The European Union is to formally offer Theresa May a two-year standstill Brexit transition deal next week as the reward for today’s “grand bargain” divorce settlement with the bloc.
In return for Britain paying about £40 billion in EU liabilities for many years to come, the 27 EU member states will sign off on the next stage of Brexit at a summit of EU leaders on Thursday.
The plan, which both sides believe can be formally agreed upon by the end of January, will give business a two-year cushion in which to make preparations for a full EU exit. Ministers hope that the transition plan — a key trade-off over the so-called divorce bill — will be enough to steady business nerves and prevent mass relocations in the run-up to March 2019.
Talks about a future trade deal, however, are not expected to start until February or March at the earliest. The EU has yet to formally start agreeing upon its own negotiating stance among member states and insists it cannot do so until after the British position is clearer. The developments came after an early morning of drama which involved the prime minister flying to Brussels after all-night talks ended at dawn with a deal over the crucial issue of Northern Ireland. When the details became public Mrs May was hailed by both sides of her party for an outcome which was better than many had anticipated. Under the plan Britain will pay between £35 billion and £40 billion over the next 50 years to cover future EU liabilities such as pension costs. There was also a comprehensive deal on EU citizens’ rights which will involve a limited role for the European Court of Justice — but much less than had been demanded by Brussels. The issue of the Northern Ireland border was effectively fudged: while Britain promised to keep regulatory alignment with the EU on matters affecting the Good Friday agreement, it also pledged not to do anything to jeopardise Northern Ireland’s status within the United Kingdom. Failure to move on from divorce talks risked triggering significant political upheaval as well as renewed economic uncertainty and potential damage. May and Juncker announce breakthrough Relief was laced with caution, however, with the DUP signalling that it was prepared to withdraw its consent. Some Tory Brexiteers expressed concerns, particularly over the continuing role of the European Court of Justice, and all sides acknowledged that the looming trade talks would be as least as difficult as the divorce deal. Standing next to Jean-Claude Juncker at a Brussels press conference Mrs May said: “It has not been easy for either side. What we have arrived at today represents a significant improvement.” She said she would “guarantee” there would be no hard border in Ireland. “There would be no barrier north-south, or east-west”, she added. Mrs May denied that the special arrangement for Northern Ireland would mean that the whole of the UK would stay in the single market. She said there were “unique circumstances” in Northern Ireland, and she was “confident of retaining the economic integrity of the single market of the United Kingdom”. Attempts to find a compromise on the Irish border continued through the night after the breakdown of talks on Monday, when the DUP’s Arlene Foster refused to back a text which Mrs May had hoped to seal four days ago. She offered six commitments to Northern Ireland: upholding its status as an integral part of the UK; protecting its position within the single market of the UK; no new borders between Northern Ireland and the rest of Britain and no hard border between Northern Ireland and Ireland; the whole of the UK will leave the EU customs union and EU single market; upholding the Good Friday agreement; the whole of the UK, including Northern Ireland, will no longer be subject to the jurisdiction of the European Court of Justice. “Whether you voted Leave or Remain, I am determined to deliver an outcome that works in the best interests of everyone across the United Kingdom,” she said. Donald Tusk, the European Council president, said: “We all know that breaking up is hard. Breaking up and building a new relationship is much harder.” He confirmed that during any transition period Britain would have to accept and respect all EU law, including any new rules, without having a say in their setting. Critics say this will mean Britain becomes a “law-taker not a law-maker”. The deal on citizens’ rights will also see some cases sent to the European Court of Justice for a period of up to eight years, which could attract opposition from some hardline Brexiteers. Mrs Foster said today that “substantial changes” had been made which would mean there was “no red line down the Irish Sea”. Her party added: “There is still a major debate within the cabinet, parliament, the Conservative Party and other parties about the nature of any regulatory alignment with the EU that may be required post-Brexit. We believe that the paper could pre-judge the outcome of that debate. “We cautioned the prime minister about proceeding with this agreement in its present form, given the issues which still need to be resolved and the views expressed to us by many of her own party colleagues.” Business leaders welcomed the news, after weeks of warning that uncertainty over Brexit risked companies leaving the UK. Stephen Martin, director-general of the Institute of Directors, said: “It went right down to the wire, but businesses will be breathing a huge sigh of relief.” Josh Hardie, CBI deputy director-general, added: “It’s now time to focus on the true prize of a new relationship and a deal that starts from 40 years of economic integration. With the same willpower shown today these talks can set the UK up for the next 40 years of close alignment.” But there was also criticism. Nigel Farage, the former Ukip leader, said on Twitter: “A deal in Brussels is good news for Mrs May as we can now move on to the next stage of humiliation.”