As with so many things, COVID-19 has had a major impact on our lives, our businesses and anything close to ‘business as usual’.  We have taken a long break from any posts related to Brexit given the major disruptions that COVD-19 has caused.  However, the clock has still been ticking towards 31 December 2020, the date upon which the UK’s transition arrangements with the EU will cease and the UK will no longer have any residual EU membership rights.  And every now and then, we would be reminded that Brexit is a process not a destination as the world dealt with responding to COVID-19.

In the beginning of September, the UK Government proposed a new Internal Market Bill (click here for full details) which amends parts of the Brexit withdrawal agreement.  The Bill was immediately criticised due to its purported impact on the previously agreed Brexit withdrawal agreement as a potential breach of an international treaty.  Our read was always more nuanced and we could see the need to make a no-deal scenario less acceptable to the EU.  The existing withdrawal agreement is perceived as leaving the EU with a good outcome even in a no-deal situation, undermining the EU’s incentives to negotiate in good faith with the UK.  In fact, some in the UK negotiating team have suggested just that – namely that the EU has not negotiated in good faith with the UK.

Subsequently, on 17 October, the UK Government informed the EU that talks with the EU are over unless the EU makes some concessions to move forward what was widely regarded as a stalled process.  We have previously commented on the issues that are created when one party has significantly more bargaining power than the other.  Clearly the UK was going to always have a tough time negotiating a trade deal with the EU unless the UK could credibly walk away.  Now that the UK has consistently signalled that it prepared to walk away, both publicly and privately, the EU has finally shown signs of movement with signals of possible concessions rumoured on 2 November.

Our view is that a trade deal of some sort will be done this year, but perhaps not until late in December.  While the final terms of the proposed comprehensive free trade agreement between the UK and the EU remain to be finalised, any firm doing business in the UK and Europe should make themselves familiar with the information published by the UK Government, which can be found here.   This will give firms a good indication of the breadth and scope of the proposed trade deal that may have an impact on their plans for 2021.