The EU27 have today agreed the terms of the UK's transitional period with the EU following its exit on 29 March 2019 and adopted guidelines setting out the EU's negotiating position on the future relationship. Although this means that the effect of the transition – to delay the effects of Brexit for businesses – is now known, it is not yet legally binding. Businesses need to prepare for the transition period, while also continuing to follow through on their contingency plans for a 'no deal' scenario.

On the future relationship, the Guidelines confirm the EU's stance that the UK will not be given preferential access to EU markets without also signing up to the EU's institutional and legal set up. It has presented this as an automatic consequence of the UK's positions, which "will inevitably lead to frictions". However, as the Guidelines also show, the EU is willing to bend its own rules to get what it wants, for example to maintain access to the UK's fishing waters. The EU has also said it would prefer the UK to remain aligned to its substantive rules, which is what Theresa May was offering in her Mansion House speech, albeit in exchange for preferential access.

On paper, the parties appear far apart but, reading between the lines, there is scope for negotiation if the political will exists and, as the agreement of transitional arrangements today shows, business can play a vital role in bringing the parties together to agree mutually beneficial outcomes not otherwise on the political agenda.