Last Friday, the Secretary of State for Exiting the EU, David Davis, announced the broad shape of the UK Government’s objectives for a transitional period post-exiting the EU in March 2019 aimed at ensuring a softer landing post-Brexit. Mr Davis was clear that this period would be time limited and that the UK will remain bound by the current terms of its EU membership albeit without having input on further EU legislation and regulations. In exchange, the UK will insist that it may proceed with negotiations of trade deals with non-EU countries. While this appears at first glance to be conceding almost entirely to the EU, Mr Davis has stressed that the transitional period must be based on agreeing what the future relationship between the UK and the EU will be. Our understanding is that by making additional concessions to the EU it is hoped that negotiations on the future relationship with the EU may begin more quickly leaving a chance that all can be agreed in advance of March 2019 (and crucially ratified by the other EU Member States – and the UK Parliament).
Media and political speculation continues in respect of what if anything will actually happen in March 2019. The Chancellor of the Exchequer, Philip Hammond, made a speech in Davos on 25 January in which he mentioned his hope that the divergence between the UK and EU economies would be modest post-Brexit (you can see the full text of his speech here. This has been seized upon as evidence of continuing discord within the UK government and signaling that nothing will change in practice, which appears to be an over-interpretation given the Chancellor’s actual comments when taken in context.
David Lidington, who is now effectively the Deputy Prime Minister, has also stated in an interview last Sunday (which was subsequently endorsed by Downing Street) that the UK will take back control of its own laws from March 2019 implying that the UK can start to diverge from the EU (where not restricted due to existing EU rules) from that point.