As the old adage goes – fail to prepare, prepare to fail. The often heated debate surrounding Brexit negotiations has regularly touched on this theme. At this critical juncture, as talks are poised to move to the second phase, good preparation may hold the key to the entire process.
In the absence of a declaration that Phase 2 talks on trade could begin (it was never likely to happen), the big announcement from the recent EU Council summit was that the EU 27 will prepare for this to happen at the December summit instead. Their internal discussions will include establishing plans for a transition period from March 2019.
From an EU perspective, it is important that the unity of the member states over their negotiating stance is maintained. However, this may be easier said than done as any deal stuck is likely to have a disproportionate economic impact on some member states. This, in turn, could lead them to call for different approaches to Phase 2 talks in order to protect their own respective interests, thereby weakening the EU’s collective bargaining power.
Meanwhile, businesses in the UK and the EU are preparing for transition too. However, increasingly concerned by delay, deadlock and an apparent lack of clarity over the direction of talks, many UK-based companies are considering relocation to avoid being caught up in a ‘hard’ Brexit or ‘no deal’ situation. Businesses are clamouring for some certainty about the outcome of Brexit and have called for a swift agreement to be concluded on the transitional period, allowing them to invest and make contingency plans.
Whilst the EU preparations for transition talks reassured the commercial world that some progress is being made, many business leaders are concerned at the lack of urgency and they fear that a potentially disastrous ‘no deal’ scenario may follow.
‘No deal’ is the hot topic currently occupying UK government minds too. Here, unlike within the business community, there appears to be a more relaxed attitude to this possible eventuality. Indeed, some MPs are actively pursuing the idea and have urged the Chancellor to start spending now in preparation for the outcome. Mr Hammond’s response can be paraphrased as ‘not yet’ and this has increased fears in some quarters that the UK will not be fully prepared if the negotiations fail.
Critics of the government’s handling of negotiations thus far condemn a lack of preparation on Phase 1 issues and make claims that the decision to trigger Article 50 was made without having a plan in mind. Whether or not these arguments are justified, it is clear that the government must satisfy the EU that Phase 1 issues have been fully addressed by December or risk further delay to trade talks.
Once again, preparation is the key…
Article published: 7th November 2017
