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What’s in Theresa May's Brexit deal and why is it so unpopular?

What’s in Theresa May's Brexit deal and why is it so unpopular?
REUTERS/Toby Melville
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This article originally published in January has been updated.

Three times this year the UK parliament has voted down the Brexit deal negotiated by London and Brussels, and approved by the other 27 EU governments. Deadlock over the path ahead has brought down Prime Minister Theresa May, and twice forced a delay to the UK's scheduled departure date from the EU. It has now been set by EU leaders for October 31.

British parliamentary approval for the exit deal is one of the conditions necessary for its terms to take effect. Without it, the default legal position is that the United Kingdom will leave the European Union without an agreement.

The deal consists of two parts: a Withdrawal Agreement covering the terms of the UK’s exit, and a Political Declaration setting out a framework for future relations.

Boris Johnson has pledged to renegotiate the deal as prime minister, and take the UK out of the EU by the end of October "come what may". European leaders have repeatedly ruled out reopening the Withdrawal Agreement – dealing with the divorce bill, citizens' rights and arrangements for the Irish border. However they are willing to rework the Political Declaration on future ties.

In the spring, MPs voted to force the government to seek to delay Brexit rather than allow the country to leave the EU without a deal. But attempts to find alternative solutions to the negotiated deal failed to secure a majority for any proposal.

What are the main arguments?

Theresa May insisted the deal negotiated with the EU was in the UK national interest and delivered on the result of the June 2016 referendum. Its supporters argued it was a sensible compromise, while the EU and many in business said it was vital to avoid a chaotic exit.

The controversial Irish “backstop” – the mechanism designed to guarantee an open border on the island of Ireland – was one of the main reasons MPs rejected the agreement. Many “leavers” also argue that the deal leaves the UK too closely entangled with the EU and some say they would prefer no deal at all.

Many “remainers”, meanwhile, say the agreement is far worse than current membership terms and fails to deal properly with future relations. Some would like to offer the public the chance to overturn the result of the 2016 referendum. The main Labour opposition says the deal does not meet its six Brexit tests, which include a customs union with the EU.

What does the Brexit deal contain?

The long Withdrawal Agreement (on the terms of the UK’s exit) and shorter Political Declaration (on the future relationship) were the result of nearly two years of negotiations between London and Brussels. The deal was approved by the British government and the other 27 EU countries in November.

Withdrawal Agreement

A transition period

The legally-binding Withdrawal Agreement would establish a “transition or implementation period” to run after Brexit until the end of 2020, during which many existing arrangements would stay in place.

Although no longer an EU member, the UK would still have to conform to EU rules during this period. The transition can be extended “for up to one or two years”, with a decision taken by mutual consent before July 1, 2020.

  • Critics of the deal argue that far from taking back control — a key pro-Brexit referendum slogan — the UK would be surrendering it to the EU. It would be outside the EU’s institutions with no formal say over rules it would have to follow.
  • The advantage, however, it that this avoids a “cliff-edge” Brexit, giving people and businesses time to adapt to the UK outside the EU. It also allows more time to reach a final deal.

Money and rights

The accord settles the “divorce” issues to untangle the UK’s 46-year membership of the EU, largely confirming terms agreed earlier on two priority areas: money and citizens’ rights.

It establishes a mechanism for calculating the financial settlement — money the UK owes the EU to settle its obligations. No figure is mentioned but estimates have put it above €40 billion. It includes contributions to be paid during the planned transition period — to run until the end of 2020. If the period is extended, more payments will be due.

  • Many Brexiteers hate the financial settlement because it still involves large sums being paid to Brussels and brings no guarantees regarding the future relationship.
  • However, the EU made it clear from the outset that it’s about settling the bill for commitments undertaken — and it’s been argued that to renege on these would seriously damage the UK’s international reputation.

On citizens’ rights, under the deal, EU nationals in the UK and Britons in the EU – plus family members – would retain residency and social security rights after Brexit. Freedom to move and live within the EU and UK would continue during the transition period. People would be allowed to stay when it ends and apply for permanent residence after five years.

However, the right for British citizens settled in an EU country to move freely after Brexit within the bloc – as they currently can – remains up in the air and subject to a possible future agreement. This concerns those who want to retain as many of the UK's existing EU benefits as possible.

Read more:

What the deal means for EU citizens living in the UK

What the deal means for Britons living in the EU

The controversial backstop

This part of the withdrawal agreement in particular brought about its defeat in January, thanks to hostility among Conservative Eurosceptics and Northern Irish unionists.

The Withdrawal Agreement envisages a “backstop” mechanism to guarantee an open frontier between Northern Ireland in the UK, and EU member the Republic of Ireland. This is seen as necessary given the different tariffs and regulatory standards likely to result from the UK’s decision to leave the EU’s single market and customs union.

The backstop is described as a kind of insurance policy, should future talks fail to produce a free trade agreement. It would ensure no physical border infrastructure, allaying the risk of a return to the divisions that existed prior to a 1998 peace accord which put an end to decades of political violence.

Under the deal, the whole of the UK would remain in a “single customs territory” – seen as a temporary customs union – with the EU until at least July 1, 2020. This could be extended or terminated, but only by mutual agreement. Tariff arrangements would be the same as now.

  • This has infuriated many Brexiteers as it would prevent the UK from applying trade deals with other countries if tariffs are removed.
  • The UK government argues that neither the UK nor the EU wants the backstop and so it is unlikely to last.

Northern Ireland would also stay aligned to some EU rules, including in some areas of the single market. This would avoid checks at the Irish border — but would mean some controls between Northern Ireland and the rest of the UK.

  • Tory Brexiteers and Northern Ireland’s Democratic Unionist Party (DUP) – which has been propping up the government — hate anything which sets Northern Ireland apart from the rest of the United Kingdom. They have not been placated by attempts to minimise differences and cite May’s own insistence on “no border down the Irish Sea”.

The UK, including Northern Ireland, and the EU also commit themselves to a “level playing field” over tax, the environment, social policy, state aid and competition. The UK would have to align with future EU changes.

Although independent bodies are given a role, the European Commission and the European Court of Justice retain major powers of oversight concerning Northern Ireland — and to some extent for the UK as a whole.

To exit the backstop, either side can propose such a move to a Joint Committee — which can consult joint UK-Ireland institutions. The UK cannot unilaterally leave — although the government argues that changes agreed with the EU mean the UK cannot be trapped in the backstop indefinitely.

  • The lack of ability to leave the backstop unilaterally has particularly enraged the pro-Brexit camp. They have argued that UK independence is seriously compromised if customs union membership is indefinite.
  • Theresa May said that this would be highly unlikely as neither side would want it. The EU is anxious to stop the UK exploiting backstop arrangements to engage in unfair competition via “back-door” customs union membership.

Read more:

Why is the Irish border issue so complex?

What 'alternative arrangements' are there to the Irish backstop?

Can technology remove the need for the Irish backstop?

Legal disputes and other matters

Although a joint UK-EU committee and an arbitration panel would try to resolve disputes, the UK would remain under the jurisdiction of the European Court of Justice (ECJ) during the transition. Afterwards, its rulings would no longer have direct effect in the UK but it would retain influence.

One contentious issue — that of fishing rights — is left to be dealt with on another day. The agreement says the EU and UK should do their best to strike a separate deal on access to UK waters for EU fishing boats.

A protocol on Gibraltar — the British territory on the southern tip of Spain — seeks to ensure in particular that citizens’ rights are respected. Another, on Cyprus, aims to preserve the current situation — keeping the British military base in the EU’s customs territory.

Political Declaration

The 26-page Political Declaration accompanies the Withdrawal Agreement and sets out the basis for future relations, including trade. Euronews has previously examined it in more detail here.

This document is not legally binding but defends the core principles dear to each side: the integrity of the single market and customs union for the EU, and sovereignty for the UK. At the same time, it says future ties should be as close as possible.

Unlike Conservative Eurosceptics and Northern Irish unionists who have focused their hostility on the backstop arrangements in the Withdrawal Agreement, the UK's Labour Party has has emphasised its opposition to the Political Declaration. Leader Jeremy Corbyn has argued that the document is too vague and would lead the UK into a "blindfold Brexit".

Theresa May belatedly tried — and failed — to seek a compromise deal with Corbyn, putting the focus on Labour's demands for a customs union with the EU. The EU's chief Brexit negotiator Michel Barnier confirmed that this could be addressed by adapting the Political Declaration.

UK government fails repeatedly to get deal passed

All three votes in the House of Commons, on January 15, March 12, and March 29, saw an unlikely alliance of Brexit supporters and opponents come together to reject the deal by emphatic margins.

The EU refused to renegotiate the withdrawal agreement itself following the first parliamentary vote — even though the House of Commons voted to send the government back to Brussels to seek "alternative arrangements" to the backstop.

The night before the March 12 vote, Theresa May and European Commission President Jean-Claude Juncker announced to revisions to try to reassure sceptics:

  • A “joint interpretative instrument” allowing the UK to seek arbitration and an exit from the backstop, if the EU deliberately tries to keep the UK permanently inside it by failing to negotiate a new trade deal in good faith.
  • A "joint UK-EU statement" added to the Political Declaration which deals with future relations. This commits both sides to seeking alternative arrangements for the Irish border to replace the backstop by December 2020.
  • A “unilateral declaration” by the UK, with EU approval, saying nothing would stop Britain from taking steps to leave the backstop if relations broke down.

On the morning of the second vote the government's chief legal adviser, the Attorney General Geoffrey Cox – whose advice is influential with Brexiteers — issued a new legal opinion. He said the legal changes reduced the risk that the UK could be held indefinitely in the backstop against its will.

However, crucially he also wrote that the revised divorce deal did not give the UK the legal means to exit the backstop unilaterally if "intractable differences" arose.

It wasn't enough to change the minds of Northern Ireland's DUP and leading members of the Conservatives’ anti-EU European Research Group (ERG). Most again rejected the revised deal, which consequently suffered a second defeat.

The government decided the third vote in the House of Commons would be only on the withdrawal deal, not on the declaration on future relations. This was partly to conform to a ruling by the Speaker who insisted on substantial changes from the previous vote. However, it still ended in defeat by 58 votes.

Can Boris Johnson renegotiate the deal?

Amid the parliamentary deadlock over Brexit and the repeated defeats for the negotiated deal, leaders of the other 27 EU countries agreed to extend the date of the UK's departure until October 31.

As an ongoing member of the European Union, the UK was obliged to take part in elections for the European Parliament in May — which brought success for the newly-formed Brexit Party and to a lesser extent the pro-EU Liberal Democrats, but resulted in a drubbing for the ruling Conservatives and Labour opposition.

Theresa May's resignation sparked a leadership race to replace her as party leader and prime minister. A series of votes among party MPs and then the membership resulted in a resounding victory for prominent "leave" campaigner Boris Johnson.

The UK's new prime minister has pledged to try to secure changes in three months — which include the summer break — that his predecessor never obtained from the EU over two years. If his attempt fails, he insists that Brexit must happen come the revised scheduled departure date in October, deal or no deal.

Ditch the backstop?

Johnson has said the Irish backstop must be renegotiated in any new deal with the EU — something EU leaders have consistently ruled out. The insurance policy designed to guarantee an open border on the island of Ireland incurred the wrath of Brexiteers, ensuring the deal's downfall in parliament. But Ireland and the EU insist it cannot be ditched.

In an interview with the BBC, Johnson said it would be possible to "take the bits of the current withdrawal agreement... that are serviceable and get them done". EU leaders have remained firm in their opposition to "cherry-picking" from the bloc's rules and say the negotiated deal cannot be carved up.

The Northern Irish border question, he said, could be tackled during the "implementation period" after the UK's exit. The negotiated transition period, however, is part of the withdrawal agreement. The EU is adamant this must be passed for it to take effect. Johnson said he believed there would be a new approach as "politics has changed so much since 29 March".

He argues that technology can help maintain an open border, though many trade experts say nowhere in the world have such solutions yet brought a completely open frontier between two different regulatory and customs regimes.

Read more: What is the Irish backstop and why does Boris Johnson want it ditched?

Refuse to pay the bill?

The incoming prime minister has also said he would refuse to pay the UK's estimated €45 billion divorce bill unless the EU offers better terms — using the phrase "creative ambiguity" over whether payments would be made. Such a move regarding the UK's legal obligations has been criticised as reckless and dangerous.

Reuters quoted a top French source as saying it would be “equivalent to a sovereign debt default”. The EU's Budget Commissioner Günther Oettinger has also warned that failure to pay might affect future relations over trade, employment, and programmes on security, universities and science.

“Everybody knows what is on the table. What is on the table has been… negotiated successfully by the Commission and approved by all member states, and the election of a new prime minister will of course not change the parameters of what is on the table,” European Commission spokesman Margaritis Schinas said, when asked about Johnson’s threat.

Free trade — even with no deal?

The EU has made it clear that under a no-deal Brexit, the UK would be treated as a "third country". The European Commission's contingency plan says this means levying duties and taxes, and carrying out controls.

However, Boris Johnson — and key supporters — argue otherwise. "There will be no tariffs, there will be no quotas, because what we want to do is to get a standstill in our current arrangements under GATT 24," he told a leadership campaign debate.

Article 24 of the World Trade Organisation's General Agreement on Tariffs and Trade (GATT) has previously been invoked by Brexiteers. It allows for smooth trade in goods — but not services — once a free trade deal has been agreed in principle.

But this would require the agreement of both sides. The EU has repeatedly said it would not apply in a no-deal Brexit — which by definition, would imply a failure to agree on key issues.

Johnson's view has been flatly rejected by many trade experts, as well as the Bank of England governor Mark Carney, fellow Brexiteer the UK's international trade secretary Liam Fox, and even by one of his supporters, the attorney-general Geoffrey Cox.

But leading Johnson supporters such as former Tory leader Iain Duncan Smith argue that GATT 24 can deliver a "clean managed Brexit", and the candidate himself insists GATT 24 remains an option.

'No renegotiation' says EU

Meanwhile, outgoing European Commission President Jean-Claude Juncker, EU chief negotiator Michel Barnier and several other European government leaders have repeatedly ruled out a renegotiation of the legally-binding Withdrawal Agreement.

“It’s a treaty between the EU and the UK. It has to be respected by whomsoever will be the next prime minister… There will be no renegotiation,” Juncker said.

Barnier tweeted in reaction to Johnson's leadership victory by saying the EU hoped to work with him to ratify the Withdrawal Agreement and achieve an orderly Brexit — and confirming that the Political Declaration on future ties could be reworked.

British MPs have reinforced their opposition to a "no deal" Brexit — but opinions differ over whether the UK parliament would be able to block a government determined to pursue such a scenario.

It is also far from certain that the EU would approve another extension to the UK's membership.

Read more:

No-deal Brexit: everything you need to know

Brexit Guide: where are we now?

Watch: a history of the UK-EU relationship
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