The Brexit White Paper is the best plan businesses could have hoped for, but we're not home and dry yet.
It’s been a big week in the Brexit story, but at the end of it I believe we as businesses are in a better place than when it began. Consider this: last Friday we had a fractious Cabinet; only piecemeal proposals regarding future relations with the EU; and an expectation that any proposal on the movement of goods would be limited to one designed only to solve the Irish border issue.
Seven days later following the ‘Chequers declaration’ and the publishing of the Brexit White Paper we appear to have a united Cabinet (albeit with more trouble potentially brewing outside); a single and comprehensive set of proposals for EU negotiators to consider; and a plan that calls for the UK to effectively remain in a single market for goods. The last point is a massive win for businesses – not only does it call for the continuation of a tariff free area after Brexit, but also maintains regulatory alignment and removing a ‘hidden’ barrier that would have complicated market access and raised costs for thousands of companies in the UK.
Here, finally, we have a window (however misty) onto what a possible future after Brexit might look like. It is a world in which those moving food and goods across our border can continue trading much as before and a world in which citizens can continue to move with relative ease (at least to travel). So my first piece of advice would be to delve into the White Paper and see what it might mean in the way you, say, move staff around Europe or transfer data.
Thursday’s White Paper now puts the ball in Europe’s court, where I suggested it needed to be on my last appearance here. It is noteworthy that Europe did not immediately shoot down the plan either (as of when I’m writing this on Thursday afternoon). This may not sound like a glorious victory, but it’s already survived longer than several other plans floated by the UK this year. That might be because the UK has softened its lines in several important areas, or simply that the EU wants time to digest and formulate a response. But as the proposal is mulled in European capitals this summer, the sympathy for the plan will not have been hurt by the blood already spilt on the prime minister’s side in trying to reach an agreement that has some chance of commanding a majority in Parliament.
Politically, I believe this was about as good a deal as business could have hoped for. But that does not mean we can ease back and crack open a beer at the corporate summer barbecue. The possible deal might have improved from where we stood a week ago, but the possibility of that deal landing remains highly debatable. Ergo all possible outcomes, including a chaotic ‘no deal’, remain alive and kicking.
Europe might be taking a look at the plan but if leaders dig in over the indivisibility of the four freedoms then it’s heading for the rocks.
And at home, there’s considerable uncertainty as to whether the prime minister can convince enough of her own MPs, or from the Labour Party, to back the plan. Indeed, does any Brexit position exist that would command a majority in the House of Commons? Even if a fragile majority were achieved, subsequent concessions to the EU might sink it.
We are again back to the Venn diagram I described last October in which there is no over-lapping territory in the middle that simultaneously satisfies leavers’ demands to ‘take back control’, the wishes of business to keep the status quo, a deal that can satisfy a majority of MPs and one that can achieve unanimity at the Council of Europe (and in parliaments across the Continent).
Theresa May has probably moved as far as she can from her Lancaster House speech to Chequers. Will Europe now reciprocate? Certainly something has to give and perhaps it will be parliament. Impasse may provoke a constitutional crisis and force a general election. I notice the odds of one taking place this year have fallen sharply.
So, yes we should be calm in the knowledge that this week we have seen emerge probably the best-possible deal for business (in the current political environment). But we should also carry on with contingency planning, knowing that the risks of a ‘no deal’ Brexit (or a Hard Brexit after a transition) have not diminished.
My advice remains the same as I’ve been saying for over a year now: keep on taking no regrets decisions – things that you could be doing regardless of the Brexit situation to make your business agile – and be ready to push the button on contingency plans this autumn. This is the crunch point when we should know which way Brexit is heading.
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.