Committees

EU exit and transitional arrangements

12 December 2016

As part of its inquiry into the UK's future economic relationship with the EU, the Treasury Committee issues a call for written submissions on transitional arrangements.

Chair's comments

Rt Hon. Andrew Tyrie MP, Chairman of the Treasury Committee, said:

"Many firms are understandably concerned that in April 2019, the Government's current timetable for leaving the EU, they will be faced with a sudden change in their operating environment.

Transitional arrangements could offer firms some protection.

If it were concluded that transitional arrangements are likely to be needed, obtaining them would probably be an early and important objective of the negotiations.

Without an early commitment to them, firms may conclude that they cannot afford to wait, and act pre-emptively to protect their shareholders' interests. This action could include some cancellation of investment and/or relocation out of the UK, to the detriment of the British economy, and important parts of the financial services industry."

Transitional arrangements – call for written submissions

Transitional arrangements refer to any arrangement that takes effect between the point at which the UK formally leaves the EU (two years after a notification is made under Article 50(2), assuming no extension under Article 50(3)), and the point at which UK's final, settled relationship with the EU becomes effective.

The Committee invites evidence from firms, trade bodies, regulators, experts and any other interested parties on any or all of the following questions:

The desirability of transitional arrangements

  • The desirability in principle of transitional arrangements, and the reasons they might be necessary
  • The pre-emptive action that might be taken by the private sector in the absence of a credible commitment to transitional arrangements during the Article 50 negotiations
  • The timetable over which such pre-emptive action might be taken
  • The extent to which a political commitment to transitional arrangements might reduce the likelihood of pre-emptive action, and the form in which such a commitment in principle would need to be made
  • The likely consequences of not having negotiated transitional arrangements, assuming the UK's final, settled relationship with the EU has not been agreed at the end of the Article 50 process
  • The particular risks that might not be readily manageable in absence of transitional arrangements
  • The extent to which the Great Repeal Bill might provide all the legal certainty and continuity required to render the need for transitional arrangements unnecessary

The design of transitional arrangements

  • The period of notice that would be required of the UK's final, settled relationship with the EU to enable the private sector to make necessary preparations
  • The form that transitional arrangements would need to take in order to prevent pre-emptive action by the private sector, and minimise the risk of sudden and disruptive changes to the operating environment
  • The desirability or otherwise of a temporary period during which the UK's economic and legal relationship with the EU does not change ("standstill"), and the length of time that this would need to last in order for necessary preparations to be made

The negotiation of transitional arrangements

  • The interests of other EU Member States in transitional arrangements
  • The interests of other EU businesses in transitional arrangements
  • The likely timetable for securing a political agreement to transitional arrangements during the Article 50 negotiations
  • The compatibility of transitional arrangements with the Government's intention to leave the EU two years after the triggering of Article 50
  • The compatibility of transitional arrangements with the Government's intention to end free movement and the jurisdiction of the European Court of Justice
  • The practicalities of negotiating transitional arrangements before agreement has been reached about the shape of the UK's final relationship with the EU

The deadline for written submissions on transitional arrangements is 31 January 2017.

Further information

Image: iStockphoto