The IoD’s head of Europe and trade policy, Allie Renison, explains what the further extension of Article 50 means for British business
Summer may be getting into full swing, but there’s no such thing as a break from Brexit. Three years after the referendum took place, we’re still no clearer about our future trading arrangements with the EU.
In April the two sides settled on a further extension of Article 50, fixing 31 October as the latest departure date. If the House of Commons should approve a withdrawal agreement before this, the UK would leave the bloc on the first day of the subsequent month.
Negotiating Brexit was never going to be easy and neither side wanted to be in this position. The prime minister and her continental counterparts have all stated that the UK’s participation in this summer’s European Parliament elections is less than ideal.
Politicians of different stripes both sides of the Channel have voiced their concerns about a further extension. The European Parliament’s Brexit co-ordinator, Guy Verhofstadt, called the six-month postponement “too near for a substantial rethink of Brexit” and “too far away to prompt any action”, while Nigel Farage, leader of the new Brexit Party, opposed the delay because it was, well, just that.
Nevertheless, both sides have agreed to the postponement because they acknowledge that breaking the deadlock in the Commons will require extra time. MPs are expected to continue debating how to leave the EU, while the European Council’s president, Donald Tusk (pictured, top), has suggested that the extension is “still enough to find the best possible solution”.
Although the prospect of an imminent no-deal Brexit has receded, neither Westminster nor business should feel that the heat is off. MPs must co-operate to broker a deal that will win enough backing in the Commons. The EU has indicated that, while it won’t restart talks on the withdrawal agreement, it is open to altering the accompanying political declaration, the non-binding part of the deal.
So where does this leave British firms? The continuing state of limbo means that business leaders are still awaiting the clarity they’ve been calling for ever since the negotiations began. Our Policy Voice surveys indicate that a clear majority of IoD members think that a no-deal outcome would harm their business. Yet fewer than half have planned for such a contingency, even though only a quarter believe Brexit will have no impact on their operations.
Regardless of the extra breathing space, we strongly encourage members to conduct a full audit of the potential effects of a no-deal Brexit and plan for that possibility, because domestic politics could quickly put it back on the agenda. We have updated our well-received Business Planning for Brexit guide, which is available exclusively to members at iod.com/brexit. The latest version covers information released by the government, the European Commission and other relevant bodies in recent months.
We know that the unrelenting uncertainty can be difficult for directors, regardless of the sector and size of your business. The way policy-makers choose to use the next few months is crucial. The IoD will be your guide to the twists and turns throughout this period – and well beyond.
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