Buyers have been told to plan for a hard Brexit and WTO rules after prime minister Theresa May’s speech today.
Despite May providing her clearest vision for the UK’s post Brexit relationship with Europe so far, John Glen, CIPS economist, said businesses should still be prepared for a number of different scenarios, with a hard Brexit being most likely.
“If I were planning, my number one scenario would be hard Brexit, WTO rules with European regulations if you want to sell into Europe, and then work from there,” he added.
As well as leaving the single market, Glen said it was likely that the UK would also leave the customs union.
In her speech today at Lancaster House, the prime minister had a message of stability and, to a certain extent, transparency. May confirmed she would not pursue membership of the single market in any form, but instead “seek the greatest possible access to it through a new, comprehensive, bold and ambitions free trade agreement”.
She also said she wanted a new customs agreement to make cross border trade as “frictionless as possible” while giving the UK the freedom to make its own trade agreements outside the EU. May said the UK would enshrine all EU regulation into domestic law.
Glen, who is director of the centre for customised executive development at Cranfield School of Management, said: “I think the aspiration to negotiate a free trade agreement is no more than that, an aspiration.” He predicted the implications for the supply chain would be felt at least into the medium term – two years or more from after article 50 is invoked.
Glen also said May appeared “nervous” about certain sectors, including the automotive and financial sectors.
But he did praise May for finally “providing a narrative” to markets, which he said had led to today’s rise in the value of the pound.
Today’s speech was met with cautious welcome by David Jinks, head of consumer research at parcel broker Fastlane International. Although he said May’s commitment to free trade was reassuring, Jinks warned moving outside the EU’s Common External Tariff could mean the UK would need to create thousands of tariff codes.
This would “undoubtedly [lead] to increased border delays and red tape for British importers and exporters, and EU businesses looking to trade with the UK”, he said.
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