Business leaders call for Cabinet unity on Brexit
Company bosses have urged the Cabinet to end their public arguing over the potential terms of a Brexit transition phase and come to a collective agreement as soon as possible.
The Institute of Directors (IoD) set out a range of options including membership of the European Economic Area (EEA) and extending the Article 50 negotiating timetable, which will currently see Britain quit the European Union by the end of March 2019.
It comes amid increasing Tory tensions over the Brexit process, with Cabinet ministers publicly disagreeing over a potential transition agreement.
Last week, Chancellor Philip Hammond signalled that free movement of EU citizens would continue for a three-year transition period in all but name, with an added element of migrants having to register in the UK.
But International Trade Secretary Liam Fox insisted unregulated free movement of labour after Brexit would “not keep faith” with the EU referendum result and that the Cabinet had not agreed a stance on immigration.
The IoD said prioritising an agreement to extend Brexit talks under Article 50 would be “on paper the simplest solution”, giving more time to negotiate a trading relationship.
But the institute acknowledged that option would be “very politically challenging” for both the EU and some Brexit-backing MPs.
Staying in the EEA, and therefore the Single Market, during a transition period, an “off-the shelf” model being touted in some quarters, would give the UK a degree of autonomy but is “not straightforward” and the IoD warned that the tight timetable could complicate negotiations.
Another option would be to prolong the application of EU law, as cited by the European Council in its original negotiating guidelines, which would be easier to put in place in time, and would be more comprehensive, but would leave the UK with less control than the EEA approach.
A transitional customs agreement could also accompany any of these options to replicate the benefits of being in the Customs Union, including maintaining common external tariff alignment and continuations to transpose customs and VAT legislation. Allie Renison, head of EU and trade policy at the IoD, said: “Businesses will be pleased that ministers increasingly acknowledge the importance of a transition period in the Brexit process to minimise economic disruption.
“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.
“Prioritising interim arrangements and thereby mitigating the risks of EU exit means the eventual opportunities aren’t diminished by shortterm chaotic cliff edges.
“The IoD has put forward this range of options for transition in the hopes that it sparks a proper debate on the practicalities of how best to Brexit.
“We look forward to engaging with both the Government and the EU on these proposals.”