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Analysis

Business needs to rally against end-2020 cliff edge

by Luke Lythgoe | 21.03.2018

A handful of business groups are making clear the 21-month Brexit transition deal the government has clinched with the EU won’t do the trick. They rightly fear this won’t be long enough to secure a decent trade deal and avoid an economic cliff edge, which will just be postponed until the end of 2020. Other business groups need to stop saying they like Theresa May’s stopgap deal and speak out about its defects before it’s too late.

The frankest reaction to the transition deal agreed came from the Institute of Directors (IoD). It said many businesses won’t be able to sufficiently prepare for Brexit until precise details of the future relationship are known – including changes to things like customs infrastructure.

The IoD wants a finite “adjustment period” which would only take effect once the future partnership between the UK and EU is finalised. IoD members think this period should be between a year and 18 months in length, a spokesperson told InFacts. Reaching a deal as comprehensive as the one the prime minister wants will take years – the best estimate is around five. It’s implausible all that can be squeezed into 21 months.

The Confederation of British Industry was less critical of the deal, calling it “a welcome gift of time for firms on both sides”. It did, though, admit “some sectors may need more than 20 [sic] months to prepare for post-Brexit life”.

One of these is undoubtedly the food and drink sector. The director-general of the Food and Drink Federation told the BBC’s Today programme that if no deal was reached on customs arrangement then there was “no chance of us being ready” by 2020, and warned of “chaos”. (listen from 0:17) The EEF, which represents UK manufacturers, called the transition period “short” warning that manufacturers needed “operational certainty”, access to EU talent and investment.

Other business groups were less forthcoming with their concerns. The British Chambers of Commerce said the government must “swiftly conclude” a deal and “adopt a laser-like focus”.  Meanwhile, the Federation for Small Businesses said it was “good to see an agreement which will largely mean business owners can continue to operate broadly as they do now until 31 December 2020”.

Of course, a too-short transition that’s bad for business is also bad for workers. The Trades Union Congress told InFacts the government should be seeking the “right deal, not the quickest deal”.

An unsatisfactory transition means problems elsewhere too. For example, agreeing a new framework for security and defence cooperation could need a longer transition, warned the Commons’ Home Affairs Committee in a report today. It proposes an extension.

Although extending the transition would provide more time to get new agreements and infrastructure in place, it would also mean we’d be following EU rules without a vote for years to come and paying annually into the EU budget. If voters don’t like the sound of this, there’s a better solution – cancel Brexit entirely.

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Edited by Hugo Dixon

One Response to “Business needs to rally against end-2020 cliff edge”

  • A transition period gives businesses another 21 months with tarrif free unbueaucratuc access into the Single Market, but what they, and anyone with regular dealings in Europe require, is PERMANENT accesss into the Single Market.