The Brexit Column: Reaching agreement | KPMG | UK

The Brexit Column: Reaching agreement

The Brexit Column: Reaching agreement

A deal with the EU is doable, insists Mark Essex. But both sides need to reach beyond their centre of gravity – and those proposing solutions need to take account of the whole deal.

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Director, Public Policy

KPMG in the UK

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The Brexit Column: Reaching agreement - illustration of member of UK and EC trying to reach each other

No one ever said it would be easy. But, as the Brexit tension builds by the day, are the UK and the EU really engaged in the epic cross-Channel tug-of-war that some of the more overblown rhetoric out there might lead us to believe?

To my mind, things are far more nuanced than a test of which team is strongest. Rather than two opposing forces trying to drag each other over a series of red lines, what we’re seeing is one of the most delicate balancing acts in history. Brexit secretary David Davis and the EU’s chief negotiator Michel Barnier are not only attempting to reach out and find consensus with each other; they’re also both striving to hold together a wide coalition of views within their own sides. Right now, the Brexit negotiations are in an unstable equilibrium.

Picture David Davis and Michel Barnier standing on either side of a precipice, each leaning out towards the other, while the divergent groups behind them provide just enough counterweight to create stability. If just one part of that balance shifts, then the chain – and that bridge – collapses.

We’re all aware of the divergence of voices here in the UK. So far, the EU 27 have been surprisingly unified. But both sides still have to  lean further across if a deal is to be done – and soon. As KPMG’s Brexit Navigator spells out, many businesses are three months away from making irreversible decisions if they are to satisfy the expectations of shareholders and customers.

The negotiators are not short of advice from firms, most of it well-intentioned. For businesses focussed on their own risks and the disruption ahead, it is tempting to push hard for everything on their risk register, without considering the wider implications of such requests. I think this risks giving up control of prioritising the most important aspects – after all, government cannot please all the people all of the time.

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KPMG Brexit Navigator: Our two-year roadmap

KPMG Brexit Navigator: Our two-year roadmap

The KPMG Brexit Navigator is designed to help businesses plot out the key decision milestones to consider across the next 2 years.

The possible, not the perfect

How about instead, considering what piece of the overall offer would have to change to maintain the fragile equilibrium while meeting your most important needs. I’ve been given this piece of sage advice when it comes to making proposals, ask two questions: First, is there a UK parliamentary majority for the proposal? And second, what’s in it for Europe?

It’s time to focus on the feasible, rather than the optimal solution. That means that the ‘no cherry picking’ refrain must apply to the coalition of UK voices as well as the EU’s four freedoms. If David Davis and Michel Barnier are both to fully stretch out over that void, they need their ‘coalitions’ to back the play they make, not be distracted by impossible demands. We need less of the granite absolutes, more of the can-do creative thinking. Or, in negotiating speak, finding the zone of potential agreement.

And what is technically feasible must also be grounded in what is politically achievable. Here, I am optimistic. I believe the conditions to strike a deal are boosted by a palpable sense of confidence within the EU, thanks to improving economic indicators and a turning of the populist tide – embodied by President Macron and Angela Merkel’s high approval ratings. A confident and relaxed negotiating partner is better than the Europe of a year ago. Will we now see the EU leaning out to meet us halfway?

As Barnier wryly observed this week, the Brexit clock is ticking. Business needs a sense of what might be possible by autumn at the latest. Now is the time for the UK to tempt the Commission into demonstrating the flexibility needed to find agreement. That means continuing the positive tone, demonstrating consistency in our requests and above all, showing that we are realistic in our expectations of a deal. Let’s not allow the perfect to be the enemy of the good.

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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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