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The UK has agreed to a transition deal – but what we are transitioning to is still not clear

Michel Barnier has made clear how hard-headed his approach will be: Reuters
Michel Barnier has made clear how hard-headed his approach will be: Reuters

So that’s settled then? The Cabinet says it is “united” about a “transitional period”, sometimes termed an “implementation period”, after Britain leaves the European Union in 2019. Obviously it wouldn’t be a Brexit story without some spin and confusion; the transition period is variously put at two or four years; the exact scope of it, including such tricky issues as the jurisdiction of the European Court of Justice and immigration, is far from clear; and some Conservatives will be concerned that it amounts, in practical terms, to continuing EU membership. Still, it does seem that the Chancellor's attempts to convert his harder-line colleagues to the wisdom of avoiding a “cliff edge” Brexit have been successful. Insofar as his demeanour permits him, Philip Hammond should allow himself a moment of self-congratulatory gloating.

All that does, though, is raise two further and much more disturbing questions, which are interlinked. First, as with so much else in the debates about Brexit, there is an assumption that the European Union will calmly and sensibly see the attractions of the British proposal and go along with it without demur. Just like the breezy claims by the Brexit and Trade secretaries that the EU27 are bound to agree a free trade deal with the UK because they'd be crazy not to; this is a highly dangerous assumption. There is no necessary reason why negotiator Michel Barnier would recommend it to the commission and have it agreed by the member states and the European Parliament, no reason why, even if he did, they would agree to it, and it is difficult to see how it strengthens their negating hand or serves the narrow interests of the EU. The shorter the negotiating period and the tighter the deadlines the more chance the EU has of bending the UK to their will; voluntarily agreeing, in effect, a potentially longer period for negotiation does the opposite.

So the chances are that the transition period would be finite and would be only agreed to if a deal has been done. In other words there needs to be answer to the question: “Transition to what?” On that point, however, the omens are not encouraging. The second round of talks this week appear to have been somewhat perfunctory, and there are as yet no concrete proposals capable of being agreed on the conundrum of the Irish border, the size of the so-called divorce bill or the rights of EU citizens in the UK, and British citizens in Europe. Allowing the UK to retain some or all of the elements of EU membership for a period after 2019 sounds attractive – but only if both sides know where they are heading. Otherwise, there is simply no reason for the EU to agree to the idea.

Mr Barnier has made clear how hard-headed his approach will be. The EU sill not tolerate a “bargain basement” UK on its flank, offering low taxes and light regulation to business while still trying to have free trade with the EU. That and many other British vanities will need to be consigned to the bonfire before Mr Barnier and David Davis are able to sign the terms of a new economic relationship.

On this side of the channel, slowly and surely, the British public are starting to realise that exiting the EU is about much more than limiting immigration and cutting the amount of money we send to Brussels. The real consequences for jobs and investment and living standards are beginning to crystallise. The British are starting to realise that they cannot have their free trade deal without an agreement to allow free movement of EU labour, and they cannot leave the customs union to negotiate their own free trade deals with other countries and retain the current “frictionless” access to European markets for goods and services. What is often termed soft Brexit may well not be possible because the EU simply doesn’t want to offer such terms to an ex-member state; and each soft Brexit option has so many disadvantages attached, mainly that the UK has no say at all in its own economic governance, that they will be seen to be less attractive than continued membership. The great irony is that soft brexit, like hard Brexit, entails a loss in trade and living standards but also a loss in national sovereignty, with the UK resembling a colony of the EU, reliant upon its bigger neighbour to protect its economic interests. Will Britain want to accept such a painful humiliation as that? Would not the British people want a second referendum before they agree to such a dilution of their powers of self-government?