Government must be clear on Brexit strategy so business can scenario plan

0
Theresa May and Donald Tusk, scenario plan

The government has been categorical about the departure date, but less clear on some of the key steps it must take to ensure an orderly withdrawal. Business needs to be prepared for various scenarios, writes Allie Renison

The run-up to this autumn’s budget has been fraught and, unsurprisingly, Brexit has been at the heart of this. The debate on what the no-deal option looks like and when it should be deployed has often replaced a much more necessary discussion about the future shape of the UK-EU trading relationship. There has since been intense wrangling over how and when to prepare for a shift to trading on the basis of World Trade Organization rules as a result of a no-deal scenario. The chancellor has been dragged into a row over what some see as a refusal to commit money hand over fist in the budget to improve the country’s ability to withstand such an outcome.

But the reality is that some of this preparation will be required no matter how the UK leaves the EU, particularly when its membership of the single market and participation in the customs union ceases. The looming prospect of customs declarations for trade with the EU and the repatriation of powers to the UK with respect to farming and fisheries are but a few of the areas that will require a significant boost to government’s functional capacity. So, while one can argue about when these needs should be matched by resource commitments from the Treasury, it’s clear that positive steps of some kind need to be taken soon to demonstrate that the UK is ready for Brexit.

We do know that the government is committed to negotiating a transitional phase – what it calls an “implementation period”– to give both itself and British business time to adjust to the new trading relationship with the EU. But, on the basis of David Davis’s proclaimed intent to secure both our withdrawal agreement and a new free-trade deal by the end of March 2019, one would expect certain decisions to have been made already – internally, at least, given that the government’s published plans for a new partnership with the EU are rather short on specifics.

The chemicals industry is one example of where detail is lacking. The UK’s declared intention to leave the single market means that the key EU regulations covering the sector and its related agency would need to be transferred to the UK. In order to reach a trade deal within the next 18 months, the Health and Safety Executive would need to be ready to assume various functions from the EU’s chemicals regulator and a new UK database for registering chemicals would also need to be up and running. Yet there is precious little evidence to indicate that such processes are under way – and it’s vital for companies facing a new deadline for chemicals registration next year to know whether or not they’ll need to undertake dual registration and, if so, when.

As the clock ticks down, it’s clear that much of the detail remains to be fleshed out. Some firms are planning for a no-deal scenario. While such prudence should not be discouraged, speculation about such an outcome has detracted to some extent from the discussion of fundamental issues, including what arrangement should replace our membership of the single market. Regardless of the result of the negotiations, government and business will need to boost infrastructure – and there are measures that can be taken now to prepare for Brexit. Business welcomes the government’s commitment to a transitional phase, but the most important question of all is what the future UK-EU relationship will be.

Allie Renison is the IoD’s head of Europe and trade policy

Keep up to date with Brexit

Visit the IoD’s Brexit hub to read the latest news and reports from the IoD Policy team

Become a member of the IoD

The IoD has a range of memberships for directors, founders and co-founders, providing all the resources and facilities needed to enhance your business. To find out more about membership offerings and to join today, visit iod.com/membership

About author

Allie Renison

Allie Renison

Allie Renison leads on trade and EU policy at the IoD, devising recommendations and representing the voice of members on EU reform matters and helping to provide the link between business and government on increasing international trade. She also routinely provides advocacy for the IoD on a range of regulatory issues in Brussels.

No comments

Time limit is exhausted. Please reload the CAPTCHA.