. The question is whether there is a line of compromise somewhere between these irreconcilable visions. In principle, as the divorce talks have shown, the EU, being the biggest trading bloc in the world, has the upper hand.
By this point the final draft of the Brexit withdrawal deal and the plans for a future trade relationship need to be in place and gain approval from the EU Council. This is because after the summit, the EU parliament will need to sign off on the package. The bloc's member countries will also need several months for their national parliaments to consider the proposal for the new EU-UK economic agreement, and the UK parliament will review the terms of the final withdrawal agreement, as well. Skeptics believe this deadline will be impossible to meet.
Grace period: End of October until the EU summit on 13-14 December
There may be a great deal of argument towards end of the process, and these two months could serve to bring in last-minute compromises to end disagreements on all sides. Up till now the Brexiteers have firmly suppressed the reality that any new agreement is going to be extraordinarily complex. New rules will have to be written for every field in every sector, from air travel to scientific exchange to financial services and beyond. Even a basic agreement on this will inevitably contain a lot of explosive material, for both the European and the British sides.
Open questions
Until now, ideology has been the driving force behind Brexit. Between now and the end of next year, however, economic factors will presumably also influence Britain’s negotiating strategy. Researchers have calculated that Brexit has already cost Britain around one percent in economic growth in 2017. At the same time, inflation has gone up by three percent, principally because of the drop in the value of the pound. Stagnant wages mean living conditions for employees are deteriorating, and as many British private households are heavily in debt, there is the danger of a wave of bankruptcies. The United Kingdom is already losing more money as a result of Brexit than it pays in EU contributions, according to the Financial Times, which calculates the loss at around 340 million pounds (€382 million; $455 million) a week.
Will Britons back down from a Brexit before the departure date in March 2019?Image: Reuters/P. Nichols
If no agreement is reached on the transition phase by March 2018, companies are likely to start implementing Brexit emergency plans. Banks have already started setting up subsidiaries on the continent. Time will be getting tight for pharmaceutical companies and others that need EU licenses for their products. If the British government is not in a convincing position by next summer, we may see the start of a “Brexodus” of companies moving abroad.
There is no guarantee that a majority of the British Cabinet will be able to agree on a Brexit model for the framework agreement with the EU by autumn of next year. There may be fresh elections with unforeseeable outcomes. A recent survey indicates that public opinion on Brexit is beginning to turn. It’s not clear where a new, possibly Labour, government would stand on the issue. As we head into 2018, on the British side almost all the crucial questions about Brexit are still open.
Brexit timeline: Charting Britain's turbulent exodus from Europe
Britain shocked the world when it voted to leave the European Union on June 24, 2016. DW traces the major events that have defined Brexit so far.
Image: picture-alliance/empics/Y. Mok
June 2016: 'The will of the British people'
After a shrill referendum campaign, nearly 52% of British voters opted to leave the EU on June 23. Polls had shown a close race before the vote with a slight lead for those favoring remaining in the EU. Conservative British Prime Minister David Cameron, who had campaigned for Britain to stay, acknowledged the "will of the British people" and resigned the following morning.
Image: picture-alliance/dpa/A. Rain
July 2016: 'Brexit means Brexit'
Former Home Secretary Theresa May replaced David Cameron as prime minister on July 11 and promised the country that "Brexit means Brexit." May had quietly supported the Remain campaign before the referendum. She did not initially say when her government would trigger Article 50 of the EU treaty to start the two-year talks leading to Britain's formal exit.
Image: Reuters/D. Lipinski
March 2017: 'We already miss you'
May eventually signed a diplomatic letter over six months later on March 29, 2017 to trigger Article 50. Hours later, Britain's ambassador to the EU, Tim Barrow, handed the note to European Council President Donald Tusk. Britain's exit was officially set for March 29, 2019. Tusk ended his brief statement on the decision with: "We already miss you. Thank you and goodbye."
Image: picture alliance / Photoshot
June 2017: And they're off!
British Brexit Secretary David Davis and the EU's chief negotiator, Michel Barnier, kicked off talks in Brussels on June 19. The first round ended with Britain reluctantly agreeing to follow the EU's timeline for the rest of the negotiations. The timeline split talks into two phases. The first would settle the terms of Britain's exit, and the second the terms of the EU-UK relationship post-Brexit.
Image: picture alliance/ZUMAPRESS.com/W. Daboski
July-October 2017: Money, rights and Ireland
The second round of talks in mid-July began with an unflattering photo of a seemingly unprepared British team. It and subsequent rounds ended with little progress on three phase one issues: How much Britain still needed to pay into the EU budget after it leaves, the post-Brexit rights of EU and British citizens and whether Britain could keep an open border between Ireland and Northern Ireland.
Image: Getty Images/T.Charlier
December 2017: Go-ahead for phase 2
Leaders of the remaining 27 EU members formally agreed that "sufficient progress" had been made to move on to phase two issues: the post-Brexit transition period and the future UK-EU trading relationship. While Prime Minister Theresa May expressed her delight at the decision, European Council President Tusk ominously warned that the second stage of talks would be "dramatically difficult."
Image: picture-alliance/AP Photo/dpa/O. Matthys
July 2018: Johnson, Davis resign
British ministers appeared to back a Brexit plan at May's Chequers residence on July 6. The proposal would have kept Britain in a "combined customs territory" with the EU and signed up to a "common rulebook" on all goods. That went too far for British Foreign Minister Boris Johnson and Brexit Secretary David Davis, who resigned a few days later. May replaced them with Jeremy Hunt and Dominic Raab.
Image: picture-alliance/empics/G. Fuller
September 2018: No cherries for Britain
May's Chequers proposal did not go down well with EU leaders, who told her at a summit in Salzburg in late September that it was unacceptable. EU Council President Tusk trolled May on Instagram, captioning a picture of himself and May looking at cakes with the line: "A piece of cake perhaps? Sorry, no cherries." The gag echoed previous EU accusations of British cherry-picking.
Image: Reuters/P. Nicholls
November 2018: Breakthrough in Brussels
EU leaders endorsed a 585-page draft divorce deal and political declaration on post-Brexit ties in late November. The draft had been widely condemned by pro- and anti-Brexit lawmakers in the British Parliament only weeks earlier. Brexit Secretary Dominic Raab resigned along with several other ministers, and dozens of Conservative Party members tried to trigger a no-confidence vote in May.
Image: Getty Images/AFP/E. Dunand
December 2018: May survives rebellion
In the face of unrelenting opposition, May postponed a parliamentary vote on the deal on December 10. The next day, she met with German Chancellor Angela Merkel to seek reassurances that would, she hoped, be enough to convince skeptical lawmakers to back the deal. But while she was away, hard-line Conservative lawmakers triggered a no-confidence vote. May won the vote a day later.
Image: Getty Images/S. Gallup
January 2019: Agreement voted down
The UK Parliament voted 432 to 202 against May's Brexit deal on January 16. In response to the result, European Council President Donald Tusk suggested the only solution was for the UK to stay in the EU. Meanwhile, Britain's Labour Party called for a no-confidence vote in the prime minister, her second leadership challenge in as many months.
Image: Reuters
March 2019: Second defeat for May's deal
May tried to get legal changes to the deal's so-called Irish backstop in the weeks that followed. She eventually got assurances that the UK could suspend the backstop under certain circumstances. But on March 12, Parliament voted against the revised Brexit deal by 391 to 242. EU leaders warned the vote increased the likelihood of a no-deal Brexit. Two days later, MPs voted to delay Brexit.
Image: picture alliance/AP Photo/T. Ireland
March 2019: Extension after second defeat
Following the second defeat of May's divorce deal, the European Council met in Brussels on March 21 to decide what to do next. EU leaders gave May two options: delay Brexit until May 22 if MPs vote for the withdrawal deal or delay it until April 12 if they vote against the deal. If the deal were to fail again in Parliament, May could ask for a long extension.
Image: picture-alliance/AP Photo/F. Augstein
March 2019: Brexit deal rejected a third time
On March 29, the day that the UK was supposed to leave the EU, British lawmakers voted for a third time against May's deal — rejecting it this time with a vote of 344 to 286. Following the latest defeat, May approached the main opposition Labour leader Jeremy Corbyn in an attempt to find a compromise, angering hardline Brexiteers in her own Conservative party.
Image: picture-alliance/AP Photo/House of Commons/M. Duffy
April 2019: Brexit delayed until Halloween
With the April 12 deadline looming after the third defeat of May's deal, EU leaders met again in Brussels to discuss a second delay. The only question was how long should it be? In the end, the UK and EU agreed to a "flexible" extension until October 31 — which can end sooner if the Brexit deal is approved. The UK had to take part in EU elections in May because their exit wasn't secured in time.
Image: Reuters/E. Plevier
May 2019: Prime Minister Theresa May resigns
Weeks of talks between Prime Minister Theresa May and the Labour party to reach a deal proved unsuccessful and further eroded her political capital. She triggered an angry backlash from her party after she tried to put the option of a second referendum on the table. The series of failures led May to announce her resignation, effective June 7, in an emotional address.
Image: Reuters/H. McKay
June 2019: Search for a new prime minister
After Theresa May announced on June 7 that she would leave office, other members of her Conservative party began clamoring for the top job. Within a month, the leadership battle came down to Jeremy Hunt (left), an EU proponent who fears a no-deal scenario, and Boris Johnson (right), one of the main proponents of Brexit.
July 2019: Prime Minister Boris Johnson
At the end of July 2019, Johnson was officially named Theresa May's successor as British prime minister. "We are going to energize the country, we are going to get Brexit done by October 31," he said after he was elected leader of the Conservative Party.
Image: Imago Images/Zuma/G. C. Wright
September 2019: Johnson's election threat
Conservative rebels and opposition MPs backed efforts to delay an October 31 Brexit deadline in fear of a no-deal departure. In response, Johnson called for a general election, saying his government cannot rule without a mandate after he stripped 21 rebel MPs of their Conservative status. The Labour Party said it would not back elections until legislation to block a no-deal Brexit was in place.
In late September, Britain's highest court ruled that Johnson's decision to suspend Parliament ahead of the UK's planned exit was unlawful. "This was not a normal prorogation in the run-up to a Queen's Speech," said the Supreme Court. Political rivals immediately called on Johnson to leave his post. Johnson said he would abide by the court ruling, though said he "strongly" disagreed.
Image: Reuters/H. Nicholls
October 2019: A new deal
British Prime Minister Boris Johnson managed to secure a deal with European negotiators that would allow the UK to leave the EU in an orderly manner. The deal received unanimous backing from the leaders of 27 other member states. But an attempt to get the UK Parliament to sign off on the deal failed. Instead, Parliament pushed for the Brexit deadline to be extended until the end of January 2020.
Image: picture-alliance/AP Photo/F. Augstein
December 2019: Lawmakers vote for Johnson's Withdrawal Bill
On December 22, UK lawmakers vote for Prime Minister Johnson's European Union withdrawal bill, which will see a leave date of January 31 2020 enshrined in law. Getting a majority to vote to pass the bill in the lower house has proven a major sticking point for the PM, but following a general election Johnson's Conservative party won control of the house and the bill passed with a 124 majority.
Image: picture-alliance/empics/House of Commons
December 2020: EU, UK 'finally' reach trade deal
After months of disagreements over fishing rights and future business rules, the EU and UK clinched a post-Brexit trade deal on Christmas Eve. Prime Minister Boris Johnson hailed the deal, saying the UK has "taken back control of our laws and our destiny." The deal will allow the UK and the EU to trade without tariffs, but also impose limitations on free movement and financial services.
