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BREXIT: two-year transition period could be extended

UK business secretary Greg Clark and EU Brexit negotiator Michel Barnier have both spoken in support of extending the Brexit transition period by two years, ahead of confirmation of the draft withdrawal agreement between the UK and EU.19 Nov 2018

UK business secretary Greg Clark and EU Brexit negotiator Michel Barnier have both spoken in support of extending the Brexit transition period by two years, ahead of confirmation of the draft withdrawal agreement between the UK and EU.

At the weekend Barnier suggested to ambassadors from the EU’s remaining 27 member states that the transition period could be extended until the end of 2022, according to media reports.

Under current proposals, the transition period will maintain the relationship between the EU and UK, including free movement of people.

Clark told BBC Radio 4’s Today programme on Monday that he backed an extension of the transition period at the UK’s request, to support businesses in the changes they had to make to prepare for Brexit.

Clark said the extension would only be requested if a trade deal between the EU and UK had not been finalised by the end of the current transition period, which is scheduled to last until December 2020.

He said businesses wanted a transition period rather than a “cliff edge” and preferred one change rather than two. However, Clark said the proposal of an extension until the end of 2022 would be a “maximum period”.

Brexit advisory expert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com, said an extension was likely to be needed.

“Negotiating all the detail of the future EU-UK trade agreement in the 21 month transition period, from 30 March 2019 until 31 December 2020, would be extremely challenging, and likely unrealistic,” Lougher said.

“The time taken to conclude recent trade agreements involving the EU, for example its recent agreement with Canada, suggests that a much longer time period is likely to be necessary, and given the scale of the task even a two-year extension might not be enough,” Lougher said.

It is not the first time a longer transition period has been floated. In February a draft text suggested the transition should last for “how long it will take to prepare and implement the new processes and new systems that will underpin the future partnership" between the UK and the EU.

The date of 31 December 2020 was set down in negotiating directives at the start of 2018, to align with the end of the EU’s current seven-year budget period.

EU leaders said in January that during the transition period the UK would continue to participate in the EU customs union and single market, and would remain bound by EU trade policy, customs laws and tariffs. It would not be able to participate in EU decision-making, and would no longer be represented at the European Commission, European Parliament and European Council during this time.

A detailed draft withdrawal agreement was published last week, but still needs to be approved by the UK parliament. Lougher said businesses needed to continue planning for a range of possible outcomes, including a no-deal scenario.

The draft agreement states that the transition period can be extended under a joint agreement by both the EU and UK before 1 July 2020.