Following the UK’s formal departure from the European Union on 31 January 2020, a transition period of 11 months was agreed. The purpose of this transition period is to allow UK-EU negotiators an opportunity to discuss key issues such as trade, and decide what the future relationship between the two sides will look like. The transition period is set to end on 31 December 2020, at which point the UK will leave the EU’s single market and customs union.
As the coronavirus pandemic spread across Europe creating economic devastation and uncertainty calls were made from the Managing Director of the International Monetary Fund (IMF), Kristalina Georgieva, to delay Brexit and extended the proposed transition period. Georgieva argued that in light of the economic forecast that the UK and EU should not press ahead with the proposed deadline to finalise a post-Brexit trade deal.
The IMF warned that the global pandemic is likely to cause the worst recession since the Great Depression and that given the UK’s sizeable role in the global economy that things should not be made tougher by the impact of Brexit.
However, the UK Government have repeatedly ruled out prolonging the transition period and rejected the IMF’s suggestion to do so. David Frost, the UK’s Chief Brexit Negotiator, stated that it would not be in the interests of the UK to extend and that given the current economic and political crisis caused by the coronavirus that the UK should be in control of its own affairs.
Deep divisions between the EU and UK on a number of issues coupled with delays of face to face negotiations as a result of the pandemic have undoubtedly created uncertainty as to whether a trade deal can be achieved by the end of the year. In the event of a “no-deal” Brexit, the UK would have to follow World Trade Organisations rules to do business with the EU. This will lead to financial tariffs being imposed on UK goods until such a time as a free trade agreement is reached.