Business Leader warns of ‘small window of opportunity’ for Brexit agreement
22 November 2017
The Government has only a "small window of opportunity" to secure agreement on a Brexit transition period before the end of March - or companies will activate plans to move abroad, a senior business leader has warned.
Already half of businesses are drawing up contingency plans for Brexit - some including relocation elsewhere in the EU - and one in 10 has begun to implement them, said the director of the Institute of Directors, Stephen Martin.
And he warned the number taking action will "snowball" unless a firm political deal is struck within the next four-and-a-half months to guarantee a transition period after the official Brexit date in March 2019, during which existing EU regulations will remain unchanged.
In extracts of a speech to business leaders at the annual IoD dinner in London on Tuesday evening, Mr Martin said that many companies were "concerned" over what will happen if Theresa May fails to achieve a breakthrough at next month's Brussels summit, allowing the UK to move on to negotiations on trade and transition.
"Moving on to phase two of the talks is crucial for all sides to avoid a chaotic Brexit, so we urge the Government - and indeed the EU - to pull out all of the stops to break the impasse in December," he said.
"The message from business is that all we want for Christmas is progress on Brexit."
Mr Martin said that crucial investment decisions were "facing a chill" as a result of uncertainty about the outcome of Brexit.
Business backs the Government's plan for a two-year "implementation period" to provide time to adjust to new arrangements, but cannot wait long for it to be agreed, he said.
"We need to know this implementation phase will, in effect, keep the terms of cross-border trade unchanged, so that business can get back to making crucial investment decisions that are facing a chill at the moment," said Mr Martin.
And he told his audience: “We know from our recent surveys that over half of you are already in the process of contingency planning.
“The number of businesses who have actually implemented these plans is currently low – around one in 10 – but this will snowball if we don’t find out soon what is going to happen in March 2019.
“It’s clear that the Government has a small window of opportunity between now and the end of the first quarter of next year to secure a firm political agreement on transition. If we don’t have this commitment by the end of March, then business will come under pressure to implement contingency plans, even perhaps as far as relocating operations.”
Mr Martin said businesses need to be ready for any possible new relationship with the EU, including a “no deal” outcome requiring reversion to World Trade Organisation rules, which would be “a huge drop down from where we are now”.
In a plea to ministers to avoid the “no deal” scenario, he said: “WTO is not the simple option, it would involve massive complexity to adjust our customs procedures, and we would lose not just our level of access to the single market, but also potentially all of the trade and investment agreements we have with other countries through the EU.
“It’s not desirable, but it is possible. The time may come soon when we have to advise all of our members to be ready for ‘no-deal’.
“We plead with the Government that it does not get to this stage.”