This means a transition period of 21 months from the end of the Article 50 expiry on March 29th 2019 until the UK is fully out of the EU on the first day of 2021.
This is slightly shorter than the 2-year transition that was thrown in the air. For businesses, it means three more years of some kind of a better trade deal, which is still unclear. And later on, full uncertainty.
The pound is not reacting too much, flirting with 1.34.
Chief EU negotiator Michel Barnier clarifies that the transition period will not be an “a la carte” for Britain to choose from. The transition will adhere to EU principles. He aims for an orderly withdrawal of the UK from the EU and mentions that “we are not there yet”.
The transition period will include access to the single market but also obligations. For hard Brexiteers, this means that the gates of immigration will remain open.
More: GBP: Fading Extreme Brexit Optimism; Wha’a the Trade?