On the first day of talks, Prime Minister Theresa May provided an update from the UK perspective on the progress on negotiations. Most significantly for businesses, the Prime Minister stated that both sides are “within touching distance” of a final deal on citizens’ rights. She promised that EU citizens, and their families, legally living in the UK would be able to stay after the UK leaves the EU.
On the second day of talks, EU27 leaders concluded that “sufficient progress” had not been made in the Brexit negotiations so far. While discussions had taken place on the issues of citizens, Northern Ireland, exit issues and the financial settlement, progress had not been enough to allow talks to advance onto the all-important second phase issues: transition, and the future EU-UK trading and security relationship.
However, there were many things to welcome. European leaders were keen to emphasise that they do think it will be possible to agree on the new relationship. Additionally, the green light was given to the EU’s negotiating team, led by Michel Barnier, to start internal preparatory discussions on the next phase, in order to allow the EU27 to agree what it wants for the long-term. Importantly, EU talks during this next phase will take account of the papers the UK has published on the future relationship, so although phase 2 of the negotiations will not be open, both sides can begin to explore issues that may arise.
What does it mean for businesses?
Firstly, companies should be sure they understand the different scenarios that Brexit could present – including “no deal” – as although the Council was full of warm words from both sides, it did not provide any additional certainty for businesses. The CBI will play its part in helping members – particularly small and medium-sized firms – to prepare for Brexit Day 1.
Secondly, businesses should start making clear to policymakers on both sides what they want to be agreed by March 2019, as the EU can now discuss this. At the moment, only the UK has a formal view on the future framework, and this is not a complete one. This is an opportunity to ensure both sides are clear on priorities for the future economic framework. Firms should expect some conflict to arise here, as the EU and UK may have different perceptions about what can be agreed by March 2019.
What happens next?
Phase 1 talks on Ireland, the financial settlement, exit issues and citizens will continue. The dates for these meetings have not yet been set. The European Council will then meet again on the 14-15th December to reassess the state of progress in the negotiations with a view to determining whether sufficient progress has been achieved. If so, the European Council will adopt additional guidelines on the framework for the future relationship and on possible transitional arrangements. Barnier will take these guidelines as the basis for negotiation from December.
The CBI is urging both sides to be pragmatic and determined to achieve sufficient progress as soon as possible. Both sides must then agree on a comprehensive transition period, with continued membership of the Single Market and a Customs Union, to give businesses certainty. It is crucial for EU leaders to start detailed discussions on trade as soon as possible so that jobs are protected and businesses continue to have certainty to invest in a strong, and global economy.
The CBI will continue to work closely with sister federations and BusinessEurope to ensure that the economic case for a strong partnership between the UK and the EU is heard across Europe. Finally, the CBI will continue working extensively with its members to better understand and define what they want out of a future trade deal with the EU.
For more information on Brexit, visit the CBI's Brexit and EU Negotiations hub