Friday, 4 August 2017

Finance: Businesses urged the government to press for a transitional Brexit agreement

Chancellor Philip Hammond.

The Institute of Directors said the government must decide how to approach a transitional agreement as soon as possible to protect businesses.

LONDON – There is an "urgent need' for the Cabinet Office to come to a collective decision as soon as possible on how best to negotiate a transitional Brexit agreement, the Institute of Directors (IoD) said on Friday.

Giving businesses some indication of the type of interim agreement the government will seek to negotiate is crucial for allowing them to plan for the future, the IoD said in a policy paper.

The paper outlined an initial range of options, including the political and practical pros and cons of each, in an attempt to move the debate on transition "from desirability to practicality."

"Businesses will be pleased that Ministers increasingly acknowledge the importance of a transition period in the Brexit process to minimise economic disruption," said Allie Renison, head of EU and trade policy at the IoD.

"There is now a window of opportunity for the government to flesh this out as a policy objective in order to reassure companies that a smooth and orderly Brexit is on the cards," she said.

A transitional deal would cover the period between the UK's 'exit day' from the EU in March 2019 and the point at which complicated new trading arrangements with the EU are finalised. The IoD said negotiating an interim agreement was important to ensure long-term opportunities were not jeopardised by "short-term chaotic cliff edges," and that the UK has a smooth exit.

Its proposals include extending the Article 50 deadline, which would give the government more time to negotiate but would be politically challenging, seeking membership of the European Economic Area and agreeing to extend the time EU law applies to the UK during a transitional period.

The IoD said the government should be concerned about business investment stalling; outlining a clearer blueprint for the future would boost confidence and allow businesses to consider practical issues, such as whether they will need to relocate some staff overseas.

"It is not about delaying the inevitable, but rather allowing sufficient time to get to the end destination to minimise the need for disruption," the paper said.

Echoing the IoD's concerns, immigration lawyer George Koureas said businesses in the UK are "paralysed by uncertainty." Koureas, a partner at Fragomen law firm, said most sectors, even those with high proportions of EU workers, had not yet taken steps to plan how their workforce might change and where to recruit the best talent from in future.



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