#transitional arrangements

[oneminutemoneymagazine]

The UK Leaving the EU: How much are we going to pay them now?

The EU27 are not prepared to even talk to us about the terms of our future trading relationship until the transitional or implementation agreement has been decided.  You may recall that they made a take it or leave it offer and it seems that we have agreed to absolutely everything.

We will remain in the EU Single Market and Customs Union for another 21 months, which will take us up to the end of 2020.  This coincides with the end of the EU’s seven year accounting period, which may turn out to be a significant point of time (please see the penultimate paragraph below).

Our net annual rate of contribution to the EU Budget is open to interpretation, but I’m going to work on a figure of £11bn.  We have already paid £8.25bn while valuable time was being wasted between the referendum in June 2016 and issuing the Article 50 letter in March 2017.  There is then the £22bn for the two years to March 2019, then £19.25bn for the 21 months to the end of 2020.

Annual contributions to cover “existing commitments” will continue for decades from 2021 at a reducing rate.  Unless I missed it, we have never been told clearly how much.  Also will any commitments undertaken by the EU27 between March 2019 and December 2020 be classed as “existing”.  We haven’t been told.

There have been a few rumours that our rebate of approximately £4.4bn for our last year in the Single Market will not be paid.  These rumours should be either confirmed or quashed now.

At the end of every seven year EU accounting period, they recalculate every contribution due and paid on a new basis which is retrospective to the creation of the Single Market.  David Cameron and George Osborne were taken by surprise around the end of 2013, insisted they would not pay and then (you guessed it) paid up.  Could the UK be caught by a surprise demand of this type at the end of 2020?  To be fair, it is theoretically possible that we could get a rebate, but we need to be told now.

I do not see how any likely free trade deal is worth all of these payments.  It’s looking more like Norway minus than Canada plus.  However, even this government should be able to see that there is one slightly less bad line of negotiation.  If the EU27 expect all of this money, they must give us the free trade deal we want on goods and services and do so quickly.  Otherwise, we will leave without further payments, which they need badly.  Of course, it won’t happen that way.  We may get Brexit, but it will be Brexit in name only and certainly not the Brexit we voted for.

(21/03/2018)

[oneminutemoneymagazine]

Negotiating Brexit 2: The Process

This blog has been critical of the Conservative Government’s approach.  As one of the majority who supported Leave, this is what I would do.

1) Continue talking about the rights of UK citizens in the EU27 and EU27 citizens in the UK.

2) Give the EU27 the clarity they want about our contributions after March 2019.  There aren’t going to be any!  [We will, of course, contribute to costs and expenses of the many projects where we continue to co-operate.]

3) Continue talking about the border between Northern Ireland and the Republic.

4) Propose a two year transitional arrangement from March 2019 to March 2021 whereby the UK remains in the Customs Union (not the Single Market).  This gives Liam Fox and his team another two years to finalise world wide trade agreements, which would come into force from March 2021.  [But, I hear you say, the EU27 won’t talk about transitional arrangements because of 2) above.  It could be discussed as part of the Irish border issue, which would give them a face saving formula.]

5) Continue to participate enthusiastically in organisations like Europol and the ESA.

6) Understand that Brexit belongs to the nation as a whole and not to any political party, whether that be the Conservatives, UKIP, DUP or Labour.  For example, there is no need to turn more parliamentary oversight of routine changes to legislation transferred from the EU into a party political issue.

7) Prepare for No Deal.  It’s not our first choice, but we can’t force the EU to discuss trade.

(15/11/2017)

[oneminutemoneymagazine]

The EU: Topical Definitions

Soft Brexit: The UK remains in the Single Market and Customs Union and hence leaves the EU in name only.  It involves losing our seat at every decision making forum and probably making our terms significantly worse than at present.  [used mainly by the remaining Remainers to hoodwink the rest of us]

Hard Brexit: The UK leaves the EU, the Single Market and very probably the Customs Union.  We seek a mutually advantageous free trade agrement, friendship and co-operation in many areas with the 27 member EU.  [emotive term used mainly by the remaining Remainers to try to overturn last year’s referendum result]

Brexit is Brexit: Totally meaningless [coined by Prime Minister Theresa May, but didn’t catch on]

Red, White and Blue Brexit: As above, but very short lived.

Transitional Arrangement: Device by which the UK stays in the Single Market for at least four and three quarter years after the June 2016 referendum.  [used mainly by politicians who are, at best, losing their nerve about implementing a democratic vote]

(28/09/2017)

[oneminutemoneymagazine]

Brexit: Is a Transitional Arrangement Possible?

Further to the previous post, here’s some of the promised analysis.  No transitional arrangement will happen unless both the UK and the EU agree on one.  The EU have cleverly (and in some ways rightly) called on the UK to provide further clarity following Theresa May’s speech in Florence.  This of course puts the ball firmly back in our court.

It would probably be possible for the UK to continue Single Market membership on standard terms for another couple of years.  It would also be a gross denial of democracy because the UK voted to Leave.  However, our government seems to want an ad hoc arrangement.  Surely the EU will never agree to this, especially with the limited time available.

In my view, the only way to secure a transitional arrangement in reasonable time is to use an off the shelf approach.  As someone who is not a “hard Brexiteer”, I could if necessary support another couple of years in the Customs Union.  The UK would be bound by the EU’s international trade agreements (or absence of agreements) and would contribute to administration costs.  However, we could negotiate and sign trade deals across the world provided they took effect after we had left.

So would (or could?) the EU agree to us remaining in the Customs Union for another couple of years?  They have committed themselves to sequentialism and hence refuse to talk about trade until the UK has made “sufficient progress” on citizens’ rights, the exit payment and the Irish border.  They need a face saving formula which could be that the Customs Union is relevant to the Irish border issue.

Let’s hope I’m wrong, but I can’t see the two sides agreeing very much at all.  However, we should keep trying to secure a mutually advantageous free trade deal along with co-operation on security, science etc.  Equally though we must be prepared for no deal to emerge, even though hardly anyone in the UK would actually want this outcome.

(25/09/2017)