The UK today formally informed the EU that it will not seek any extension of the transition period. Hence the transition period which started on 1 February of this year will come to an end on 31 December 2020. The idea behind the transition period was for both parties to secure a trade agreement and a new partnership. With the formal rejection of the UK and the required time for ratification on both sides of the new deal, the deal has to be agreed upon by October.
In other words the EU will trade with the UK under the new rules as of 1 January 2021, which gives companies roughly 6 months to prepare.
But to prepare for what? After the fourth round of negotiations, still no significant progress has been made. Although the UK has published its UK Global Tariff (UKGT – see previous flash) there is still no overall agreement on how the future trading between the EU and the UK will look like.
Taking into account this uncertainty, business should have a clear view on the impact of Brexit, as all signs are there that we’re eventually heading for a hard brexit.