Business leaders seek a pragmatic Brexit transition period, ICAS survey reveals

English city at night
By ICAS

24 October 2017

Nearly half (47%) of CAs in the latest ICAS Brexit Tracker poll believe that any transition period following Brexit should last “as long as it takes” to negotiate a lasting relationship between the UK and European Union.

The online poll, carried out by ICAS in association with law firm Brodies LLP, shows that just 9% of those responding favour a “clean break” with no transition and 29% support Prime Minister Theresa May’s proposal of up to two years; 13% believe that a transition lasting three to five years would be appropriate.

More than 80% of CAs in the survey said they would be happy to see continued UK membership of the EU Single Market (83%), and freedom of movement (82%), as part of a transition deal, while 49% said continued jurisdiction of the European Court of Justice would be acceptable during that period (11% said it would not be).

More than half (57%) agreed that it would be acceptable for EU regulations to apply to UK businesses during the transition period (9% said that it would not be acceptable).

The Brexit Tracker

The ICAS Brexit Tracker for Autumn 2017 is the third in a series of quarterly online polls assessing the degree of optimism (or otherwise) of ICAS members regarding the impact of the Brexit process so far, and the likely impact of the UK leaving the EU.

The Autumn poll suggests that members are still slightly pessimistic as regards the impact of Brexit so far (-9, the same as for the summer survey). They are more downbeat (-15, down from -14) regarding the future impact on them and their organisation; and more pessimistic (-18, down from -16) over the impact of Brexit on the UK economy.

Expected and Preferred Outcomes

ICAS members’ preferred outcome from the Brexit talks is the UK remaining in the EU Single Market (60%), while 28% would rather see a free trade deal negotiated. Only 7% would want to see the UK in the EU Customs Union but not the Single Market, while just 2% favour an exit with no trade deal.

What the members expect to see is: a free trade deal (36%); an exit with no free trade deal (29%); or the UK remaining in the Customs Union but not the Single Market (20%). Only 6% expect that the UK will remain within the Single Market.

The key priorities for the UK’s Brexit negotiations, respondents said, should be, in descending order of importance:

  1. Ensuring cross-border supply chains between the UK and EU can continue to operate
  2. Ensuring as much regulatory alignment as possible between the UK and EU
  3. Minimising tariffs for trade between the UK and EU
  4. Minimising paperwork and the time taken to process trade between the UK and EU
  5. Negotiating new trade agreements with trading partners outside the EU

Bruce Cartwright CA, Executive Director of Policy Leadership at ICAS, said: “Our members recognise and respect the privacy of the current Brexit negotiations. It might be fair to say that nothing is agreed until it is all agreed.

“Nevertheless, the continuing public uncertainty is not helpful and is reflected in our members’ views.

“To counter this uncertainty our members’ preference is for a period of pragmatic transition the length of which should be defined by the degree of change required depending on the outcome of negotiations.”

Christine O’Neill, chairman of Brodies, commented: “It is clear that there is widespread support for transitional arrangements around Brexit but increased business confidence will depend on whether a transitional deal can be agreed and what it will look like”.

Predictions

Members were also asked for their predictions for UK inflation, interest rates and the sterling exchange rate. They anticipate:

  • Interest rates are set to rise (73%, while 1% believe they will fall even further);
  • Sterling is set to fall (44%, against 20% who believe it will rise); and
  • Rising inflation (75%, against just 3% who believe it will fall).

The survey

The survey was carried out online between 5-29 September and is based on responses from just over 370 members. Those taking part were based in Scotland (58%), the rest of the UK (27%) and overseas (14%).

Respondents work in public practice (19%), financial services (20%), manufacturing (10%), energy (6%), public sector/not for profit (15%) or other sectors (30%).


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