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Mon, 6 April 2020

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Britain doesn't need a soft or a hard Brexit, but a good Brexit – SME builders

Britain doesn't need a soft or a hard Brexit, but a good Brexit – SME builders

Richard Beresford, CEO | National Federation of Builders

4 min read Member content

Richard Beresford, chief executive of the National Federation of Builders (NFB), explains why the Government should take more time before triggering Article 50 and start negotiations to leave the European Union. 

Theresa May vowed to start the process for leaving the EU by March 2017, in a speech at the Conservative Party conference.

Mrs May claimed that leaving the EU would restore independence from the European Court of Justice and take control of immigration policy. She also pledged to introduce a Great Repeal Bill to overturn the European Communities Act of 1972.

The public mood

With EU leaders insisting that single market membership is conditional on accepting free movement of people, Mrs May’s speech fuelled suspicions that the Government is heading for a hard Brexit.

A hard Brexit could see the UK leaving the single market and the customs union to gain full control over immigration and trade policy. This stands opposed to a soft Brexit, which would instead see the UK retain access to the single market and the customs union, but accepting free movement in return.

Nevertheless, a soft Brexit seems increasingly unlikely. Opinion polls show that more people rate taking back control over immigration above securing a trade deal with the EU, with the Government likely to make this a red line in future negotiations. EU leaders are also unlikely to favour a soft Brexit. Donald Tusk, president of the European Council, said that Britain is facing a “hard Brexit or no Brexit”.

Exit process

Negotiations will commence when the prime minister triggers Article 50 by informing the European Council in writing of our intention to leave. The UK will then have two years to negotiate a withdrawal agreement with the EU. Once a deal is reached, it needs to be ratified by the European Parliament and every member state.

The UK will ultimately leave the EU two years after invoking Article 50, regardless of whether a withdrawal agreement is reached.

Failure to agree a deal means the UK might revert to World Trade Organisation (WTO) rules, which involve the imposition of trade tariffs on goods and services. With tariffs between 10% and 36%, the Treasury has assessed that the UK would lose £66 billion from its yearly GDP.

Uphill battle

The UK faces a major disadvantage in negotiating Brexit. The procedure is fundamentally designed to punish the UK for leaving the EU.

The UK retains a fairly good bargaining position until it invokes Article 50. Once negotiations are under way, the EU will have the upper hand. The UK will be fighting against a two-year clock to secure the best possible deal, which one could assume not to be return to WTO rules. At the same time, the EU will feel free to threaten to block any UK proposals it does not like without being pressed for time.

First, the Government should focus on making the best possible preparations ahead of the negotiations to present a united front. Reports of internal Cabinet conflicts, as well as ongoing debate over parliamentary scrutiny, show neither the Government nor the country is united over Brexit. The Government should resist calls to “get on with it” and settle these issues before engaging in negotiations.

Second, elections are scheduled to take place in France and Germany – undoubtedly the two most influential EU member states – respectively in May and September 2017. If the prime minister triggers Article 50 in March 2017, these countries may not engage in talks for another six months. Besides focusing on retaining power at home, they will be tempted to undermine the UK’s negotiating position by wasting time. The UK would then have just 18 months to negotiate a good withdrawal agreement and hope it gets ratified by 27 different countries and the European Parliament.

The NFB welcomes the Government’s commitment to secure the best deal for Britain and understands the intention not to undermine its negotiating position. That is why the NFB suggests the Government wait until October 2017 to trigger Article 50 and achieve a good Brexit.

Read the most recent article written by Richard Beresford, CEO - NFB warns Government of cash-flow crisis amid continuing construction


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