In Depth

Brexit trade talks: what happens next?

Businesses beg for certainty but negotiations with EU may still be months away

British businesses are warning that lack of clarity about the UK’s post-Brexit relationship with the EU is preventing them from planning for the future.

The Institute of Directors (IoD) is urging the Government to publish its negotiating objectives for the next stage of EU exit talks  “as soon as possible”.

In a survey by the organisation, which represents business leaders, 55% of company directors said they would only be able to “make planning and investment decisions” with certainty when “we understand our future with the EU”, The Guardian reports.

And only 35% of the 952 directors surveyed said the information contained in the withdrawal agreement gives them the “certainty needed to make planning and investment decisions”.

“To give businesses any chance of being ready for the new relationship by the end of 2020, the Government needs to be as clear as possible about what its intended destination is,” said Allie Renison, the IoD’s head of Europe and trade policy.

“With directors clear that negotiations with the EU are the priority right now, clarity is crucial for so many companies.”

How will the process work?

Boris Johnson is expected to set out his negotiations objectives in a major speech before mid-February, but there has been “little to no parallel consultation with business to mirror what is going on in Brussels”,  says The Guardian.

The EU Commission is currently holding a series of seminars with member state representatives on its goals for negotiations, covering fisheries, energy, transport and law enforcement. The future mobility of EU citizens has already been discussed over the past week, as have space, the European defence fund, and cybersecurity.

Brussels plans to publish draft negotiating guidelines on 1 February, with its goals to be agreed among member states at a meeting on 25 February. 

But European Commission spokesperson Eric Mamer said this week that formal talks with the UK may still be months away.

“We have said we will start negotiations as quickly as we can, but it will certainly not be before the end of February, beginning of March,” he said. “This is not a slowing down or speeding up of the process.”

Calling for the British government to clarify its negotiation plans, the IoD’s Renison said: “Avoiding the chaotic uncertainty of leaving the EU without a deal is clearly a relief to business leaders, but they are still much more inclined to feel this Brexit deal on its own doesn’t provide the certainty they need to invest and make plans for the future.”

But Chancellor Sajid Javid pointed out to the Financial Times last week that “companies that have known since 2016 that we are leaving the EU”, although he added: “Admittedly, they didn’t know the exact terms.”

What else do we know?

Javid’s claim that the UK will not be “aligned” with EU rules after trade talks has sparked fears among already anxious business leaders of new post-Brexit trade barriers.

Bosses have warned that new barriers could create unwelcome friction on cross-border trade, with a negative impact on investment, jobs and the economy.

The Government has pledged that a future trading relationship will be agreed with the EU by the end of 2020, but has not released details of what that might involve.

The IoD’s Renison said: “To give businesses any chance of being ready for the new relationship by the end of 2020, the Government needs to be as clear as possible about what its intended destination is.”

Meanwhile, ministers have quietly restarted “no deal” planning amid fears that trade talks with Brussels could collapse.

Whitehall’s EU Exit Operations Committee met last Thursday to start preparations for a “disorderly December”, in the event that Brussels “fail to grasp we really are going at the end of the year”, a cabinet minister who was present told The Mail on Sunday.

Senior Downing Street aide Dominic Cummings reportedly told government advisers at a meeting on Friday evening that “we are not bluffing on the no extension” beyond 2020.

The UK will be looking for a new trade deal with the US to bolster the economy and show Brussels that Britain is capable of going it alone.

“Brexit provides a unique opportunity for the Government to capitalise on the Trump administration’s keenness to get a UK/US trade deal over the line by November’s presidential election,” says The Times.

But the newspaper adds that “sceptics say this is wishful thinking” and that the UK can choose either a US or EU trade deal by the end of 2020 - but not both.

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