Britain will remain bound to rules from Brussels for nearly two more years after Brexit as Theresa May crossed her own red lines to strike a transition deal with the bloc today.
In a move that was hailed as a breakthrough by some business groups, David Davis, the Brexit secretary, and Michel Barnier, the EU’s chief negotiator, said they had resolved major sticking points to allow a transition deal to be signed by European leaders later this week.
While Britain has won concessions from the EU to allow it to negotiate and sign trade deals during the period without authorisation, it will elsewhere have to follow EU rules, with strict sanctions if the government fails to do so.
In particular the prime minister was forced to back down on her insistence that EU citizens arriving in Britain during the transition period could “not expect” to be treated in the same way as European citizens already in the country.
As part of the agreement all citizens — both UK and EU — will enjoy “the same rights and guarantees” as those present before Brexit.
The government also backed down on its insistence that it would take back control of its fishing waters after Brexit. Under the deal agreed today the UK will effectively remain part of the Common Fisheries Policy (CFP) until the transition period ends in December 2020.
The UK will not have a seat at the table when quotas are set for 2020, although the European Commission has pledged that Britain’s allocation will not be reduced.
The failure to secure more concessions has angered fishing organisations and Scottish Tory MPs.
The Scottish Fishermen’s Federation chief executive, Bertie Armstrong, said: “This falls far short of an acceptable deal. We will leave the EU and leave the CFP, but hand back sovereignty over our seas a few seconds later.”
The Scottish Tory MP Ross Thomson added: “UK national fisheries resources are not negotiable and that means we will therefore be setting our own fisheries policy from 29 March 2019. We cannot remain party to the CFP during the proposed transition period.”
The British side also issued a partial climbdown on Northern Ireland, agreeing that the withdrawal agreement should contain a “backstop” to prevent a hard border in Northern Ireland if an acceptable compromise cannot be reached.
Richard Tice, of the pro-Brexit group Leave Means Leave, said: “Once again we appear to have caved in.
“This is totally unnecessary and UK negotiators must insist that this is removed from the text.”
Business groups, however, welcomed the progress made on the transition deal, with the CBI describing it as a “breakthrough”.
Carolyn Fairbairn, the organisation’s director-general, said: “Agreeing transition is a critical milestone that will provide many hundreds of businesses with the confidence to put their contingency planning on hold and keep investing in the UK.
“This spirit of compromise must be maintained, as tough choices lie ahead on the route to a final deal.”
The announcement of a deal this morning came after a weekend of intensive talks, between EU and UK negotiators.
The pound jumped by almost 1 per cent against the dollar to 1.40 US dollars after the news. Sterling also up 0.7 per cent against the euro at 1.14 euros.
At a joint press conference Mr Davis and Mr Barnier said they had resolved all the major sticking points to allow the deal to be signed by European leaders this week.
The Brexit secretary said that the agreement represented a “significant step” while the EU’s chief negotiator described it as “decisive”.
“They [businesses] now have certainty about the terms that will apply immediately after our withdrawal, meaning that they can continue to operate and invest with confidence as the design of our future partnership with the European Union becomes clear,” ” Mr Davis said.
Mr Barnier added: “The intention is to move as fast as possible on all aspects of the future relationship.”
Simon Coveney, Ireland’s foreign minister, said negotiations were “moving forward”. “Progress on Irish issues remains a key priority for both negotiating teams and solidarity with our EU partners remains strong,” he said.
Mrs May said it proved that an overall deal was possible within the timeframe.
“Prior to December, people questioned whether we would get agreement then,” she said. “We did. People questioned whether we would get agreement now. We have.
“I think what this shows is that with goodwill on both sides, working hard, we can get an arrangement for the future which will be in the interests of the UK and in the interests of the European Union and it will be good for all parts of the UK.”
But Mats Persson, David Cameron’s former Europe adviser who now works for the consultancy firm EY, warned that some business would not take politicians at their word.
“[This] draft Brexit transition deal means business face a binary choice,” he said.
“They can plan on the basis of a political deal and put contingency plans on hold or make an irreversible decision to activate plans now as October too late.
“I’d say [there is] a 50-50 split amongst businesses I speak to.”
March 19th, 2018: The Times