Brexit Business Brief | Rolling exit dates

31 October 2019 is the new 29 March 2019

In the early hours of yesterday morning, the European Council agreed to extend the UK’s membership of the EU, and the Article 50 period, until 31 October 2019. The Council's decision in full is here and in short form here. The UK has formally agreed to the extension terms here.

What has been agreed?

• The extension is to last until 31 October 2019, unless the Withdrawal Agreement is ratified earlier (and if it is done earlier, the UK leaves on the first day of the month following completion of the ratification procedures). As the Council’s full decision puts it, "the withdrawal should take place on the first day of the month following completion of the ratification procedures or 1 November 2019, whichever is the earliest".
• If the House of Commons approves the Withdrawal Agreement before 22 May 2019, the UK would leave at the end of May and not participate in the European Parliament elections.
• If the Withdrawal Agreement is not approved by the House of Commons before 22 May, then the UK must hold those elections. If it fails to do so, it leaves on 31 May on ‘no deal’ terms. (The UK government has already put in place the legal requirements for those elections to be held.)
• No re-negotiation of the Withdrawal Agreement is permitted during this new extension period.
• The UK remains a full member of the EU during this new extension period, and so of the Single Market and the Customs Union.

So the ‘no deal’ cliff edge is moved to 31 October 2019?

Yes, and no. That’s when the UK is now scheduled to leave if there is no deal (or if the Withdrawal Agreement is ratified in October). But there does not appear to be anything in the Council decision which rules out a further extension – something that has been acknowledged by certain EU leaders.

Why the end of October?

The new European Commission forms on 1 November 2019.

What does this mean for business?

Whilst this avoids an imminent no deal Brexit (which would have happened today, had an extension not been agreed), the extension will mean continued uncertainty, but this time with multiple possible dates for a UK departure. The no deal date is moved back to the end of October (or the end of May if no European Parliament elections are held in the UK).

And the UK could leave on the first day of any month between June and October if the Withdrawal Agreement is ratified during that month. That means we have a series of rolling possible exit dates, on the start of each month from June.

The transition and the future

On the original timetable, the UK should by now have left the EU; be in the status quo ‘transition period’; and be preparing for the negotiations on the future relationship as sketched out in the Political Declaration.

While the timetable for the UK to leave the EU has been put back, there has been no change to the dates in the Withdrawal Agreement. The end of the transition period, as set out in the Withdrawal Agreement, remains 31 December 2020 (unless extended under the terms of the Irish backstop).

The consequence of this further extension, is that the UK will have an even shorter period to negotiate the future relationship – possibly as short as the 14 months between the end of October 2019 and 31 December 2020. Those negotiations can’t start until the UK has left the EU.