“The Conservative majority means the Government will ‘Get Brexit Done’ in the legal sense of ratifying the withdrawal agreement for the UK’s EU exit on 31 January. To avoid WTO rules applying, the UK’s future relationship with the EU now needs to be negotiated by the end of next year. For business planning, the binary outcomes become a trade deal or no deal by December 2020.
“Breaking the current Brexit gridlock and its paralysing uncertainty is a gift to businesses but with a short use by date. The Conservative manifesto pledge not to extend the 11-month transition period and what happens in practice will cause new uncertainty. Countdown clocks should realistically be reset to the end of June, the deadline for agreeing a one-time, two-year extension. Our clients expect a small Brexit bounce but recognise this is just one step further to an unknown destination, meaning deeper felt uncertainties remain.
Planning for a free trade agreement (FTA)
“As the dust settles, the rough shape of a future relationship might be emerging – but only for some.
For businesses moving physical goods, the scenarios are relatively clear with strong FTA precedents. They should now have a good enough feel for the implications to roll up their sleeves and start the serious work of implementing plans. For companies trading in services or those heavily regulated – the bulk of the UK economy – the direction of travel is ambiguous with no precedent for a FTA of this nature. For services, regulations and people, the picture will only emerge as negotiations progress which will stymie effective planning.
“While the timer will force negotiations to be conducted at breakneck speed, most of our clients prefer a better than “bare bones” deal – so long as they have a sense of the menu, they might accept it not being quite ‘oven ready’.
“The Government’s own readiness will come into sharp focus. Preparing the infrastructure and new trade technology systems necessitated by either a FTA or no deal, presents a major challenge with such limited time.”