It’s more than four years since Britain voted to leave the European Union, and almost a year since Prime Minister Boris Johnson won an election by vowing to “get Brexit done.” Spoiler alert: It is not done. As negotiators from the two sides hunker down for their final weeks of talks on an elusive trade agreement, Britain and the EU still don’t know whether they will begin 2021 with an organized partnership or a messy rivalry.
“A deal is the likelier case now, but I wouldn’t be banking the house on it yet,” said trade expert David Henig, U.K. director at the European Centre for International Political Economy.
Here’s a look at where things stand:
HASN’T BRITAIN ALREADY LEFT THE EU?
The U.K. has quit the now 27-nation bloc politically, but not economically. Britain’s June 2016 vote to leave was followed by protracted talks on divorce terms. When then-Prime Minister Theresa May finally struck an exit deal with the bloc, Britain’s Parliament repeatedly vetoed it.
May finally resigned in defeat last year. Her successor, Johnson, secured his own withdrawal agreement with the EU in October 2019, allowing for the U.K. to leave on Jan. 31. The two sides gave themselves an 11-month transition period to strike new agreements on trade, security and a host of other areas. When that period ends on Dec. 31, Britain will leave the EU’s economic embrace after decades of membership.
With or without a deal, Britain will leave the EU’s customs union and single market for goods and services, and will no longer have unfettered access to its biggest trading partner.
The two sides are hoping to agree a free trade deal with no tariffs and no quotas. Even if that happens, the British government says businesses must prepare for new paperwork such as customs declarations, and “short-term disruption” to cross-Channel trade. It is building vast parking lots and customs clearance depots near ports, and says a “reasonable worst-case scenario” could see backlogs of 7,000 trucks waiting to enter the EU.
A no-deal exit would be far more disruptive, bringing the instant imposition of tariffs on many goods at levels set by the World Trade Organization — including a 10% tax on cars and more than 30% on dairy products. Whole sectors of the British economy could be ruined, prices would rise and there could be temporary shortages of some goods.
WHY HASN’T THERE BEEN A DEAL YET?
Both sides say they want a deal, but their views of what that means are fundamentally at odds. The bloc accuses Britain of wanting to “have its cake and eat it” — retaining access to the EU’s lucrative markets without agreeing to follow its rules. So it is demanding strict legal guarantees on the governance of any trade deal.
Britain says the bloc is making unreasonable demands and is failing to treat it as an independent, sovereign state. Talks have also been soured by a lack of trust. Many in the EU are wary of Johnson after years of hearing him make disparaging and exaggerated claims about the bloc. Trust plunged even lower when Johnson announced plans last month to pass a law that breaches part of the legally binding withdrawal agreement that he made with the bloc just a year ago.
Frustration boiled over last week when Johnson declared that talks were over unless there was a “fundamental” change of stance from the EU. There wasn’t, but conciliatory words from EU chief negotiator Michel Barnier about the need for compromise on both sides coaxed Britain back to the negotiating table.
The two teams say they will meet daily, including weekends, and see mid-November as the deadline for a deal if it is to be ratified and in place by year’s end.
WILL THERE BE AN AGREEMENT?
For all the tiffs and tantrums, the two sides have managed to reach agreement in many areas, but there are big gaps in two main areas.
One is the economically small but symbolically huge topic of fishing. EU nations such as France, Spain and the Netherlands want to retain their fishing boats’ access to British waters, while the U.K. is determined to assert its authority as an “independent coastal state.”
The other is about ensuring fair competition and settling disputes — what’s known as “level playing field” provisions. The EU fears Britain will slash social and environmental standards and pump state money into U.K. industries, becoming a low-regulation economic rival on the bloc’s doorstep.
The U.K. insists it won’t lower standards. But U.K. negotiator David Frost said this month that Britain would not “accept level playing field provisions that lock us in to the way the EU do things.”
WHAT HAPPENS IF THERE IS NO DEAL?
Britain’s prime minister refers to a no-deal exit as leaving on “Australian terms” — since Australia has no comprehensive trade deal with the EU — and insists Britain will “prosper mightily” even if that happens.
But most economists say leaving like that would deal a severe blow to an economy already reeling under the coronavirus pandemic. Adam Marshall, director-general of the British Chambers of Commerce, said British businesses facing “the triple threat of a resurgent coronavirus, tightening restrictions and a disorderly end to the transition period” desperately need the clarity that a deal would provide.
As well as the economic impact, a no-deal exit would endanger everything from U.K. police forces’ access to EU crime databases to U.K.-EU cooperation in science. “What really makes a difference is the underlying cooperation,” Henig said. “Deal and you have a basis for clearing up problems. No deal and you have a very hard landing, no way to manage the process afterwards, continued uncertainty — and that’s a much bigger hit.”