On the same day the House of Commons Treasury Committee publish a report on the transitional arrangements for exiting the European Union, TheCityUK has repeated its warning that the value of a transitional deal is disappearing by the day.
TheCityUK calls on the UK government and EU-27 to make rapid progress on setting out and agreeing the principles underpinning a transitional period. Industry needs an agreement to be reached in Q1 2018 at the latest.
In a summary paper on transitional arrangements, TheCityUK clearly sets out what is at stake for both the UK and the EU if a credible political agreement on transition, supported by all the relevant regulators, cannot be urgently reached. Without this in place, more firms will be forced to accelerate their contingency plans, with significant international investment and jobs likely to leave Europe as a consequence.
Miles Celic, Chief Executive Officer, TheCityUK, said,
Now that talks seem likely to move onto the second phase, EU and UK negotiators must not delay discussing a transitional deal. The longer it takes, the less value it has.
Many firms are already well underway with their contingency plans. Those which remain are ready to press go early in the New Year. There is still time to slow or adapt these plans, but without progress soon, it may be too late.
This isn’t just about business leaving the UK. It is about the very high risk of jobs, capital and inward investment leaving Europe. The resulting fragmented markets will be of benefit to no-one, with costs likely to increase for customers right across the continent.
TheCityUK is very clear that any transition period must be as close as possible to the current status quo. This would provide continued mutual market access, avoid two sets of costly adaptation phases, and see the UK accept all of the rights – and obligations – of the Single Market in line with EU law during the transition period. It must also cater for new as well as existing business and ensure that existing contracts will continue to be serviced and honoured.
Ultimately, in the long term the UK cannot be a rule-taker in relation to its domestic regulation. Equally, the transition period must be long enough to finalise the new relationship between the UK and the EU27, including the conclusion of an ambitious and comprehensive UK/EU free trade agreement and the design of the new regulatory framework accompanying it.