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Brexit: What we know so far

Last updated: 15 November 2018 

As the climax of Brexit negotiations approaches, our article helps cut through the political noise to explain the key points that have been agreed.

When is Brexit?

The UK will leave the European Union at 11pm on 29 March 2019, two years after Prime Minister May invoked the Article 50 process for withdrawal, and nearly three years after the June 2016 referendum on the UK’s membership of the EU.

However, an implementation period will see the UK remain subject to EU rules until at least 31 December 2020.

What has been agreed?

Technical negotiations were completed and signed off – in principle at least – by the UK cabinet on 14 November 2018. The 585-page draft withdrawal agreement is available to read in full here^, alongside a political declaration on the future relationship between the EU and the UK.

Included in the agreement is everything from an agreement on citizens’ rights, the financial settlement – estimated to be in the region of £35-39bn, data protection agreements and the length of the transition period.

Transition period
A transition or implementation period will begin after the UK leaves the EU in March 2019, and is scheduled to end on 31 December 2020.

The hope is that this will give the UK time to introduce a new immigration system and mean that businesses will only have to plan for one set of changes in the nature of the relationship between the UK and the EU.

The implementation period will see trade continue on “current terms” – in other words the UK would not leave the Single Market or Customs Union until the end of this period. But, the UK will be able to sign and ratify its own trade deals – including the future trade agreement with the EU.

The EU explained PDF† (27KB - opens in a new window) that the UK will have to continue to adhere to all existing EU regulations during this period, including the “four freedoms” of movement of goods, capital, services and people, but they will not have any representation in the European Parliament.

The length of the transition period could be extended, however, and such a move would need to be requested before 1 July 2020. The EU’s chief negotiator, Michel Barnier, was at pains in his press briefing on 14 November 2018 to underline that it would be their preference to extend the transition rather than to ever implement the backstop.

Irish border
The final sticking point for negotiators has been well documented: the Irish border and the backstop solution in the draft agreement. The backstop is only designed to come into force should the UK and EU fail to reach an agreement on their future relationship.

It provides for limited checks on food and animal products, and some checks on industrial products carried out by UK authorities on the premises of a business – as opposed to at the ports. But it establishes what is being called “the single customs territory” between the EU and the UK.

In a technical note explaining the backstop PDF† (64KB - opens in a new window), the government explained:

“Both parties therefore believe that the backstop protects both the EU single market and the UK internal market without prejudice to the future UK-EU relationship, as set out in the December Joint UK-EU Report, and respecting the overarching requirement to avoid a hard border.”

What happens on Brexit day?

Technically... not a lot. The UK will however cease to be members of the European Council and the European Commission. The UK’s 73 MEP’s will return home from Brussels and the UK will officially be allowed to negotiate new trade arrangements with both the EU and the rest of the world.

However, due to the transition period that was agreed between the UK and the EU, trade with the EU, freedom of movement of people and goods will remain unaffected until at least January 2021.

Future relationship

Any future relationship between the UK and the EU cannot be formally agreed until the UK ceases to be a member of the Union in March 2019, when it will become a third country.

The two sides have published a political declaration on the future relationship PDF† (107KB - opens in a new window) which states, among other things:

  • The goal of creating a free trade area for goods;
  • A commitment to maintaining a high level of data protection;
  • A commitment of financial services equivalence in order to maintain market stability;
  • The goal of creating ‘ambitious’ arrangements for the trade in services and investment;
  • An intention to ensure ‘comparable’ market access for freight and passenger operators in the UK and the EU.

Parliamentary approval

The government has committed to a vote on the final deal between the UK and EU. The deal will also be subject to approval by the European Parliament and the leaders of the EU27 that make up the European Council.

Alongside the European Union (Withdrawal) Bill, the government announced a total of eight Brexit-related Bills in the Queen’s Speech in June 2017.

Different factions in both the Conservative and Labour parties mean each of these are likely to face numerous amendments.

1 Queen’s Speech 2017 PDF†^ (321KB - opens in a new window)

Barclays’ commitments to our clients

Barclays currently makes use of passporting to serve clients across Europe, predominantly via Barclays Bank PLC and its subsidiary Barclays Capital Securities Ltd, both of which are incorporated in the UK. Should Brexit result in a loss of relevant passports for the UK financial services industry, Barclays intends to utilise our existing Irish subsidiary Barclays Bank Ireland PLC, expanding this to become the legal entity serving European clients.

Subject to the evolution of the Brexit negotiations, we expect the expanded Barclays Bank Ireland entity to be operational ahead of the UK leaving the EU in March 2019.

We continue to develop specific propositions for our corporate clients to meet their funding, cash management and risk management needs, and continue to add innovative solutions to help them navigate potential changes.

We continue to invest in our European business and are rolling out a consistent product suite across all major European geographies so that clients can enjoy the same level of service regardless of their location.

While Brexit unfolds, we stand close to our clients in helping them understand the potential impacts on their underlying business – and corporate treasury – models, and will support them in delivering solutions to help them manage changes in their supply chain from our suite of trade and working capital financing, payments, and liquidity solutions.

If you have any questions on how Barclays is preparing for Brexit, please speak to your relationship manager.