The UK Needs a Bridge to a New EU Deal

Business Insight

Business leaders call on Government to negotiate an interim arrangement until the final Brexit deal comes into force.

Negotiators on both sides of the UK-EU talks should aim to agree transitional arrangements as soon as possible. A limited period of transition, beginning when the Article 50 process ends, would provide firms with continuity and certainty, protecting jobs and trade flows. This is why the CBI is proposing that the UK seeks to stay inside the EU single market and a customs union until a final deal is in force.

The question is not whether the UK leaves the EU, but how. Firms are committed to making a success of Brexit. The CBI’s proposal is to build a bridge from the end of the Article 50 process in March 2019 to the new deal, maximising continuity for firms and avoiding a damaging cliff-edge. Crucially, it would mean that firms would only need to make one transition.

Carolyn Fairbairn, CBI Director-General, argues that uncertainty is biting on our economy and our firms.

She said, “Instead of a cliff edge, the UK needs a bridge to the new EU deal. Even with the greatest possible goodwill on both sides, it’s impossible to imagine the detail will be clear by the end of March 2019. This is a time to be realistic.

“Our proposal is for the UK to seek to stay in the single market and a customs union until a final deal is in force. This would create a bridge to the new trading arrangement that, for businesses, feels like the road they are on. Because making two transitions – from where firms are now to a staging post and then again to a final deal – would be wasteful, difficult and uncertain in itself. One transition is better than two and certainty is better than uncertainty.

“Firms tell us this feels like common-sense. But if others have alternatives that deliver equivalent economic benefits, now is the time to put them on the table.

“The goal should be a framework for the new trading relationship before we exit in March 2019. A ‘heads of agreement’, to use the language of business, in writing, that will allow technical talks to start.

“We need a bridge to the new future, and, with our EU partners, should start building it now.

“The prize is more investment, more jobs and reduced uncertainty for firms here and in Europe.”

“We’re seeking the most ambitious and comprehensive free trade deal ever agreed in history. “A deal which makes sure bakers in Northern Ireland can sell their bread to Dublin without delay and barriers. A deal where car manufacturers can continue to bring in parts from all over the EU without red tape. A deal where cosmetics firms can work under one set of standards across Europe. A deal where our services firms, which are 80% of our economy, can continue to export to their main market, in particular our financial services.

“Because barrier free trade brings jobs, growth and well-being to all parts of the UK and elsewhere in Europe.”

“The prospect of multiple cliff edges – in tariffs, red tape and regulation - is already casting a long shadow over business decisions. The result is a ‘drip drip’ of investment decisions deferred or lost.

“A major European engineering and electronics firm has told us it has shelved plans to build a UK innovation centre.

“A UK infrastructure provider is already having problems retaining and recruiting skilled workers from the EU needed to build the rails, roads and houses already planned.”

On the implications of staying in the Single Market and a Customs Union during transition, Carolyn said:

“If agreed soon, firms here and from elsewhere in the EU will know they face greater stability for a number of years and will carry on investing. They will know they won’t have to adapt twice – first to the transition and then to the final plan.

“In practice, it would mean the UK would adhere to the EU’s common trade policy, for both internal and external trade, for the duration of the transition period.

“Staying in the single market guarantees continuity for business operations. Staying in a customs union guarantees ease of trade, not just with the EU, but with the rest of the world as well.

“We and our members think it is plain common sense. Agreement is needed fast - waiting until March 2019 is too late.

“The exact mechanisms to achieve this can be debated and negotiated. But for businesses making daily decisions about where and how much to invest, this is the simplest answer to the uncertainty they face today.”

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