The five costs of UK's pyrrhic Brexit victory

The prize sought by British negotiators during their latest Brexit showdown was certainty. UK businesses desperately need to know how long they have to prepare for departure and threatened to panic without promise of a transition phase.

In this respect the Brexit secretary, David Davis, can claim a partial, if pyrrhic, victory. The EU has agreed to park outstanding disagreements for now and proposes a 21-month transition period that would last until December 2020.

Considering it could have refused to budge unless everything was resolved, this is what counts for progress in Brexit-land. The pound duly recovered some of its recent losses on the news.

But the victory is only partial because further uncertainty remains. The transition period will only apply if remaining niggles are ironed out by the time UK and EU parliaments are asked to ratify the whole withdrawal treaty in the autumn. Without full agreement, some are already questioning how valuable this latest reassurance actually is to anxious British businesses.

“There will be no legal certainty in relation to the transition arrangements until after the withdrawal agreement is agreed and ratified,” said Rob Aird, a partner at the law firm Ashurst.

What is certain, however, is that the UK has paid a high price to get to this point. A series of once unimaginable concessions are now baked into the withdrawal agreement, with more likely to come if Britain wants to avoid everything falling apart again in nine months’ time.

1. Northern Ireland

The first, and potentially most painful, climbdown has come over the border between Northern Ireland and the Irish Republic. Last month Theresa May insisted no British prime minister could possibly agree to the “backstop” proposal outlined by the EU. It sought to prevent a hard border after Brexit by keeping single market rules the same in Northern Ireland.

Now, the UK has gone back to a position it appeared to accept in December that a backstop is acceptable – so long as both sides keep working toward technological and legal alternatives that might avoid this necessity for full regulatory alignment.

Since the EU regards both proposed UK alternatives as implausible, it implies an eventual showdown with Democratic Unionists has only been postponed unless new “magic” answers can be found.

The ray of hope for Downing Street is that the UK seems to have retained the right to try to come up with an alternative backstop rather than automatically accept the toxic-looking EU version – a plan D, if you like.

“We agree on the need to include legal text detailing the ‘backstop’ solution for the border between Northern Ireland and Ireland in the withdrawal agreement that is acceptable to both sides,” said Davis.

2. Fish

Almost as hard to swallow for Brexiteers is the British decision to abandon any immediate attempt to take back control of its fishing waters.

In stark contrast to recent promises by the environment secretary, Michael Gove, the UK has accepted that throughout the transition period it will abide by the current fisheries policy so despised by leavers.

“The United Kingdom’s share of the total catch cannot be changed,” said Davis, celebrating the supposed certainty this offers. Unfortunately, continuity was the last thing this particular industry wanted to see.

With similar threats to link ongoing trade access to future compliance on fisheries access, the government is already being accused of betraying the one industry which hoped to be a clear winner from Brexit.

3. Duration

David Davis accepted the 21-month transition period on offer from Brussels rather than the 24 months he once proposed because he said the two were “close enough”.

But the real surprise is the absence of any provision to extend the period if the future trade talks are not all wrapped up in time. Only recently, UK officials had urged that the period last “as long as it takes” to ensure a smooth departure.

Lest anyone think Davis was relaxed because he thought this would be plenty of time, he also dropped his previous boast that trade talks would be mostly wrapped up before the transition phase even began. This shortened phase will be “the platform upon which we build the new relationship”, he said.

4. Freedom

Other climbdowns are now irreversible according to the agreed text. Where once Britain imagined it might buy its freedom from EU rules, the treaty will commit the UK to a £40bn divorce bill stretching out until 2064.

Taking back control will also have to wait. Throughout the transition phase, Britain has now accepted it will have to abide by EU rules, particularly freedom of movement. The only bright spot is confirmation from the EU that the UK will be allowed to negotiate new trade deals elsewhere during the transition period – something both sides have always said was likely anyway.

5. Citizens

There is certainty for EU citizens as a result of another climbdown over whether they will continue to enjoy their rights in the UK during transition, but campaigners fear the concession is not entirely reciprocated.

Jane Golding, the chair of British in Europe, which represents 1.2 million Britons living in other EU countries, said the agreed legal text provided more free movement rights after Brexit for English cheddar than to British citizens.

The latest draft drops article 32, which included an explicit ban on British citizens living in another EU country moving on to live and/or work in a third EU country. But Golding said that its omission did not mean they had suddenly been allowed to keep free movement as it did not change the substance of the agreement.

“In fact the agreement is as clear as mud when it comes to our future rights to move and work across the EU, either as people falling under the withdrawal agreement or as third country nationals,” said Golding.

“With 80% of British people living on the continent working age or younger, free movement and its associated cross-border economic rights are a necessity, not a nice to have, for many ... As things stand, after Brexit English cheddar will have more free movement rights than we will.”