Brexit: Mayday in March?


With the United Kingdom set to leave the European Union on 29 March 2019, the Withdrawal Agreement between the UK and the EU, published on 26 November 2018, remains unratified by the UK Parliament. Having already lost one parliamentary vote on her proposed deal, Prime Minister Theresa May has failed to appease hardliners within the Conservative Party over the issue of the Irish backstop and win a Commons majority in support of the Withdrawal Agreement as set out last November.

Refusing to amend her own ‘red lines’ for agreement, Mrs May has instead pursued rounds of discussion with EU leaders seeking changes to the mechanism that aims to prevent a hard border returning to the island of Ireland. The EU 27 have sought to assure Mrs May that there is no intention to use the backstop as a way of effectively keeping Northern Ireland in the EU – but insist that the Withdrawal Agreement cannot be renegotiated.

On 24 February, facing mounting pressure from within her own Cabinet to extend Article 50 and delay Brexit, Mrs May said that leaving on 29 March was “within our grasp”, and that the Commons would be able to vote again on her deal by 12 March – only 17 days before the UK is scheduled to leave the EU.

Political intransigence and deep division that crosses party lines make it unlikely that a largely unchanged deal will be approved by Parliament, leaving the UK destined to exit the EU without a deal unless Article 50 is extended.

The EU’s Position

Prior to the publication of the Withdrawal Agreement, the European Commission issued a Communication setting out contingency measures in the event of a ‘No Deal’ scenario when the UK leaves the EU. Published on 13 November 2018, the Communication set out that these measures should not replicate the benefits of EU membership, nor the terms of any transition period, as provided for in the Withdrawal Agreement; they must be temporary in nature and should in principle not go beyond the end of 2019; and they must be unilateral actions of the EU in pursuit of its interests, and therefore in principle the EU could revoke them at any time.

On 31 January 2019, with no deal in sight, the Commission published a further proposal to ensure the continuity of funding arrangements between the UK and the EU in the event of no agreement by 29 March 2019. It recognises that the UK exiting the EU without a deal would leave the budgetary relations between the EU and the UK without agreed legal arrangements, until a deal is eventually reached. The Commission acknowledged that this would result in ‘considerable uncertainty and difficulties for the implementation of the Union’s budget, for all UK beneficiaries and in some cases also for beneficiaries of the other Member States.’

The proposed contingency framework would allow the UK to remain eligible for EU funding until 31 December 2019. This would be subject to the UK making a written commitment and continuing to contribute to the financing of the EU budget for 2019. As the UK would fully contribute the 2019 budget, UK entities would continue to be eligible throughout 2019 for any calls, tenders, contests etc from the multiannual financial framework 2014-2020 decided while the UK was a member of the EU. The aim is to avoid, or at least minimise, any unnecessary disruption for beneficiaries of EU spending programmes and other actions at the time of the UK’s withdrawal, also with the expectation that this will facilitate a future financial settlement between the EU and the UK.

If the UK and EU were unable to reach an agreement before the end of 2019, the situation at the beginning of 2020 would be equivalent to the one at the current withdrawal date of 29 March 2019. In either event, the EU and the UK would be required to honour their respective obligations during the UK’s membership of the EU until the exit date.

The UK’s Position

Independent of the European Commission, the UK Government announced two years ago that it would underwrite UK funds for all EU-funded projects successfully bid for while the UK is a still a member of the EU. This extension was extended in July 2018 to cover all funding for UK participants successfully bid for from exit day until the end of 2020 in the event of a ‘no deal’ scenario. With regards to Horizon 2020 – the current Framework Programme for Research and Innovation – the UK and the EU’s intention is that UK researchers and businesses will continue to be eligible to participate in Horizon 2020 for the remaining duration of the programme.  This will ensure that UK Research and Innovation (UKRI) can keep UK researchers and businesses informed of the next steps if the Government needs to underwrite Horizon 2020 payments.

In the meantime, UK recipients of Horizon 2020 funding are being invited by UKRI to input basic information about their awards into an online portal. This system is a first step towards supporting the continuity of funding for UK organisations which have been awarded grants from the European Union’s flagship programme for science and innovation. The bespoke portal will capture basic information about recipients’ grants and identify a relevant contact at the participating organisation for the project, likely to be the LEAR (Legal Entity Appointed Representative), so that they can be informed of the next steps in the process.

Those in receipt of Horizon 2020 grants, and participants in a Euratom Research and Training project or an ongoing Framework Programme 7 project are urged to input their information into the system as soon as possible. Recipients must have a Horizon 2020 or Euratom R&T signed grant agreement in order to register their details on the portal.

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