Brexit 1.0 done. Brexit 2.0 looms: what’s next?

The UK formally left the EU six months ago. This article sets out some of the key points about the next stage of the Brexit process at the end of the transition period - Brexit 2.0 -  and a link to a guide on what businesses need to do now.

Although the UK has left the EU (Brexit 1.0), during the current transition period (from 11pm on 31 January until 11pm on 31 December 2020) nothing much has changed: the UK continues to apply EU law, and any judgments from the Court of Justice of the European Union are still binding on the UK.

There are some exceptions though. Since 31 January, the UK no longer participates in the democratic institutions of the EU: no UK MEPs have given any speeches to the European Parliament, and no UK Commissioner has roamed the corridors of the Berlaymont office block in Brussels. The UK is now represented by the UK Mission to the EU on the Avenue d’Auderghem, a three-minute walk away from the EU Commission’s HQ.

What’s next?

This means that, in a sense, we are roughly at Brexit 1.5. And the clock to Brexit 2.0 is ticking fast. There will doubtless be quite a few exuberant walks between EU venues and UKMis Brussels over the next few weeks now that UK and EU negotiators are able to meet face to face again. Discussions will also be held in London, with the last round of talks, the sixth of six, scheduled for 17 August.

There’s a lot to discuss. In 1987, during a heatwave, the air conditioning spluttered to a halt in the old Charlemagne building in Brussels. Lord John Kerr, the man who drafted Article 50 and former UK ambassador to the EU, recalled that ‘the fact it was hot and uncomfortable and unpleasant’ worsened a quarrel between the UK and the EU. With current negotiations going down to the wire, and organisations such as the CBI and the TUC calling for a good and decent deal with the EU respectively, the need for negotiators on both sides to be well-fed, well-watered, and at an optimum (non-heatwave) temperature is more important than ever.

A lot is clearly at stake and seemingly inconsequential issues could have a similar disproportionate impact. What’s more, six months is a fiendishly short time in which to agree a deal or mini-deals, particularly given the ongoing challenges of COVID-19 and the fact that any UK-EU deal also needs to be ratified by the EU, and possibly by national parliaments and regional assemblies of the 27 EU member states.

What is clear is that the deadline to extend the transitional period has now passed. Unlike previous deadlines in the Brexit process, it seems unlikely that this period can easily be extended. The result? Brexit 2.0 will happen at 11pm (UK-time) on 31 December 2020, deal or no deal. Negotiators on both sides of the Channel have their work cut out.

“Getting Brexit done” isn’t a one-off event, and there is a lot that you can do to protect your business for Brexit 2.0 and the years ahead. History tells us that unexpected events could scupper any nascent deal. A second spike in COVID-19 might mean that UK-EU face-to-face meetings are off the agenda again, making any deal by video-conferencing that bit more elusive. An air-conditioning system might break down at the worst possible moment with both parties walking away, minutes from a possible breakthrough. But, of course, the realpolitik of being so close to each other in geographical terms might bring both sides together at the last minute.

If Brexit has taught us anything over the past four years, it is to expect the unexpected. Just as businesses have been forced to build their resilience in light of the COVID-19 pandemic, they need to be doing the same for Brexit 2.0.

Request your copy of our updated Brexit guide to see what you need to be thinking about - and doing now - as the Brexit 2.0 clock ticks down.