UPDATE: Jan. 23, 2020: The U.K. House of Lords voted Wednesday to approve Prime Minister Boris Johnson's EU Withdrawal Agreement Bill unamended. It now awaits the Queen's signature before becoming law, keeping the U.K. on track to exit the EU on Jan. 31 as planned.
- The U.K. House of Commons ruled in favor of the EU Withdrawal Agreement Bill Thursday with 330 members voting for and 231 against. The Brexit bill now goes to the House of Lords. If approved, the U.K.'s withdrawal from the EU could formally become law by the Jan. 31 deadline.
- Currently, the U.K. is and will remain subject to EU trade laws until Dec. 31, 2020. Thanks in part to Prime Minister Boris Johnson's new parliamentary majority, he has expressed optimism that the U.K. and EU can draw up and ratify a trade agreement by that deadline to avoid costly economic disruption and trade barriers.
- The negotiations are set to begin in late February or March, according to a report from The Wall Street Journal. Johnson will have the option to request an extension in June if a deal can't be reached by the end of 2020.
Despite the bill's expected passage, supply chains in the region face continued uncertainty as the future of the U.K.'s relationship with the EU remains in doubt. If the parties don't reach a deal by the end of the year, the U.K. will lose its privileged access to the EU market and must renegotiate hundreds of existing trade agreements with member states.
Expectations of key port slowdowns, customs barriers and prolonged intermodal transfers have the food, healthcare and manufacturing sectors particularly concerned that stockpiling resources won't be enough to ride out a no-deal scenario. Auto manufacturers from BMW to Toyota are considering shifting their U.K. supply chains into the EU to be safe, though BMW called it a "worst case scenario."
Britain's European partners do not share Johnson's optimism for an expedient resolution to Brexit uncertainty.
The relationship between the U.K. and the EU "cannot and will not be as close as before, because with every choice comes a consequence," European Commission President Ursula von der Leyen said in a speech Wednesday. She called the likelihood of the two partners reaching a comprehensive trade agreement by the end of the year "impossible."
"We have now organised an orderly divorce. But now, the U.K. will automatically, mechanically, legally, leave 600 international agreements," the EU's chief negotiator Michel Barnier said in a speech Thursday. "We will insist on a trade partnership with zero tariffs, zero quotas, but also zero dumping."
Brexit uncertainty has roiled the U.K.'s economy since 2016, costing approximately 130 billion pounds ($170 billion) to date and potentially an additional 70 billion pounds ($91 billion) in 2020 alone, according to a Bloomberg Economics report. The majority of the loss comes from devaluations of the British pound and decreases in economic productivity.