Sunday, 11 September 2016

Exiting is Harder than it Seemed

Source: TechCrunch
Two months after the referendum ended in a vote to leave the European Union the British government still hasn't been able to set out a framework or process for achieving an exit. For a government that seems to be trying not to show its hand before negotiations it seems to be making its confusion and muddled thinking all too clear to all. Theresa May's government has so far offered the nation much needed illumination on the issue by telling us, "BrExit means BrExit" and "BrExit means leaving Europe".

During the referendum campaign a lot was made of the need to reduce migration, reallocate ER financial contributions to public services, and take back control of the legislative process. We were also regularly informed of how irrelevant the single market was in real terms. Now the vote to leave has been taken all the vocal Leave campaigners seemed to have gotten suddenly hazy about exactly what needs to be done. And no one seems in much of a hurry to kick the single market into touch. 

It is true that BrExit will now afford the UK the opportunity to negotiate its own trade deals with other trading blocs. However negotiations won't necessarily be on its own terms as it will lack leverage; and will most likely approach them with more than a faint hint of desperation. This will make any negotiations slow and attritional. Not exactly the earth shattering empowerment independence through BrExit was supposed to bring. 

There will be advantages for domestic manufacturers supplying goods within the UK as the costs of importation are likely to go up making their produce more competitive. It is also possible there might be import restrictions which will benefit them. They will face higher revenue costs for importing capital and materials. But those businesses that export into the EU will very likely see the imposition duties and restrictions which will adversely affect their businesses. 

Farmers are anxiously awaiting news on what will happen to agricultural subsidies. It is clear that there won't be a like for like replacement of lost EU funding. However, decisions on transitional arrangements need to start being made now. Imminent EU funding is likely to be discontinued, or at best suspended while a decision is pending on Article 51. 

However ill prepared the government is for exiting the EU there is enough knowledge about what needs to be done for it to start identifying key requirements for trading negotiations and shaping policy. The sooner the government starts to engage various sectors and identity its priorities and risks the stronger the likelihood of positive, even if meagre outcomes.
Source: www.ledó