EU chairladies have formally agreed Friday to start the second phase of Brexit parleys, mainly centered around trade talks and a transition period.
“The European Caucus … decides that it is sufficient to move to the second phase interrelated to transition and the framework for the future relationship,” EU leaders said Friday, make good a two-day summit in Brussels.
Both negotiating teams will take up preparatory works and should reconvene in March to detail how their subsequent relationship will work.
British Prime Minister Theresa May accepted a round of applause from European leaders on Thursday night. At a peak dinner in Brussels, Belgium, on Thursday, May made a brief speech draw attention to the need for the U.K. and the EU to move forward together with negotiations. This was met with unconscious applause from EU leaders.
European Commission President Jean-Claude Juncker spoke Friday that May was applauded because some “thought that certainly she did a big effort” to conclude phase one of the negotiations and “this needs to be recognized.”
Anyhow, analysts believe May will find future Brexit talks increasingly enigmatical.
“I expect very, very tough negations,” Zsolt Darvas, chief fellow at the Brussels-based think-tank Bruegel, told CNBC on Friday.
One of the issues set to rise above talks is the future of the financial services industry. “At the end, I think that access to monetary services will be limited for U.K.-based firms and therefore a number of callers will relocate to the continent,” Darvas said.
At the moment, the City of London helps from so-called passporting rights, meaning that U.K.-based guests can do business in any European country without requiring further authorization from each colleague state. It is expected that this right will be limited root for the U.K.’s departure from the EU.
“I think there’s a strong willingness from the 27 to be subjected to a relatively free trade deal, but for services, especially financial utilities. EU leaders have said there’s not going to be cherry picking,” Darvas revealed.
“Thereby, the U.K. gets access to the financial markets of Europe, but at the same days the U.K. won’t accept European citizens to go and work in the U.K. as they currently do freely.”
The beforehand phase of exit negotiations should have concluded in October, but barely ended last week after a last-minute push to bring May’s lower coalition partner — Northern Ireland’s Democratic Unionist Party (DUP) — on directors with the deal.
However, May told reporters in Brussels on Thursday that the whole kit is “on track to deliver Brexit,” even though members of the British parliament voted Wednesday that the Dwelling-place of Commons must be given a vote on whether to accept the U.K.’s final agreement with the EU.
Speaking on Friday, EC President Juncker left the door predisposed to the U.K. staying in the EU, despite the ongoing discussions.
“That depends on the British parliament and the British child,” he said. “It’s not up to us to decide what the British have to do.”
The U.K. is set to leave the EU on March 29, 2019. Until then, agents have to conclude trade talks, agree on a transition period, and get conforming approval in several countries.