CBI @10am: Preparing for the end of transition – spotlight on services

Speakers:

• Josh Hardie, Acting Director-General, CBI
• Rachel Kent, Partner, Hogan Lovells
• Chris Hearld, Head of Regions, KPMG
• James Harding, Co-Founder and Editor, Tortoise Media (Chair)

Overview:

Josh Hardie:

• On COVID-19: we’re expecting three sets of announcements this week. Today, the government will focus on the rules after 2 December. We expect some tweaks to the tiering system, a relaxation of the 10pm curfew, and the rolling out of mass testing. Tomorrow, we expect to hear more about Christmas. And on Thursday, which regions will be in which tiers when we come out of lockdown
• On the Comprehensive Spending Review: because of the pandemic, this is only a one-year spending review. But it’s vital to think about the future. The key narrative will be around public sector pay, but we’re expecting a lot of positives, such as building on the 10 point net-zero plan, the national infrastructure plan, the shared prosperity fund, more on skills, and on funding for the implementation of trade deals
• On Brexit: there’s a degree of optimism that a deal could be reached. Things are moving in the right direction. There’s been a narrowing of the gap on fishing, the level playing field, and on governance. We’ve had a series of taskforce preparation roundtables with Michael Gove, and the key point we’re making is that there are too many unanswered questions. The government needs to get a deal and get it quickly. For services businesses, there a range of key issues, namely mutual recognition, travel and mobility, and data adequacy.

Rachel Kent:

• When it comes to passporting, larger firms are typically more prepared, and have set up subsidiaries. Smaller clients are very aware of the issues, but many haven’t set up subsidiaries, and are currently having to terminate relationships with EU clients, because if no deal it’d be illegal for them to continue servicing those clients
• There are still a lot of businesses who are hoping for passporting. We’ve been speaking to swathes of businesses in the fintech space. Providers of capital are telling these businesses they need market access to get funding. But they’re not clear how to get that
• As things stand, there isn’t anything substantive on this. There’s no passporting right in the current proposed deal. Equivalence (data adequacy) in FS relies on the EU deciding that the UK is equivalent so firms can continue to operate. At the moment UK firms cannot take advantage of the equivalence regime
• A deal will keep lines of communication open. If there’s no deal, this brings other things into question. On the memorandum of understanding, for example. It suits the UK to have relaxed rules, but it might suit the EU to further restrict it.

Chris Hearld:

• Most of our clients were expecting data adequacy to be fairly straightforward. But has become more complicated
• Businesses have to plan for there being no agreement on data adequacy, We can’t guarantee any other situation
• Similarly, in terms of moving people to other offices in parts of Europe after 1 January, businesses have to plan for the assumption that the UK will become a third country. This means looking at practicalities, such as your passport, and bilateral visa arrangements.