The Brexit Column: Ready to rip up the rulebook? | KPMG | UK

The Brexit Column: Ready to rip up the rulebook?

The Brexit Column: Ready to rip up the rulebook?

The best way to break the deadlock and soothe businesses fears? Play the Brexit disruption at its own game, says Mark Essex

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Director, Public Policy

KPMG in the UK

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Hit a patch of ice on the road and what do you do? Pull in the opposite direction and you’ve got problems. Steer into the skid, on the other hand, and you’ll regain control of the wheel. Sometimes unlocking a stalemate calls for an equally counterintuitive approach. And where better to try out that thinking than with the current deadlock on Brexit?

We all know that businesses need legal certainty, above everything. So here’s my off-the-wall starter-for-ten. How about delivering it to them far earlier than anticipated, by accelerating the Article 50 process to end in March 2018 - a full 12 months ahead of schedule?

Unthinkable? Undoable? Insane? Bear with me. I’m not talking about a walking-away scenario here. This is about exploring whether we can turn a seemingly intractable challenge into a radical win-win solution.

We seem to be making progress on the divorce bill. And, as I said last week, the EU's Michel Barnier has spoken encouragingly about achieving an ambitious deal. But time waits for no man or Brexit negotiator. I think it’s far from fanciful to suggest that speeding up the whole Article 50 process by a year would achieve greater stability on all sides – and lead to a much more productive outcome. 

Isn’t the exit date of March 2019 set in stone? Not so: as I’ve pointed out elsewhere, Article 50 only defines a maximum rather than a minimum timescale. We’re perfectly free to end our membership early, as long as we agree terms with our negotiating partners. And from where I sit, stepping on the gas in this way could benefit both sides of the table.

Let’s say we move to a "Norway" model next April - staying in the Single Market - but also continuing to be members of a customs union. That would remove the imminent threat of cliff edge. The current thinking on transition period is that it must be around two years. After all, it’s boxed in by the immovable facts of the UK general election and the end of the EU budget period in 2021. But start early and a three year transition period is feasible. Welcome breathing space for businesses, civil servants and politicians alike.

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Could it – would it – work?

It would give companies the headspace to prepare for an orderly departure. And for the EU, it would mean the removal of a costly and time-consuming distraction when the bloc has plenty of other priorities to address.

It would also buy both sides invaluable time to tackle complex issues such as a workable solution for the Irish border: allowing digital borders to mature, say, rather than supplying answers devised against the clock. As a third country from next spring, we would have longer to achieve the kind of Free Trade Agreement which both sides would happily sign up to.

You can’t please all of the people all of the time. But I think this approach could give "Leavers" the exit they believe the majority voted for, while also delivering the softer transition that "Remainers" – as well as the City and import and export businesses – have long asked to see.

Could it – would it – work? I’d be the first to admit there are likely to be numerous practical and legal issues to overcome, which I have not yet traced through to their conclusion. Not least among these, of course, is the scope and timing of the Withdrawal Bill – a mammoth undertaking by any measure – although remaining in the European Economic Area (EEA) and a customs union would certainly help. A three year transition might be too long for free traders to wait to sign new deals; but for a near-steady state transition, could the EU be persuaded to allow the UK to negotiate deals as a third country, even if they would need to wait until the end of transition to implement?

“Difficult” is not the same as “impossible”. Brexit is the ultimate disruptive influence. Our clients say that sometimes the best response to change is to disrupt the disruptor. Applying that kind of counterintuitive thinking to Brexit may well reveal answers we hadn’t known were there. It’s certainly possible that this particular idea, while it has many merits, cannot be delivered in practice. Yet the very act of thinking the unthinkable may help us to unlock answers for all those businesses desperate to get on with what they do best.

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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