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So, here it is Merry Brexit….
15th November 2018

So, here it is Merry Brexit….

This blog post is by TTF Managing Director David Hopkins

 

So, here it is. After two years of puffed up posturing and inflated rhetoric we finally have sight of the outline Brexit withdrawal deal that Theresa May has managed to agree with the EU.

At first sight it contains very few surprises: there are commitments over mutual citizens’ rights; a 21 month transition period after March 29th 2019 to smooth the way toward a new trading arrangement; and a ‘fair financial settlement’ so that the UK pays up what it owes to cover membership fees up to this point (£39 billion).

[For the eagle-eyed among you there is also reference to the Timber Regulations on page 415 – I’ll forgive you if you don’t read all the way through to that point. We’ll send out a summary in due course.]

Crucially, after the transition period, it also foresees a temporary UK-wide customs union to avoid the introduction of a hard border between Ireland and Northern Ireland. This is only temporary – i.e it could change as and when the UK finalises its future trading arrangements with the EU – but is still controversial to some.

So, so far so good in terms of easing trading worries.

However, what lies beyond that transition period is currently anyone’s guess. We can extend the transition period if no trade agreement is in place by July 2020, but only once. Beyond that though, the agreement merely states that we will work towards “a free trade area and deep co-operation on goods, with zero tariffs and quotas.”

To put this another way, it still does not give much future clarity or certainty that business needs in order to plan ahead. It’s not good for inward investment in the UK and many firms are reported to be sitting on their hands waiting for certainty before making any decisions.

At the time of writing it is hard to say whether this initial agreement will get through a Parliamentary vote. I doubt it. Ministers are resigning at an alarming rate. The DEXEU Secretary, Dominic Raab, having only recently realised that the English Channel is not a TV station but a vital route for UK trade, is the biggest casualty of the day so far. More may follow and it is likely that this resignation will give confidence to others to vote against the deal.

So, there are likely to be far more twists and turns before Brexit reaches any conclusion.

What the agreement does give is a good picture of the complexity of the situation in trying to extricate oneself from an intertwined 40 year relationship, and in the balance of power between the UK and the EU.

When the UK started this process, we were told by ministers at the heart of Government that we could create a Global Britain, we could have our cake and eat it, and that Britain held all the cards. The Ministers that made those statements have-come up against an unfortunate wall of reality. They have also had to resign having achieved very little.

Right now, the only certainty about the future relations is that UK will be out of the single market and will have to sit on the sidelines of decisions shaping the future prosperity and development of the world’s largest economy and largest free market trading bloc. A rather diminished and humiliated figure in the eyes of the other global players.

I think MPs will realise this and vote against this deal. While they are at it, they should also challenge the central lie which is often repeated by the Government: that we either back this deal or plunge over the cliff edge.

There are always other options. We could, for example, request that we extend Article 50, (as MPs have been asking during PM question time) that the negotiations are stopped until such time as the UK forms a clearer position and realistic vision of the future. This is perfectly allowable under the terms of the negotiations. It is a lie to say otherwise.

It would allow time for some reflection and to wonder whether we can Leave the political framework of the EU, but Remain in the single market and customs union.

This may allow us to compromise on the referendum result, without being compromised in our economic ambition.

If not, the parliamentary puffing and posturing will continue for many years to come.