9 February 2017 | By Tiernan Kenny Insight

Steps to a successful Brexit

Insight: Tiernan Kenny, CBI senior policy adviser, UK/EU negotiations

As Article 50 negotiations move closer, a phased implementation of the UK’s departure from the EU could help avoid a cliff edge

When the UK voted to leave the EU on 23rd June 2016, it was clear that businesses would be faced with change. The CBI undertook one of its biggest ever consultations of its membership across the UK and every sector of the economy. A clear message emerged: the final result must be a coherent deal that delivers the best outcome for every region and every sector of the UK economy.

The CBI has published the business community’s views on priorities for the UK’s negotiations with the EU in its report, “Making a Success of Brexit”. The report sets out six principles which every sector agrees should be at the forefront of the negotiations:

  • A barrier-free relationship with our largest, closest and most important trading partner
  • A clear plan for regulation that gives certainty in the short-term, and in the long-term balances influence, access and opportunity
  • A migration system which allows businesses to access the skills and labour they need to deliver growth
  • A renewed focus on global economic relationships, with the business community at their heart
  • An approach that protects the social and economic benefits of EU funding
  • A smooth exit from the EU, avoiding a “cliff-edge” that causes disruption

Does the Government’s plan deliver?

The Government’s self-imposed March 2017 deadline for triggering Article 50 and beginning the two-year window for the UK’s departure from the EU is now fast approaching. The ambition to seek a phased implementation of the UK’s departure from the EU and new trading arrangements, including a possible interim deal, is welcome news for business because it would avoid a disruptive regulatory “cliff edge” scenario.

Prime Minister Theresa May’s January speech and the following February White Paper are the most comprehensive outlines to date of what the Government hopes to achieve both for its departure from, and its future trading arrangements with, the EU. The plan provides clarity on the Government’s intentions in some important areas, such as free trade ambitions with the EU, but is more silent on others, such as non-graduate migration.

Importantly, the Prime Minister made clear that the Government would not seek for the UK to remain a member of the EU Single Market. This narrows the options available to the Government for achieving barrier-free trade, and raises the prospect of new trade obstacles, especially as the Prime Minister did not rule out falling into a WTO trade system if a deal is not reached. But ambitions to keep trade tariff-free and to minimise barriers are and very welcome.

The government’s plan includes:

  • A commitment to provide as much short-term regulatory certainty as possible through the Great Repeal Bill, although some questions remain about how this process will work in practice.
  • An acknowledgement of the importance of migration for economic growth, but no additional details on the Government’s plans for this area were provided, especially for non-graduate migration.
  • The the Prime Minister’s vision of a “global Britain” which, in terms of international trade, matches what businesses want the UK to be: open and outward-looking; a champion of free trade.
  • A willingness to make targeted contributions to certain EU programmes, which could help the UK maintain its position as a world leader in science, technology, and innovation.

The Government’s Brexit plans set the stage for the UK’s negotiations with the EU over the next 18 months. The EU has not responded because it has pledged not to engage until it receives the Article 50 notification from the UK. The Government now needs to prepare to put this plan into action to deliver a deal that works for the whole economy, and make a success of Brexit.

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