Agreement on “a large part” of the Brexit transition deal, announced on Monday, “will give business the timings it needs”, the UK’s leading business federation the CBI has told tourism industry leaders.
EU negotiator Michel Barnier and UK Brexit secretary David Davis announced a deal on “the implementation period” or transition phase of Britain’s exit the EU on Monday.
John Foster, campaigns director of the CBI, told an English Tourism Week conference in London the agreement “would give three years of certainty for business”. He said: “The odds against a no-deal Brexit have increased.”
However, Foster warned: “[The] progress on Monday comes with a big caveat that they need to agree more.”
Barnier and Davis hailed their agreement as “a decisive step”, although the issue of the Northern Ireland border remains unresolved.
The agreement sets the Brexit transition period to last from March 29 2019 to December 2020, confirms the rights of EU citizens in the UK – and UK citizens in the EU – after Brexit, and gives EU citizens arriving in the UK during the transition period the same rights.
Foster suggested business would heave a sigh of relief, saying: “Companies are diverting time and resources to prepare for Brexit. Firms feel they have [had] no option but to prepare for a no-deal scenario.”
He said: “Negotiations on a new deal begin in March and are scheduled to end in December. Ireland poses a particular problem. [But] March is the big deadline regarding transition. Business needs one set of adjustments only [and] agreed joint legal steps.”
However, Foster added: “The EU refers to transition as ‘a gift’ or ‘a favour’ to the UK. It has said December 2020 [is the deadline] because that would comply with the EU budget.”
He praised Prime Minister Theresa May for adopting a “positive, open, constructive tone”, but identified “hurdles on regulation, on the European Court of Justice, and on the trade-off of access for control”.
Foster suggested a major obstacle to May’s vision of “managed divergence”, laid out in her recent Mansion House speech, would be: “The fear the EU has that this could provide an attractive model for others.”
Yet he insisted: “Aviation will be an area easier to agree because of the mutual interests. The Department for Transport is doing a lot of work behind the scenes on bilateral deals [in case] there is no agreement. But I don’t foresee aviation being a stumbling block.”
A CBI study of more than 300 UK businesses at the end of last year found 57% said Brexit was taking time from other priorities, 40% believed investment had been negatively affected and 40% that recruitment and retention had been hit.
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