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The big picture
With article 50 separation talks now behind her – albeit leaving a number of loose ends still to tie up – Theresa May marked the beginning of phase two of Britain’s Brexit talks with a cabinet reshuffle (more on that below).
The next 10 months will make or break Brexit. The UK and EU hope to sign off on a formal divorce agreement and at least an outline of future trading ties by October, giving all the capitals time to approve it before Britain leaves on 31 March 2019.
London would like more than an outline, but that looks very unlikely. It also wants a transition deal – or “implementation period ” – agreed by the end of March, the prime minister told the BBC’s Andrew Marr, which looks more achievable, although by no means certain.
Much could still go wrong. Britain continues to insist it want a “creative”, “deep and special” relationship holding on to most of the benefits of EU membership, but the government’s red lines preclude staying in the single market.
Without some kind of customs union with the EU – which the chancellor, Phillip Hammond, refused to rule out – there is no solution in sight for the Irish border, and no indication of how May can keep Northern Ireland’s DUP (on which her majority depends), the Irish government and her own Brexiters happy.
The EU has made clear that the UK’s demands mean the final outcome can only be a trade deal along the lines of Canada’s, plus some extra cooperation in areas such as defence and justice but with customs barriers and little provision for services.
As that becomes clearer, pro-Brexit campaigners may question if such a deal is worth the £40bn the UK has as good as agreed to pay. Talks could break down before October; May’s government could fall; the UK could yet walk out.
Early shots were fired by Brexit secretary David Davis, who turned the EU’s Brexit motto against it to say the bloc cannot “cherrypick” in a trade deal and the UK would not accept financial services being excluded from any agreement.
The old year ended with fireworks as the Labour peer Andrew Adonis resigned as the government’s infrastructure tsar, saying Brexit was a “nationalist spasm” that was causing a “nervous breakdown” in Whitehall and describing the government’s EU withdrawal bill as “the worst legislation of my lifetime”.
The new year does not look like being an easy ride.
The view from Europe
Europe has largely been on holiday too, but shows no signs of budging from its stance: the four freedoms are indivisible, and Britain’s red lines – “taking back control” of borders, laws and money – have unavoidable consequences for the kind of post-Brexit relationship available.
The 27’s impressive unity thus far is not guaranteed to last, however. German chancellor Angela Merkel is otherwise engaged in new coalition talks but Emmanuel Macron, the French president, urged EU leaders last week to maintain solidarity as negotiations move on to discuss the future trade deal:
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