The proposed transition period suits both right wing Brexiters and the rest of the EU.
The concern in the EU is that we will ‘have our cake and eat it’. The British Government bases its future relationship on EU alignment, which provides comparative advantage, and divergence away from the EU, which also provides domestic comparative advantage.
For the EU, this looks like the UK wants to enjoy rights without accepting responsibilities; accruing the benefits of European integration without shouldering the burdens. The success of the European project is more important to Brussels than the economic value of the trading relationship with the UK.
It is precisely because UK has so successfully secured its interests as a member of the EU – shaping the evolution of the European project, while securing opt-outs from key parts of it – that the other member states understand how ruthlessly the UK pursues its interests. One of the great ironies of the current impasse is that the UK’s success in the EU stokes fears of its conduct outside it.
The rest of the EU is worried that on their north west border, will be a right wing island rogue state, where exceptionalist Brexiteer Conservative politicians will be goading separatist movements across Europe.
On 29 March 2019, the UK will depart from the EU by automatic operation of law; Withdrawal Agreement, or not. Whether you like it, or not. This departure could be postponed/delayed or cancelled, but none of the options currently available seem likely.
The one thing which will not delay or revoke Brexit is the incompetence of the UK Government, or the increasing absurdity of the UK position. Brexit will not stop just because it is full of contradictions, or because the UK is clueless. The UK government has committed itself to a legal process, which it’s either unable or unwilling to stop.
As long as the UK is actually out of the EU, many Brexiteers will accept the continuation of payments, freedom of movement, jurisdiction of the ECJ for a long transition period. Currently up to 31 December 2020, but possibly much longer. Because the UK will be out, and that is what matters. It will be easier to keep the UK as a current member than re-apply as another new member.
So being flexible on transition suits Brexiters, as it does not jeopardise the UK being out. In contrast, extensions of the Article 50 period would carry the possibility of UK changing it’s mind and staying in.
Expect a never ending Brexit, with a transitional period which contains a politically unstable right wing UK. Especially one with a UK government that is failing to prepare for any other outcome.