The Brexit Column: Flushing out some answers | KPMG | UK

The Brexit Column: Flushing out some answers

The Brexit Column: Flushing out some answers

As the Article 50 bill gets the green light this week, Mark Essex asks whether a bold early play by Theresa May could give the UK valuable insight into the EU's negotiating strategy

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Now the real work begins. The government has the free hand it wanted, with the Brexit bill finally gaining royal assent this week and after almost nine months of preamble and phoney war, Article 50 will soon be triggered and the UK on the road to exit.

Game theorists will, no doubt, have a field day predicting how the talks may then unfold, who might adopt which strategy, and when. Might we see a move from the UK on the 3.3 million EU citizens living here as an opening gambit from the prime minister after Article 50 is triggered? Theresa May has said it is a priority issue, after all. 

In a game of poker, an experienced player might seek to challenge their opponents’ defences and flush out where they stand with a bold, first move. Applying this strategy, the UK could consider a unilateral move on the issue of EU nationals: guaranteeing their rights as soon as formal talks commence. 

Why? Because throwing down the gauntlet early would firstly allay EU citizens’ fears, while allowing the UK to assume the moral high ground. Second, it would give businesses both here and across the Channel some of the certainty they crave in a climate of kaleidoscopic change. And most importantly, it would help British negotiators understand how the EU27 are likely to behave.

The gaming terminology is apt. We’re talking about a process in which an effective outcome rests on being able to read and anticipate what the other participants are likely to do – or offer – next. The optimal number for a hand of poker is six, maybe seven, players. In this case, we could be talking about anything up to 27 partners facing us at different times around the table. And unlike a game of poker, they can talk to each other in side-chats and show each other their hands.

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Balancing different agendas

Michel Barnier, the European Commission’s chief Brexit negotiator, will, of course, work to corral the remaining EU countries into a well-disciplined cohort, speaking always and forever as one. But the issue of UK residency is far higher up the agenda for some countries than others. Poland, Spain and Portugal, for example, all have large numbers of citizens living and working here in the UK. It’s perfectly conceivable that if the UK opens talks by offfering this unilateral guarantee, and challenging others to reciprocate, some countries may defy the three-line EU whip, if they feel their own national interests are served by such a move.  

By making an unexpected offer at the start of the negotiations, the UK government may then glean a valuable piece of intelligence on which to base their strategy. Are the Brexit talks likely to be a centralised and tightly controlled technocratic negotiation? Or will they be a broader political matter, based on pronounced ideological differences? This strategy would help smoke out the real agendas and the extent to which the UK faces a united single bloc or anything up to 27 bilateral trading partners.

Knowing this, business would have a little more clarity about what to prepare for. Although here, as ever, I’d offer the caveat: be ready for anything, because anything could still happen. That's true, whether you’re projecting forwards in terms of the composition of your supply chain or your licence to operate inside the Single Market.

As my colleague Shenoa Simpson, a veteran of extensive global trade negotiations, says, “The more information you have on the likely moves of other players, the stronger your hand. Aside from the bluffs, the feints and the posturing, securing a winning result is down to excellent preparation and assertive, attentive play”.

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This article represents the views of the author only, and does not necessarily represent the views or professional advice of KPMG in the UK. You can register for the email subscription list of this column and expert views from our Brexit leaders.

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