Seven months on from the triggering of Article 50, Adam Jackson, Director of Public Policy explores where talks are at, what happens next and how businesses should react.
Not much has changed since talks began.
Whilst some progress has been made on key issues regarding the UK’s departure (the 'divorce settlement'), it has not yet been sufficient to move discussions onto our future trading relationship with the EU.
The next opportunity for this to happen is at the EU council in mid-December.
What can we expect from the negotiations to leave the EU?
Despite the continuing uncertainty, there appears two potential scenarios for March 2019:
1. No deal/chaotic Brexit – Time runs out and the UK leaves the EU with no agreement and trades under WTO terms. In this scenario we expect an initial period of chaos – with currency volatility, significant delays at ports and airports and some confusion about what rules apply. Over time this would settle down to a more uniform application of WTO rules.
2. Deal/orderly Brexit – The UK and EU agree withdrawal (Article 50) and a framework for a new relationship. This would include a ‘time-limited’ transition of around two years – with the UK remaining in the Single Market and Customs Union – meaning no change on exit day.
It looks 50/50 as to which scenario will materialise and the final outcome may not become clear until late 2018.
There are outcomes we can expect regardless. In both scenarios we can expect to see a tightening of immigration policy, with Government looking to bring in new requirements, either on skills or wage thresholds.
We also know that it will take time for new free trade agreements with ‘third countries’ to be agreed.
What should businesses do now to prepare for Brexit?
Though the future remains uncertain, there are steps businesses can take. Waiting for clarity on the outcome of the government negotiations may be too late.
We continue to advise clients to plan around the scenario that entails the biggest change over the shortest period - a chaotic/hard Brexit in March 2019 – and to work back from that to assess other outcomes involving more gradual change.
Our Brexit guidance will help you think about the potential impacts of Brexit and the opportunities it will create for your organisation.
Work out what you need to do and when you need to do it; take action now to strengthen your business basics whatever the outcome; and know at what point you need to act regardless of whether government has reached an agreement.