What does the 12-point Brexit plan mean for business?

Canary Warf
By David Wood, Executive Director, Policy Leadership and James Barbour, Director, Policy Leadership

20 January 2017

The Prime Minister has now set out the UK Government’s intentions in relation to its plans to exit the EU. At first glance it is difficult to disagree with any of her 12 points. 

But what lies beneath these high-level objectives and what issues are likely to prove most problematic in the forthcoming discussions? This article analyses the impact points 7-10 will have on business.

Point 7. Protect workers’ rights

For many people, one of the main benefits of the UK being a member of the EU was the increased employee rights and protections which Brussels introduced.

Therefore, it is welcomed that the Prime Minister intends not just to translate those existing rights under EU law into UK law, but also to build on them. This also responds to a Scottish Government concern about the possible weakening of the current rights of employees in Scotland.

Whether the Prime Minister’s stated objective will be enough to stop the Scottish Government’s claims in this area, however, remains to be seen.

The move to ensure that “the voices of workers are heard by the boards of publicly-listed companies for the first time” – which the Government is currently consulting on – echoes this objective. But how far in practice will this proposal go within the confines of the UK’s unitary board structure?

Point 8. Free trade with European markets and Point 9. New trade agreements with other countries

For many, the objective to build a truly Global Britain is key. There are undoubtedly opportunities but also threats.

After leaving the EU, the UK will be able to negotiate its own trade agreements both with the EU but also all other countries around the globe. Ideally, as the Prime Minister states, the freest possible deals in goods and services will be negotiated. However, we do not know what the terms of any such agreements will be.

For example, will our “special relationship” with the US help to conclude a quick and mutually beneficial deal or will the UK, in terms of its market size in comparison to the much larger US market, struggle to negotiate on an equal footing?

President Trump, whilst being publicly supportive of the UK also spoke many times during his presidential campaign on the dangers of globalisation and free trade. We wait to see what his true position on trade will be.

Similar questions apply to all such deals, but notably with countries seen as current, and future economic power houses, such as China and India. Whilst not palatable to many, the Prime Minister’s stated objective not to seek membership of the single market does at least accord with her position on immigration.  

Interestingly, the UK will “Instead… seek the greatest possible access to it through a new, comprehensive, bold and ambitious free trade agreement. That agreement may take in elements of current single market arrangements in certain areas – on the export of cars and lorries for example, or the freedom to provide financial services across national borders – as it makes no sense to start again from scratch when Britain and the remaining Member States have adhered to the same rules for so many years.”

Specific mentions of the car industry and ability to provide financial services across borders flag that the Government would appear to be seeking specific favourable agreements in relation to certain sectors. Reference to the car industry will again lead to questions as to what assurances, if any, were provided to Nissan.

The Prime Minister also indicated that the UK might continue to make certain payments to the EU on a much smaller scale in relation to specific European programmes. She highlights this as a matter for the UK to decide, though clearly the EU would need to agree to any such participation.

Point 10. The best place for science and innovation

This is a crucial objective. Collaboration with our European partners and indeed other partners, on major science, research, and technology initiatives is essential to build the Government’s vision of the UK.

This, however, could prove to be challenging as the EU Member States look to their own futures in the EU, post Brexit; some may see this as an opportunity to weaken the UK’s strong position in science and innovation.

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