Has U.K. Reached Point of No Return In Brexit Negotiations With the E.U.?

With much attention still focused on the COVD-19 pandemic the economic fallout of the 100-day lockdown, a crucial deadline passed that could also have a major impact on the U.K.'s economy and political future.

June 30 was the final date that the U.K. could request an extension to the transition period which gave the U.K. and E.U. time and breathing space to negotiate a deal and set out what a future trading relationship between the two will look like.

The transition period meant that, although the U.K. had left the E.U. on January 31, it still remained in the E.U. customs union and single market.

That means that until the transition period ends on December 31, most issues such as traveling to and from E.U. countries, trade and freedom of movement remain the same.

However, with the U.K. choosing not to extend the transition period, as confirmed by Cabinet Office minister Michael Gove, what does this mean in practice and has Britain passed the point of no return?

Professor Tom Sampson, from the London School of Economics, says that with an artificial deadline now in place for December 31 to find a deal, it means that the likelihood of some sort of a resolution being found before the end of the year increases, however any potential deal will not be as "good as a deal the U.K. could get if it took more time over negotiations."

Professor Sampson told Newsweek: "It's very likely now that some kind of resolution will have to be reached by the end of this year, but it is still technically possible if there was enough political will on both sides, the transition could be extended.

"It makes it much more complicated to do, legally, because effectively you require a whole new agreement to extend the transition, but it's still possible, I think that's one thing to keep in mind."

However, Professor Sampson said it a sudden U-turn by Boris Johnson's government to ask for an extension was "very unlikely" given the priority Johnson has given to finding a resolution by the end of this year.

"What we're probably looking at is come December, either the U.K. exits the transition period with no deal and we revert to trading with the E.U. on WTO terms or there is some kind of agreement reached in September or October along the lines of what is currently being discussed."

Professor Sampson says that not extending the transition period could leave the U.K. without the deal it wants.

"What it does mean is that any deal we are likely to get, is probably not going to be as good as a deal we could get if we took more time over the negotiations," he says.

With only a few months left to negotiate a deal, the only things that can be agreed, according to Professor Sampson, are "high-level principles" which the two sides can then agree to "implement in a simple way."

Despite the challenges posed by the pandemic, both the E.U. and U.K. remain committed to intensifying talks throughout July, agreeing that "new momentum" was required in order to create the most conducive conditions for concluding and ratifying a deal before the end of 2020.

U.K. Prime Minister Boris Johnson has just Chief U.K. Brexit negotiator David Frost a dual role as his national security adviser, alongside a peerage. He takes up the new role in September and is being seen as a clear indication to Brussels that the U.K. wants to get negotiating completed quickly and isn't scared to walk away.

"For the trade aspect of the deal, what is on the table is what the E.U. initially offered after the withdrawal agreement was signed," Professor Sampson says.

"They said that we will offer you a zero tariff, zero quota, zero dumping deal which means that all the tariffs are abolished."

"There will be no quotas on U.K.-E.U. trade but only if the U.K. agrees to sign up to some form of level playing field requirement which the E.U. thinks are necessary to protect the integrity of the single market."

If a deal cannot be reached by December 31, when the transition is due to finish, then that means Britain could walk away without a deal.

"If the U.K. leaves without a deal it will be a cliff edge in many ways and will bring the realities of Brexit home to people in a way that hasn't yet happened because during the transition period, although we formally left, nothing practical has changed.

"What you'll see on Jan 1st is things start to change."

Professor Sampson says this will mean more customs checks.

"The U.K. is not ready to run a full customs border with the E.U.," he says.

"This means either it's going to have to run a partial customs checks for a period while it implements a border or there are going to be big delays and possibly you get both of them."

He says that if you're going from Dover in the U.K. to Calais in France, the French have already indicated they will be imposing full customs checks starting on January 1, clogging up a "vital transport route for the U.K."

Other practical changes could include travel to the E.U. for British citizens being affected as well as health insurance and the ability to buy property in the E.U.

The think-tank the Institute for Government, has warned that even if a deal is agreed between the U.K. and E.U., both sides need to prepare for "significant changes at the end of the year".

Maddy Thimont Jack, senior researcher at the Institute for Government, said: "These negotiations are not like the withdrawal negotiations. Earlier this year, when the UK finally left the E.U. with a deal, the transition period meant that very little changed on the ground.

"At the end of this year, even if the U.K. and E.U. can negotiate some form of free trade agreement (FTA), there will inevitably be some disruption on day one – unless the two sides agree to add a further 'standstill' period into the agreement, which is firmly not on the table at the moment.

"David Frost said in February that there will be a 'one-off cost' as a result of leaving the single market and customs union. But while No.10 is keen to present the overall cost as a 'one-off', this does not reflect the reality.

"There are big up-front costs in establishing new processes, from new admin systems to the personnel to run them. There will be ongoing costs as businesses meet the burdens of trading with the E.U. – including for those exporting goods to the single market under the Northern Ireland protocol. Many services firms have already had to set up subsidiaries within the E.U. to allow them to remain operational in E.U. member states, and it will become more expensive to recruit E.U. citizens to UK businesses."

The Cabinet Office says it is focused on making "rapid progress" towards an agreement.

A spokesperson said: "The prime minister has been clear that the faster an agreement on our future relationship can be reached, the better.

"The E.U. have agreed an intensified timetable over the summer and the next round of talks with the E.U. began on Monday. These meetings are smaller and focused on seeing whether we can begin to make rapid progress towards an agreement."