The dark clouds threatening Brexit

It’s summertime and the living is easy… unless you’re a civil servant working on Brexit. Whitehall has recognised that the UK needs to step up its preparations for leaving the EU and to offer greater certainty about the country’s immediate future. A big speech is planned for September, probably by the Prime Minister, which will set out more of the government’s thinking on the issue.

One aspect of Brexit that urgently needs clarity is how Britain will leave the European Union. Theresa May has long been open to a transitional period or, as she terms it, an implementation phase. But since the election, the government’s enthusiasm for this has become far more explicit. There is now pretty much total cabinet agreement — even if the transition means free movement continuing temporarily. But for any transition to smooth out the Brexit process, it will need to be agreed well in advance. Given that the Article 50 clock is already ticking, and that any transition agreement will have to be signed off by the EU, this must be one of the UK’s negotiating priorities come the autumn.

Almost certainly, the EU will insist that progress is made on the money it claims the UK owes, along with citizens’ rights, before discussing how a transition would work. The desire to extract as much cash from us as possible (without collapsing the talks) is one issue on which the EU 27 and the Commission are entirely aligned.

But the money aspect of these talks, however politically fraught, is relatively simple. There are numerous ways to fudge the issue, unlike the more complicated question of ‘divergence’. It is often pointed out that when the UK and the EU start trade talks they will be in total regulatory alignment. This is true — but it might not last.