After a long wait the government has released the White Paper on the future UK-EU relationship.
Commenting on this Dr Adam Marshall, Director General of the British Chambers of Commerce (BCC), said: “At last, businesses have a more comprehensive understanding of the Government’s aspirations for the UK’s future relationship with the European Union.
“This vision should not have taken two years and three weeks to emerge, but it is nevertheless a welcome starting point for businesses. Momentum and pace are now needed to translate ambition into answers to the real-world, practical questions that businesses face.
“Even with the welcome direction of travel in the White Paper, companies still don’t know how they’ll be paying VAT, how they can move people between offices, or whether goods will get across borders with a minimum of fuss.
“It is incumbent on the two sides to work pragmatically and productively on the nuts-and-bolts detail of the future relationship over the coming weeks, drawing on business experience and expertise. Time is short – and for businesses, it’s results that count.”
Following publication of the White Paper, the BCC maintained 22 ‘red-rated’ and 2 ‘amber-rated’ issues on its Business Brexit Risk Register, which brings together the 24 top questions being asked by businesses across the UK.
On this, Adam said: “Businesses still need clear and detailed answers on many of the practical, real-world questions they face. Many of these answers can only emerge through negotiations – so it’s time for the two sides to crack on and get to a deal. And we have said many times, and will say again, that the Government must deliver clarity wherever the answers to business questions are entirely within the UK’s own control.”
The BCC also urged the Government to step up preparations for all eventualities – including ‘no deal’ scenarios — to ensure that businesses have clarity on how the UK would operate its borders, immigration system and regulations in the event of a breakdown in negotiations.
Adam continued: “Firms need clear guidance from the Government on preparations for all eventualities, so that they know how critical systems and borders would operate in the unwelcome scenario where a comprehensive deal cannot be reached.”
Stephen Martin, Director General of the Institute of Directors, also responded to the publication of the Government’s Brexit White Paper saying: “This White Paper puts some vital meat on the bones of the Chequers plan. More specifics on its proposed customs arrangements, and its proposed free trade area in goods with the EU will be welcomed by business leaders who have delayed Brexit preparations because of a lack of detail on the future partnership.
“It should also give EU negotiators less scope to claim that they cannot push ahead because there is no plan from the UK. We look forward to comprehensive engagement with the Government on turning these ideas into practical realities that work for firms engaged in international trade.
“However, the Government has missed a trick by holding back on detail in several areas. Clarity about its approach to VAT arrangements, which are crucial to achieving its aim of frictionless trade with the EU, is in short supply. The paper also implies that businesses and individuals won’t have access to any new dispute resolution mechanism relating to enforcement of the agreement.
“Given the unprecedentedly close economic arrangement the UK is hoping for with the EU as a third country, this should be in there. The Government has provided more clarity on its approach to financial services, and we look forward to them doing the same for the rest of the services sector.
“But the biggest question mark looms over what will replace freedom of movement. The Government is right to prioritise an ambitious scheme on labour mobility with the EU, but businesses need to work from concrete proposals. We would urge the Government to bring forward its plans for post-Brexit migration, which should be at the heart of our future economic partnership with Europe.
“EU negotiators now have specific details to build upon, and we strongly urge them to respond constructively to the White Paper so that progress can be made for the benefit of both sides.”
Carolyn Fairbairn, CBI Director-General, responded to the White Paper saying: “The Brexit White Paper reflects much of the evidence that business has been highlighting since the Referendum. This direction is welcome – protecting jobs and investment now and in future should be the guiding star for both sets of negotiators.
“Many of the intentions are reassuring. Seeking a free trade area for goods and a common rule book shows the Prime Minister has put pragmatism before politics and should be applauded.
“Businesses on both sides have been asking for frictionless trade between the UK and EU, and shared rules could go a long way towards delivering that. It is now the EU’s turn to put economics before ideology on these proposals.
“The UK’s world-beating services industry, representing around 80% of our economy, will be pleased by moves to maintain free-flowing data, mutual recognition of qualifications and mobility for skilled workers across the EU. This is the right ambition that makes sense for both sides.
“But there are gaps in these proposals and more detail is needed on EU VAT, some services sectors and the new customs system. It will be a make or break summer. It’s vitally important UK negotiators get their heads down and work with businesses to grapple with the detail and get it right.
“With three months left to go, it is now a race against time. The EU must now engage constructively and flexibly, as must politicians from all UK parties. This is a matter of national interest. There’s not a day to lose.”
Federation of Small Businesses National Chairman, Mike Cherry, said: “After more than two years since the EU referendum, we finally have a Brexit destination that Government hopes to negotiate. We hope that the EU welcomes this negotiating position and does not dismiss it out of hand.
“With just 37 weeks before we leave the European Union, we need to see tangible and comprehensive details on these proposals and how they will impact small businesses. As we draw closer to the exit date, it is welcome to see that the Government has stepped up preparations for a ‘no-deal’ scenario.
“The Government must look to ramp up the conversation with small businesses to find out how these proposals will actually affect the day to day running of their business. If there are to be any negative impacts, Government must come up with solutions to soften these and ensure that small businesses are not damaged.”
Newly published research from FSB shows that 59% of small businesses that export goods to the EU Customs Union, feel that trade would be impacted if overall costs increased as a result of having to complete additional customs declarations.
11% of smaller firms say that they would stop exporting to the EU altogether. FSB calls on Government to have realistic proposals on the table to remove the need for customs declarations and rules of origin for trade with the European Union.
Two thirds of current small business importers, who know the next destination of their imported good, say that they would find it difficult to operate dual systems and tracking arrangements depending on whether an imported good was exported to the EU or remained in the UK.
Commenting on the findings, Mike Cherry said: “These findings highlight the very real concerns that small businesses have about the impact of any new customs arrangements. It is clear that any additional customs costs, or complex tracking requirements, could act as a brake on smaller firms trading with the EU.
“It is critical that Government considers the impact these potential changes will have on small firms and develops a system that lessen any additional costs they may face post-Brexit.”
Further FSB research shows that almost one fifth (19 per cent) of smaller businesses exporting to the Rest of the World are currently using a free trade agreement to support their trade of goods and services. Over a third (36%) of smaller business current exporters stated that free trade agreements would be the most useful intervention to help them to increase the value of their exporting activity.
Mike Cherry said: “Whatever customs arrangement the Government manages to negotiate, small businesses will need significant support to ensure that they are making the most of preferential trading terms. The Government can guarantee this by enshrining within all Free Trade and Preferential Trade Agreements, a dedicated and bespoke Small Business Chapter. This model would help small firms are supported in realising their exporting and wider trade ambitions.”
Previous FSB research shows that half of small firms think Brexit provides scope for reforming regulations that impact their business.
Commenting on the commitment to keep high standards on consumer, environmental and employment legislation, Mike Cherry said: “Small businesses will welcome the guarantee that the Government will look to retain the current level of standards in the UK. Our research shows that small businesses understand the benefits of some good quality regulation particularly when it helps build customer trust and provides a level playing field.
“However, there remains concerns around the quantity and quality of regulation overall. Immediately after Brexit, small businesses will need stability with the same rules applying on the day after we have left, as the day before. After this period of time, the UK has a golden opportunity to forge its own path in creating a more small business friendly regulatory environment that can drive growth and productivity.”