Brexit update: What will happen on Friday night?

Question: What will happen on Friday night?

Answer: A false Brexit

It has finally arrived.   

On Friday night next, 31 January, the United Kingdom is expected to leave the European Union after 47 years and one month of membership. Boris Johnson was eight years old when the UK joined while Emmanuel Macron and Leo Varadkar had not even been born.

The UK is scheduled to leave at 11pm/23:00 GMT on Friday night – ironically, Brussels will have the last laugh because the UK has to leave on Belgian time and not UK time.  

It will have been a long 1318 days between the Referendum and Brexit. The former UK Prime Minister Harold Wilson (the only UK Prime Minister to win an EU-related referendum) said in 1964 that a week is a long time in politics. Well, 188 weeks since the Referendum have been very long (almost tedious) – seeing three UK Prime Ministers, two UK General Elections, three UK Parliaments and a range of deadlines for the UK to leave.

The UK is only partially leaving on Friday night. Under the Withdrawal Agreement, most of EU law continues in place until (at least) 31 December 2020. So it is more like a 'false' Brexit than a real one. It means that when people wake up on Saturday morning next, 1 February, and ask "nothing has changed, what was all the Brexit excitement about?", they need to be careful. The real impact has been postponed until 1 January 2021 or whenever the transition period expires.

During the 11 months from 1 February 2020 to 31 December 2020 inclusive, most of the same EU rules apply to the UK. The EU rules apply to the UK but it will not be a member of the EU. It will be a rule-taker but not a total stranger. So, it will not be a real and total Brexit. 

The UK may ask for the transition period to be extended beyond 31 December 2020 but it must ask for the extension on or by 30 June 2020. The UK Government has said that it will not ask for such an extension.

Business should now assume that the UK is leaving to the EU and any earlier reluctance to spend time on planning needs to be set aside. The 'phony war' is over. In particular:

  • Once the UK leaves on Friday night then it has no quick way back into the EU. Under Article 49 of the Treaty on European Union, the UK would have to re-apply in the normal way for membership. Having been a member once should help any application to re-join a little but it would also make the remaining member states hesitant and concerned about the UK's commitment to stay.
  • Businesses should take time to examine the Withdrawal Agreement and see how it impacts them: One should consider the following:
    • Part Two on citizens' rights – this is important in the context of employees and their families both in the UK and in the EU
    • Part Three, Titles I-III – trade between the UK and the EU during the transition period and a much greater element of last minute stockpiling or movement of goods at the end of the transition period to get goods "into circulation" in the EU or the UK as the case may be
    • Part Two, Title III - dealing with social security systems (particularly relevant for employees)
    • Part Two, Title II, Chapter Three – dealing with professional qualifications
    • Part Three, Title IV – intellectual property
    • Part Three, Title VI – ongoing judicial cooperation in civil and commercial matters
    • Part Three, Title VII – data
  • Brexit is clearly a legal process and appropriate legal advice should be sought
  • Businesses which have trade between the UK and Ireland should study the protocol on Ireland/Northern Ireland. The overall Withdrawal Agreement agreed by the Johnson Government is not very different at all from the one agreed by the May Government but there were some changes in this protocol and they will need to be monitored carefully. A possible flashpoint in coming years could be the willingness of all parties to ensure compliance with the checks and balances contemplated by this protocol.

In essence, this relationship is ending but the UK is staying in the house for another eleven months under the same 'house rules' while they try to work out a new "Relationship Agreement". Trying to work out the new "Relationship Agreement" will be even more tedious and more difficult than concluding the Withdrawal Agreement. The easier bit is over.

For more information on this topic please contact Dr Vincent Power, Partner or any member of A&L Goodbody's EU, Competition & Procurement team.

Date published: 27 January 2020