"A solution looking for a problem"—should Britain seek a transitional Brexit deal?

Answers from senior political figures vary wildly

August 02, 2017
Brexit secretary David Davis, with EU chief negotiator Michel Barnier in the background. Photo: Wiktor Dabkowski/DPA/PA Images
Brexit secretary David Davis, with EU chief negotiator Michel Barnier in the background. Photo: Wiktor Dabkowski/DPA/PA Images

Bar an unlikely upset, Britain is on its way out of the European Union. But while Brexit looks near-certain, the nature of our future relationship with Europe, not to mention the timings of the exit process, remain up in the air. The fierce debate on transitional arrangements over recent days has driven this home. These arrangements would last beyond the Article 50 deadline of March 2019 and—in theory at least—facilitate a smoother exit from Europe than we would otherwise have.

Discussion with senior political figures confirmed the extent of the disagreement. Nigel Lawson, Chancellor in Margaret Thatcher's government and giant of the "Leave" campaign, told me that when it comes to the length of transition, "one year is enough." This remark stands in stark contrast to recent comments by Philip Hammond, who is pushing for a transitional deal of up to three years.

Lawson's reasoning? "What we should be focusing on is the policies we intend to pursue after Brexit, when we are free to choose." The thinking seems to be that messing around too much with fiddly interim agreements is silly given Britain's exciting independent future.

Peter Lilley, Shadow Chancellor under William Hague, former Cabinet Minister and, like Lawson, a tiger of the Brexit cause, was similarly bullish in his deviation from the government line. "Transition deals are a solution looking for a problem," he told me.

"If we get a free trade deal with the EU there is no need to transition between zero tariffs and zero tariffs nor identical regulations and identical regulations." On the other hand, "if the EU refuses a free trade deal it will be to show that leaving creates problems—so they won’t agree to mitigate those problems with a transition deal."

"Transition deals are a solution looking for a problem"
The argument is that in effect a transition deal would be purposeless: either the EU will work with us in good faith, rendering one unnecessary, or penalise us for leaving, in which case there is not much to be done.

This is far from the consensus in the Tory party. Nicky Morgan, former Education Minister, stressed to me the vital importance of an interim deal: the government must negotiate one with Europe "to avoid the uncertainty of a cliff edge leaving date." In her opinion, "Businesses and employers have been clear that they need a time limited transitional phase after March 2019 to prepare for life outside the EU."

The official government line is the same: Michael Gove insisted in late July that the UK "will have an implementation period... that is something around which the government and the cabinet is united."

But even if the cabinet agrees on an interim deal in principle, the details will provoke fierce clashes. Just three days ago, Liam Fox expressed scepticism about Hammond's position.

Gina Miller, who defeated the government at the Supreme Court after it tried to trigger Article 50 without parliamentary approval, had stern words of warning for Tory Brexiteers. The government has "an almighty to-do list," but the upcoming German elections will interfere, meaning that we have "in effect 12 months" to negotiate before the March 2019 deadline.
"'Five years is not an unrealistic time-frame' for a transitional arrangement"
This lack of time means a transitional deal is essential. But "if the EU stick to their soundings that they’re making at the moment, as much as I’d love to see a transitional arrangement, they're talking about two years which doesn’t solve the problem for us—two years isn’t long enough."

Kenneth Armstrong, Director of the Centre for European Legal Studies at Cambridge, agreed. "Five years is not an unrealistic time-frame" for a transitional arrangement, he said. This is because "the length of transition depends not just on how long it might take for the UK and EU to negotiate a deep and special partnership, but also how long it might take for such a deal to be ratified and legally in force."

Any interim arrangement will be fraught with difficulty. Britain may be forced into accepting continued free movement of people until Brexit proper, and would almost certainly have to accept a continued role for the European Court of Justice. Yet Theresa May has insisted that ending the juristiction of the Luxembourg court is a Brexit "red line."

"Finding a political agreement on the role of the Court of Justice is one impediment to an orderly and transitional Brexit," Armstrong explained. "But even if a political deal can be done, there is a risk that if that deal is referred to the Court for an opinion on its legality, the Court might find fault, pushing both the UK and the EU off the cliff edge." British voters may have chosen to leave the EU—but they did not vote for such legal and economic chaos.

With complexity like this ahead, there is a chance that Britain enters into a transitional agreement and then, as the downsides of full Brexit become clearer, is unwilling to take the next step. The UK could end up "lost in transition," Armstrong told me.

Could Britain even end up retreating altogether, mid-way through the Brexit process? Liberal Democrat leader Vince Cable suggested as much recently, and confirmed to me: "A year after the referendum it is becoming increasingly clear that the problems of a hard Brexit are so enormous" that he is "beginning to think that Brexit may never happen."