The dramatic election setback for Prime Minister Theresa May has sown fresh doubts about the UK Conservatives’ Brexit plan.
Finally, almost a year after the UK’s vote to leave the EU, Brexit negotiations are expected to start in Brussels next week, with Mrs May now heading a minority government.
This is uncharted territory for the EU – a member state leaving the club – so tough bargaining is likelier than smooth progress.
Under the terms of Article 50, a divorce deal has to be reached by the end of March 2019. There is no deadline for a longer-term trade and partnership deal.
What will be the initial focus? And what could be the sticking points?
EU citizens’ rights
The European Commission says it will “seek to guarantee the rights of both EU citizens in the UK and UK citizens in the EU, as well as their families (regardless of nationality)”. It says “this includes rights that will only enter into effect in the future, such as old-age pensions”.
About 3.2 million non-British EU citizens live in the UK. Some 1.2 million UK nationals live in the other 27 EU member states.
The UK government agrees that protecting citizens’ rights needs to be tackled early in the talks. But it has resisted calls to give unilateral guarantees to EU citizens living in the UK.
EU law covers many rights, including working conditions, reciprocal healthcare, legal protection abroad and freedom of movement.
The European Court of Justice (ECJ) in Luxembourg is the final arbiter of those rights. But the scope of its jurisdiction will change once the UK leaves the EU.
The Leave campaign pledged to “take back control” and recover full UK sovereignty. That suggests a possible conflict between the powers of the ECJ and UK courts.
One solution could be to establish a joint panel of EU and UK judges just to deal with disputes involving citizens living in each other’s territory.
Controlling immigration from the EU is paramount for the UK government – it was a major concern for Leave voters.
Immigration overlaps with EU citizens’ rights in the UK in key areas: Who qualifies for UK residency? Which family members can stay in the UK? What are their welfare entitlements?
The divorce settlement will need to clarify such points – and it is a legal minefield.
Northern Ireland border
This is a pressing issue because, once the UK leaves, it will become an external border of the EU – and the UK’s only land border with the bloc.
Northern Ireland and the Republic of Ireland enjoy free movement across the border, and the removal of checkpoints was a key success of the 1998 Good Friday Agreement, which ended 30 years of sectarian conflict.
There is strong political momentum behind maintaining the Common Travel Area, which has existed between the UK and Ireland since the 1920s.
It means passport-free travel between the two countries, with close co-operation between border services.
But if the UK leaves the EU single market – as Mrs May and Conservative Brexiteers want – there will have to be customs controls on the border.
The implications for trade are enormous. New customs posts might be avoided, however, if the UK opts to stay in the EU customs union. It could do that, yet still leave the single market – a situation that Turkey has today.
The border question will loom large now that a Northern Ireland party, the conservative Democratic Unionists (DUP), is poised to prop up Theresa May’s minority government.
UK divorce bill
Calculating the UK’s exit bill will be fraught with difficulties. There is no simple formula for it, and every sign that the UK and EU will argue intensely over the figures.
The Commission is aiming for a “single financial settlement” covering:
- the UK’s share of EU commitments due before the Brexit deadline, called “reste à liquider” (RAL) in EU jargon
- the UK’s contribution to EU institutions, such as the European Investment Bank (EIB)
- longer-term commitments, including pension payments for EU staff.
A much-quoted estimate of the UK bill is €60bn (£53bn; $67bn), attributed to unnamed Commission sources. But the Financial Times calculated that it could be as much as €100bn.
UK Brexit Secretary David Davis says the UK will not pay a €100bn “divorce bill”. Some who favour a “hard” Brexit argue that the UK owes the EU nothing and can simply leave.