Businesses welcome Brexit transition deal with caveats

BRUSSELS • The UK and European Union (EU) have reached a deal on the transition agreement that businesses are keen to get pinned down for the period immediately after Brexit.

Brexit Secretary David Davis (left)  and chief EU negotiator Michel Barnier (right) briefed reporters in Brussels. Leaders are expected to sign off on the agreement at a summit on Thursday and Friday.

The UK has been trying to secure a written promise from the EU about the transition agreement, according to a person familiar with the situation.

Businesses are cranking up the pressure to make the transition as solid — and useful — as possible. They are becoming increasingly aware that any agreement reached at the summit this week will be a political commitment — not legally binding until the final withdrawal agreement is signed early next year.

“Business leaders will welcome the announcement of a provisional agreement on an implementation period and congratulate the UK government for heeding the call of business and making it a priority early on,” Allie Renison, head of Europe and trade policy at the Institute of Directors, said in statement. “We are, however, concerned that not enough attention is being given now to the finer details and practical implications of transition.”

But the British Chambers of Commerce (BCC) was more positive. “While some companies would have liked to see cop- per-bottomed legal guarantees around the transition, the political agreement reached in Brussels is sufficient for most businesses to plan ahead with a greater degree of confidence,” BCC DG Adam Marshall said in a statement.

Davis wants talks on a trade deal to begin as soon as possible, pointing out that it can’t be signed until after the UK actually leaves the bloc. “The most important thing is we need to get on with this now,” he said.

Barnier warns that there’s “a considerable amount of work” to do.

“The transition will be of limited duration as was requested by the government of the UK and by the EU,” he said. The period will be used to finalise future relationship, a period that will be “intense and demanding”.

On the transition agreement, Davis said: “It’s Dec 20, and yes it’s 21 months, which is near enough to the two years we asked for.”

Davis said the transition agreement means businesses now have certainty about the period immediately after Brexit; they can go ahead with investment decisions and be sure there’s no disruption. But Barnier repeated his warning that the transition only becomes a certainty when the final withdrawal agreement is ratified.

Barnier said both sides have agreed that the backstop solution for Northern Ireland — full regulatory alignment with the EU — must form part of the legal text of withdrawal agreement. Detailed talks on Northern Ireland will take place in coming weeks.

“We are ready to look at all options which allow us to meet our objective in a constructive way,” he said.

Davis’ tone is bullish, including on finding a solution for Northern Ireland. “While there’s no agreement on the right operational approach, we know what we need to do and we are going to get on with it.” — Bloomberg