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European Council President Donald Tusk, who chaired the talks among the 27 European governments, announced the decision Monday morning on Twitter: “The EU27 has agreed that it will accept the U.K.’s request for a Brexit flextension until 31 January 2020. The decision is expected to be formalised through a written procedure.”
This means that the U.K. will be able to leave the EU at any point before January 31, provided that its Parliament approves the exit agreement that Prime Minister Boris Johnson concluded with the other 27 EU leaders earlier this month.
Tusk’s announcement came after a meeting between the 27 European ambassadors, in Brussels, where they signed off on a third delay.
A draft document prepared ahead of that meeting, signed on October 27, and seen by CNBC said: “With a view to allowing for the finalisation of all steps necessary for the ratification of the Withdrawal Agreement, including the obtaining of the consent of the European Parliament, the European Council agrees to a further extension.”
“It notes that the Withdrawal Agreement will enter into force on the first day of the month following the completion of the ratification procedures by the Parties during this period, which ends at the latest on 31 January 2020,” the same document states.
The U.K. asked the EU earlier this month to be given until January 31 to leave the bloc. A few days later, the U.K. Parliament voted in favor of Prime Minister Boris Johnson’s revised Withdrawal Agreement, but said once again that it needed more time to approve all the necessary legislation.
Sterling was trading about 0.1% up against the dollar in the early trading hours of Europe.
“The European Council firmly states that it excludes any reopening of the Withdrawal Agreement in the future and recalls that any unilateral commitment, statement or other act by the United Kingdom should be compatible with the letter and the spirit of the Withdrawal Agreement, and must not hamper its implementation,” the document said.
The 27 European countries had concluded with the U.K. government last year a deal stating how the latter should leave the EU – the Withdrawal Agreement. However, the U.K. government, under the leadership of Theresa May, failed to get it ratified by the U.K. parliament due to the controversial Irish backstop — an insurance policy that would be implemented if the EU and the U.K. were not to sign a trade deal in the coming years and would divide Northern Ireland from the rest of the UK in terms of customs territory.
The EU ended up revising that agreement with the new U.K. government, led by Boris Johnson – which was concluded earlier this month.
According to the same draft document, the EU is set to remind the U.K. that for as long as it remains a member of the EU, it has the “obligation” to suggest a commissioner to be based in Brussels.
Less time for trade talks
Once the U.K. leaves the EU, under the ratified deal, there will be a transition period until the end of 2020, which could be extended until the end of 2022. The longer the U.K. takes to leave the EU, the shorter this transition period will be. During the transition period, both sides will look to negotiate a trade agreement.