The Government recently presented the Subsidy Control Bill, which creates a new UK legal framework for public authorities that provide subsidies to businesses. This briefing summarises the Bill, its background and commentary.
The post-Brexit transition period is scheduled to end on 31 December 2020. The UK and EU are still in negotiations with a view to agreeing a treaty (or set of treaties) that would be ready to come in force when the transition period ends.
Without an agreement in place, UK-EU trade will revert to World Trade Organization (WTO) rules and current co-operation arrangements in several areas will cease. But some things will change irrespective of whether a new UK-EU agreement is in place by 31 December.
This Insight explains some of the key changes and how the UK and EU are preparing for them.
The transition period
The transition period began when the UK left the EU on 31 January 2020. During this period, nearly all EU rules continue to apply to the UK. The UK remains part of the EU single market and customs union.
Under the Withdrawal Agreement (WA) the UK and EU could have agreed an extension to this period. But a decision on this had to be made before 1 July 2020. Some commentators have suggested that the transition period could still be extended, but this would most likely require a new UK-EU treaty rather than an extension through the WA. This might enable some or all of the current arrangements to continue for a time limited period. But such an arrangement might be politically difficult to agree for both sides, and legally difficult for the EU.
The UK will leave the single market and customs union
The UK is due to leave the single market and customs union at 11pm GMT on 31 December 2020.This would be the case both under the UK Government’s stated objective of a free trade agreement with the EU, or if no agreement is reached.
The European Commission emphasises, “there will be broad and far-reaching consequences for public administrations, businesses and citizens as of 1 January 2021, regardless of the outcome of negotiations.”
In presenting the Commission proposed directives for the UK-EU negotiations in February 2020, the chief EU negotiator, Michel Barnier, explained that even with a “best-in-class” free trade agreement, the UK and the EU would now have two separate markets.
Barnier highlighted examples of things that would change, including the need for customs checks and rules of origin (to determine where a product or its components were made). In addition, UK goods entering the EU would be subject to regulatory checks to ensure they comply with EU product standards. UK financial services suppliers would also no longer have the passporting rights they previously had.
Cabinet Office Minister Michael Gove told the House of Commons on 13 July that leaving the single market and customs union “will herald changes, and significant opportunities, for which we all need to prepare—Government, business and individual citizens.”
The end of free movement
Free movement for UK citizens travelling to, living and working in the EU will also end on 31 December (as it will for EU citizens coming to the UK).
Government guidance warns UK citizens they will need six months on their passports when travelling to the EU. They may no longer be able to use the border control lanes for EU citizens. They may need additional documentation for other reasons, including driving or taking pets.
UK citizens will not need visas to enter the EU for short trips. The EU has said that UK citizens coming to the Schengen area (covering most EU states) for a short stay (90 days in any 180 day period) will be allowed visa-free travel. But for longer stays Member States’ own rules are likely to apply.
The UK Government has said that EU citizens visiting the UK will be able to do so without visas for six-month periods.
EU and UK preparations for “any scenario”
The European Commission published a communication on “readiness at the end of the transition period” in July 2020 which highlighted “changes happening in any scenario.” This includes trade in goods and services, financial services, transport, recognition of professional qualifications, data protection, intellectual property, and EU international agreements (which would no longer apply to the UK). The Commission has published over 80 “readiness notices” for stakeholders.
In June the Government announced that UK import controls would be introduced in three phases: in January, April and July 2021. The Government said this “flexible and pragmatic approach” would give industry more time to prepare, recognising that the coronavirus had made this more difficult.
In his July statement on the end of the transition period Michael Gove highlighted the need to prepare, irrespective of whether or not there was a new UK-EU deal.
Gove announced a new border operating model and additional funds for border infrastructure, and outlined the different types of documentation traders would need. He also announced a public information campaign to help businesses and individuals to prepare. A Government press release in October warned that time was running out to prepare and urged all businesses across the country to check gov.uk/transition to see what action they need to take.
There are concerns about how ready the UK border will be for the changes which will occur in January. A recent report by the National Audit Office described preparations to manage the border at the end of the transition period as “very challenging.”
- UK-EU future relationship: Can a deal be reached in time? House of Commons Library, September 2020
- Implementing Brexit – Securing more time, Institute for Government, May 2020
- What would no deal mean?, UK in a Changing Europe, September 2020
- The UK border: preparedness for the end of the transition period, National Audit Office, October 2020
About the author: Stefano Fella is a researcher at the House of Commons Library, specialising in Brexit.
This briefing sets out the principles of EU rules on state aid and the WTO Agreement on Subsidies and Countervailing measures.
This paper provides an overview of the governance and dispute settlement provisions of the Trade and Cooperation Agreement. The Agreement establishes a network of committees to oversee its implementation. There is also an arbitration mechanism for disputes between the UK and EU, but with exemptions and variations for different policy areas.