The EU’s chief Brexit negotiator has told businesses to prepare for the possibility of the UK exiting the bloc without a transition period amid a stalemate over the Irish border issue.
Michel Barnier told German industry leaders last night to begin planning for “all scenarios.”
He said the 21-month transition period that businesses lobbied for will not be certain until the last 25% of the Withdrawal Agreement has been signed-off by both sides.
The biggest outstanding issue is how to avoid a hard border in Ireland if the UK leaves the single market and customs union, as the UK government currently intends.
EU negotiators last week gave a “detailed and forensic rebuttal” to the feasibility of two options put forward by Prime Minister Theresa May in her Mansion House speech last month.
That has sparked suggestions that Mrs May could be forced to remain in the customs’ union.
Speaking in Hamburg last night, Mr Barnier said “good progress” had been made towards achieving an “orderly withdrawal” by the UK – including on the transition period.
But he added: “Make no mistake: certainty on the transition will only come once the whole Withdrawal Agreement has been agreed and ratified by both sides, hopefully at the beginning of next year.
We are not there yet for the orderly withdrawal. There are still important issues to solve, in particular on Ireland and Northern Ireland and the governance of the Withdrawal Agreement.
“This means that companies must waste no time, and prepare for all scenarios now.”
Mr Barnier said the EU has “done our share of the work” on finding a solution to the Irish border issue and called on for the UK government to deliver “clarity” on its plans.
“It is now up to the UK to come up with its vision for the future, which should confirm the UK’s red lines or adapt them,” he said.
He said the red lines set out by Mrs May in her Mansion House speech last month – leaving the single market and customs union – were “closing doors.”
But he said: “If the UK’s red lines were to evolve, the Union would be prepared to reconsider its offer. We are flexible, never dogmatic. We are open for business.”
The UK government is so far sticking to plans to leave both the single market and customs union.
And Mrs May insisted yesterday that she is still working towards implementing the proposals that were reportedly rejected by the EU last week.
“We’ve put forward proposals that will deliver a frictionless border and enable us to do trade deals around the rest of the world,” May told reporters.
“I think that will be the best position for the United Kingdom and that’s what we’re working for.”
That will be put to the test again next week as MPs debate the customs union and the next round of Brexit negotiations take place in Brussels.