In a lecture at the London School of Economics, CBI director-general Carolyn Fairbairn and CBI chief economist Rain Newton-Smith put forward the case for a transition period as part of EU exit negotiations, to offer “breathing room” to government and business.
This intervention is built on economic research into the prospect of leaving the EU without a deal as well as numerous conversations with businesses across the country about the effect uncertainty is having on investment intentions. During the talk, Carolyn and Rain laid out the complexity of the trading relationship between the UK and the EU, even on everyday items like bread and lipstick.
The CBI’s position is clear and common sense. Even with a committed business community and negotiations conducted in a spirit of goodwill, it’s hard to see how the detail of a new deal will be settled by the end of March 2019. Negotiators on both sides of the table will need to be realistic. More time is likely to be needed to get this right and transitional arrangements are fundamental in helping businesses to keep growing and investing.
A bespoke transitional arrangement designed from scratch would use precious government capacity and could lead to a complex two stage process – once to transition, and once to a new deal. The simplest and most effective way to ensure stability until an agreement is in force would be to remain in the single market to ensure business continuity, and to stay in a customs union to ensure continued flow of trade. If better options exist, now is the time to get them on the table: businesses are making decisions now, and there is no time to waste.
The lecture comes ahead of a government meeting taking place on July 07, 2017 with business figures from sectors across the UK. Carolyn is attending the event which is being hosted at Chevening House in Kent.