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UK could have little more than one year for Brexit negotiations, economist says

U.K. Prime Minister Theresa May's resolution to complete Brexit negotiations within a two year timeframe could come back to haunt her as unpredictable European elections look set to push back talks by more than six months, according to one senior economist.

Despite May's plans to trigger Article 50 in March and begin talks in March for a new U.K.-EU relationship, discussions could be on hold until as late as September, when Germany goes to the polls to choose its new Chancellor, Markus Kuger, senior economist at Dun & Bradstreet, told CNBC.

Prime Minister Theresa May during a press conference at Government Buildings in Dublin.
Niall Carson | PA Images | Getty Images
Prime Minister Theresa May during a press conference at Government Buildings in Dublin.

Germany's is the last of three major European elections to take place this year. In March, the Netherlands will select its new leader, followed by France in April.

"There's no point making agreements when the government is changing. If you start negotiations and make tentative agreements with existing governments the incoming parties may not feel bound to it," Kuger said over the phone.

Further time will then be needed at the end of the two year negotiation period in order to ratify any new arrangements.

This will leave May with just over a year to commence and confirm new agreements with the EU before her self-imposed deadline of March 2019, estimates Kuger.

This is a tall order, making it "highly unlikely" that a suitable deal will be reached, according to Kuger, especially given that similar agreements, such as the CETA deal between the EU and Canada, took seven years to complete.

A long break-up

To cope with this, Kuger suggests an "interim arrangement" that will come into force from Q1 2019 until a new deal is enacted. This could last a number of years, he said.

"The problem with an interim period is that the U.K. will have some bitter pills to swallow."

These pills may come in the form of a concession to the free movement of people or legislative limitations for an extended period, according to Kuger.

The EU will have a vested interest in allowing a transition period and upholding its relationship with the U.K., but it will be a fine balance to strike as it looks to secure the future of the economic bloc.

"If Brexit is a success there are other countries like Finland and the Netherlands that have become increasingly hostile to the EU," he said.

"Once we see big countries leaving, like Italy and France, we will see the collapse of the EU."