In January talks will resume and the UK will focus on transition. This is DexEU and Treasury focus.
They will strike an early agreement on this, even pushing to find a way to formalise it prior to the Withdrawal Agreement being ratified /2
- drafting withdrawal agreement
- creating dispute resolution mechanisms on Money etc
- drafting a "political declaration" on trade/future relationship /3
Well. EU side says it will be a framework declaration, covering trade, security, climate, foreign affairs and all other areas of co-operation. Say 20 pages? 50 pages? 100 pages? No more.
Davis/May say this is way short of what they want. At the very least, they want a much more detailed framework that can be set out stall for trade negotiation. Or do they? /5
It would mask limitations "Canada Dry" deal. It would get May over the line - recall #Brexit has always been about Tory party management/6
Per HM Treasury forecast, Canada dry would knock 4.6%-7.8% of UK GDP by 2031. Or lower tax receipts of £36bn, equivalent to 8p on income tax.
Of course UK trade negotiators will hope to do better /7
The UK will have no leverage. The EU can take its time over a deal that favours goods over services /8
But EU doesn't believe UK will take stand - going by last week - the important thing will be to get over line. And the EU will help them. /9
At the end of the two-year transition, with an FTA deal still in a rudimentary state, the UK will find itself over the same barrel as in phase 1 and phase 2.
The cliff-edge will look no more appetising then than now /10
Or perhaps, with fanfare, there will be a portion of the deal, a basic market access agreement, that can be implemented - and again spun as 'victory'. /11
The UK will look to offset cost of new EU-UK frictions elsewhere /13
If phase one is any guide, you'd have to say that in a world of unenviable choices, it is going to be difficult.
This is the UK risk now it seems to me. /15
But a grinding exit, costly at the margins, that stirs up the same frustrations that led to Brexit in the first place.
This would be a bad outcome for EU too, if they could see it. 16/ENDS