Financial News

Brexit Article 50 Is Gone – Say Hello To Article 218

The Brexit row over parallel trade talks and the ‘divorce bill’ as Britain leaves the European Union is down to interpretation.

So far, the focus in the UK has been on Article 50 of the Treaty of Lisbon.

But Article 50 is gone and buried now Prime Minister Theresa may has pushed the exit button.

Now Brexit has moved on to Article 218 of the Treaty of Lisbon.

Article 50 deals with the manner of leaving, but Article 218 governs ‘third country’ deals with the EU.

Now Article 50 is triggered, the UK becomes a third country.

The EU interprets Article 50 as covering the principles of separation – and as these principles are agreed, the amount Britain must pay to leave is calculated.

Sequencing is all important

Further, Article 218 is then the mechanism for negotiating a trade deal.

How this plays out or is ‘sequenced’ is where the difference of opinion lies between Britain and the EU.

Britain sees a sequence of combining the Article 50 and 218 negotiations into a transitional deal.

The EU wants to see cash up front and then wants to talk about future trade.

Who will win? Well, despite the posturing and harsh words flowing between London and Brussels, both sides want a deal so must give some ground.

The whole process is ungainly with minister and civil servants from Westminster and Brussels thrashing out a deal which then must be approved by Parliaments the UK and Europe.

That’s when the trouble makers can try to derail the talks, and there are plenty on both sides.

Meanwhile, the media will be full of misinformation and fake news masquerading as fact.

Deal or no deal?

Although Brexit is due to complete on March 29, 2019, the date is not set in stone.

If both sides agree, the schedule can be extended, which is a worry for businesses that need to plan for Brexit.

“UK Ministers are fooling few people when they assert that no deal would be perfectly ok,” said Sir Paul Jenkins QC, a lawyer and former government adviser to prime minister’s David Cameron, Gordon Brown and Tony Blair.

“If there is no deal, business decisions over the next two years will be heavily risk-focused. We are already hearing about contingency plans for movement out of the UK in the banking and insurance sectors – not entire operations but enough for a sound base within the remaining 27.

“This planning guards against specific sectoral problems but also recognizes the real risk of no deal. Understanding this risk is critical for business planning.”

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