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Analysis

Transition u-turn means more years as vassal and bigger bill

by Hugo Dixon | 21.02.2018

Theresa May’s latest flip-flop is both good news and bad.

It’s good that the government is finally admitting that a two-year stopgap deal may not be long enough to cushion the blow of quitting the EU. Indeed, the best guess is that we will need a further three years. In other words, five years in total after next March to nail down a future trade deal with the EU and implement it.

But the u-turn is also bad news because, for every extra year that we stay in transition, we’ll have to follow the EU’s rules without a vote on them and pay into its budget. We could be looking at five years in total as a vassal state and five years of taxation without representation. How can that be good for a proud nation, especially when we are currently one of the EU’s leaders?

When the government first proposed a stopgap deal to prevent the economy falling off a cliff after Brexit, it said this should last around two years. Its volte-face is contained in a document setting out its proposed text for the transition arrangement, obtained by Bloomberg. The key passage reads:

“The UK believes the [Transition] Period’s duration should be determined simply by how long it will take to prepare and implement the new processes and new systems that will underpin the future partnership. The UK agrees this points to a period of around two years, but wishes to discuss with the EU the assessment that supports its proposed end date.”

The government is saying its decision not to set an end date for the transition is a “red herring”. But it would say that, wouldn’t it?

It remains to be seen what the EU will say about May’s request. Its current position is that the stopgap should finish at the end of 2020. That coincides with the end of the EU’s current multi-year budget round. If we wish to enjoy the club’s privileges after that, it’s bound to ask for more money. What’s more, since we will have left the EU, it’s unlikely to let us keep the famous budget rebate that Margaret Thatcher negotiated.

The current net cost per year without the rebate is roughly £12 billion. If we need an extra three years, that will be another £36 billion on top of the £39 billion the prime minister has already agreed to pay for our divorce bill. That means a total payment of about £75 billion.

It would, of course, be crazy to let the economy fall off a cliff at the end of 2020. But losing control of our destiny isn’t great either. There is, though, one way to preserve our power and our prosperity: cancel Brexit.

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Edited by Luke Lythgoe

One Response to “Transition u-turn means more years as vassal and bigger bill”

  • It is becoming increasingly clear that the government will manage to continue an impossiblist “have cake and eat it” approach long enough to avoid any significant change in public opinion until brexit day is upon us. The canny brexiteers will now agree virtually anything to get us out next March in the knowledge that they can change anything they don’t like thereafter.

    Time is becoming the worst enemy of those who want to convince enough people to stop brexit in its tracks. I repeat my recent post on another thread that we should be advocating an extension of the 2 year Article 50 period (likely to be granted by the 27) rather than a transition period thus avoiding “vassal state” status while negotiations get to the point where we really know what the final out come will be. Otherwise we can campaign as long and as hard as we like following March 2019 – without any hope whatsoever of keeping the UK in the EU.