European leaders will conclude another summit meeting in Brussels this Friday. The next summit after that is in October – the last chance saloon for an orderly deal on British withdrawal from the EU.

The withdrawal agreement, including a transition or standstill period, must be agreed, signed off and ready for ratification by the UK parliament, the Council and the European Parliament no later than October (maybe November at a stretch). The clock has been ticking through the two-year notice period provided for since the UK notified its intention to withdraw and the time has not been productively employed.

Brexit is not the only agenda item for the leaders in Brussels this week – the migration crisis has been intensified by the actions of the new Italian government and US President Donald Trump has been working away at fomenting a trade war.

But the summit communique must say something about the negotiations with the UK and it can hardly be the same formula as before – “progress is being made, more to do” – the waffle employed after the failures reported to previous summits in December and March.

There are just nine months to go before the UK departs the European Union at the end of March next year. This deadline cannot be altered even if there was political willingness, either in the UK or in the EU27, to hold a fresh referendum or to defer the automatic operation of the Article 50 resignation letter.

There is simply not enough time for legislating and holding a second referendum and there is no meaningful political support where it matters, in the House of Commons. In any event, the legal experts are not agreed that the operative date of Article 50 can be deferred, much less revoked.

It is wishful thinking at this stage to pretend that the UK will not leave the EU and become a third country on 29 March next. Without a negotiated withdrawal agreement and a transition period attached, trade with the UK will shortly become trade with a non-EU country, costly and burdensome for importers as well as exporters. There are just three possible outcomes:

  • (i) A free-trade agreement to be negotiated during a transition (standstill) period of two years or so. This is the stated objective of the UK government but with unrealistic requirements on the UK side that the EU feels it cannot concede.
  • (ii) A climbdown by the UK and continuing membership in the EU single market and a new customs arrangement, with a transition period attached. This option could be acceptable to the EU27 but has been ruled out, at least for now, by Mrs May’s government. The Labour opposition has not opted for single market membership either and no preparatory work has been done. Changing tack in this direction, the least disruptive outcome for the UK’s trading partners, including Ireland, would mean a split in the Tory party, possibly also in the Labour party and a political crisis in the UK.
  • (iii) No deal, automatic departure next March, with no transition.
  • No serious discussions have begun on option (i), a third-country free-trade deal of the kind agreed with Canada recently, and it would take many years to complete. The withdrawal agreement as drafted by the Commission offers a transition period (to end-2020) that would not be sufficient. Some experts believe a proper deal would take six or seven years.

    The second option, UK membership in the single market, sometimes described as the Norway option, would entail breaches of Mrs May’s taboos about freedom of movement and a continuing role for European Court judgments.

    Costly and chaotic

    The no-deal outcome would be costly and chaotic. After 45 years of membership, the UK economy is fully integrated into the European system to the point where business disruption would be widespread.

    The most likely outcome, since nobody wants chaos, is a continuing attempt to work towards option (i), an eventual free-trade agreement along Canada lines. But this would involve a hard border in Ireland – there are no wizard technological solutions.

    The EU does not want this outcome, not just because of solidarity with Ireland but because it would mean hard borders with the UK for everyone else as well.

    If the less troublesome Norway option is to be moved up the agenda, there needs to be political change in the UK.

    Last Saturday’s march in London for a second referendum looks to me to have been a doomed enterprise – there is simply not enough parliamentary time, or support. Nor is it clear that public opinion has shifted enough to ensure a pro-Remain outcome.

    European leaders must be tempted to collapse the scrum by declaring that there has been insufficient progress and precipitating the UK political crisis now rather than in October.

    Read more

    UK proposes time-limited hard border Brexit solution

    Colm McCarthy: Irish border not the only contentious Brexit issue