BREXIT BEGINS - SOME POST-ELECTION TAKEAWAYS

February 10, 2020 5 Comments

After three and a half years or paralysis and three elections in five years, Brexit is now a certainty with the Conservatives now in government with a significant majority. It means the UK will be over the Brexit start line on 31 January 2020, eight months after the original deadline. Some of the big questions now will be:

  1. how far will the UK have to diverge from the EU to remain competitive and how much will that cost
  2. how long will it take to negotiate an EU deal - 12 months sounds unrealistic and many countries will wait to see what that deal is before doing a deal with the UK
  3. what will the EU do to try and prevent having a big G7 economy operating independently on its doorstep - a Singapore on Thames, and avoid other countries leaving
  4. how will the UK deal with an EU that is becoming more muscular in its approach to trade in response to a global environment where power and size are increasingly the name of the game
  5. if the UK can't get a deal in 12 months, that means another cliff edge, likely more extensions, controversy and uncertainty - the average large trade deal takes 5-7 years
  6. where will government deregulate and cut back to offset the increase in red tape after leaving the Single Market and Customs Union - government regulatory policy is to remove two pounds of cost and red tape for every new pound coming in #1in2out
  7. which industries will be winners and losers - its hard to see sectors like agriculture, automotive and food retail maintaining their current business models where they rely on either heavy subsidies or just in time deliveries
  8. how will the government manage Scotland to prevent the breakup of the UK - both are now more, not less, politically polarised with a far stronger mandate now for the SNP to press for independence

There will be some tough choices ahead for consumers, workers, businesses and the general public on trade. The government must urgently prioritise getting in place a fit for purpose trade governance structure. There is universal dissatisfaction at the current lack of transparency, consultation, consensus and Parliamentary oversight on trade decisions coupled with public trust in government, Parliament and institutions in general at a record low. Its a recipe for more divisiveness when we all now have to work harder to make trade work for everyone and desperately need everyone on board with the direction of travel. 

None of the recommended pillars from 'A Trade Model That Works for Everyone', presented in 2018 by all the major business groups, unions, NGOs and consumer group have been fully implemented, some not at all. This is going to be essential if the government is to get the support it needs to get UK trade deals done quickly and at the scale required, most, if not all, of which will mean concessions somewhere. Some will be highly controversial like a US deal.

For goods traders, there is an urgent need now to skill up quickly in key areas like new incoming customs requirements on cross border trade, particularly for small companies who remain largely unprepared. 

There is also a big question around capacity within government to manage the scale of trade deals needed to be done whilst capitalising on opportunities to shape global dialogue on digitisation, climate change, sustainability and trade reform, particularly with COP26 and G7 coming into the UK over the next two years. The world is crying out for a global champion on responsible free trade with the resources to facilitate agreement between China, the EU and US and bridge the dialogue with less developed countries. The UK fits the bill and has the pedigree to play the role but will need to be a lot more outward looking than it has been over the last three years and needs to work hard to repair it's international reputation after a very messy, largely uninformed public debate that has been broadcast worldwide every day for three years.

These are all big challenges and opportunities for the UK and will all need to be managed at the same time as trying to bring the UK back together after three years of polarisation and deep division. The UK is a resilient and creative country so will find a way through but hold onto your hats!





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