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The Brexit Position – January 2020

Although the Brexit Bill received royal assent on 23rd January 2020, this has not brought immediate change, or clarity.


From the 31st January 2020, we will be in a transition period, where most aspects of trade and import-export regulation will remain the same. The UK are in effect EU members for now but without any input.

Transition is meant to end 31st December 2020 and in theory is a legal requirement. The issue is however transparent, leaving without a deal has been described by Boris Johnson as failure, yet a full deal is less than likely by then.

The EU have described the timetable as impossible, a logical reaction, bearing in mind their deal with Canada took 7 years. Experienced UK trade negotiators are also generally quite sceptical.

Neither has the position been helped by political statements that the UK will diverge in many ways, be rule makers, rather than rule takers. The more we deviate from the EU norm, the more there is to negotiate.

Possible Outcomes

A range of subtleties need to be considered by each UK business, with their needs in mind. There are however two core options available to the UK:

    • 1. We miraculously negotiate a full trade and regulation deal with the EU in world record time.
      2. The UK departs from the EU without a deal and moves on to World Trade Organisation (WTO) terms.
  • The second is a real possibility and one all companies should prepare for. Trading on WTO terms does not mean international business will end but would be akin to arriving on another planet.

    Despite this apparently stark choice, a third option is tucked away. A face saving announcement that a deal is done, when one isn’t, in terms of detail. More ongoing business mayhem but still better than the WTO option.

    The law could be said to be upheld, transition ended, even though this would continue in part and be called something else. A situation which might also be seen in our relationship with countries outside Europe.

    Trade Beyond The EU

    Much has been made of a swift UK-US trade deal. Yet the US deal with Canada, an aligned neighbour, took almost 3 years, South Korea 5 years. None of their latest 20 trade deals happened within a year and the average is 45 months.

    We should also look at deals the EU have in place with other nations, or trading blocks, you can see a list. In almost all cases, we currently trade with them as EU members and an alternative will need to be negotiated.

    Davos headlines of a UK-US deal being expected by the end of the year, or pleasant speeches by other leaders can not take away the required detail. Much of which our clients and ourselves depend on to run a business.

    Beyond smaller nations, a fudge again looks more likely than most options. Nobody wants to offend, or drastically damage trade but true deals with all the nations involved are simply impractical in the given time.

    Neither can we ever be truly divorced from the EU. The European Central Bank is undergoing an international policy review which will affect the UK, how do we take a joint stance on digital tax, unless we talk with the EU.

    Come the 31st of January, we can lower EU flags and ring bells but Europe will still be our most significant trading partner and nearest neighbour. Apart from common sense, Treasury and employment requirements make a real deal essential.

    Posturing and brinkmanship may be part of the year but we shouldn’t give up on a rational solution. Whether this occurs or not, our team will be up to date and ready to offer clients advice on whatever comes into place.

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