Keeping our capital working for the UK

Print this page

Business welcomes a transition phase, but it isn’t the answer

Dr David Lutton, Executive Director, Policy

Natasha Ryan, Programme Manager, Brexit

After a summer with little progress on negotiations, we heard last week that the Government is ready to “intensify” Brexit talks with the EU. We have since also witnessed a ‘leaked’ document setting out a possible ‘implementation period’ or transition phase after March 2019. These are welcome steps forward, but over a year since the vote, business desperately still needs certainty.

Together with Lloyds Banking Group we have been trying to better understand how businesses have adapted their plans since the EU referendum, and whether a transition period would help them. Unsurprisingly, our survey by YouGov[1] showed that over half of businesses have faced negative effects from the vote to leave the EU. These have included putting investment and recruitment decisions on hold, revising supply chains and witnessing a reduced demand for products and services. Looking at specific sectors, IT & telecoms, retail, Finance & Accounting were hit the hardest.

Our survey showed that four in ten UK companies were positive about a transition agreement. Interestingly, fewer than one in five expressed a concern that it would have a negative effect but one in three did not think it would make a difference to helping their business planning. An agreement between 1-3 years was the most preferred timeframe, and should cover all elements of the existing EU relationship: freedom of goods, services, capital and talent, as well as a common set of tariffs and EU legal arrangement.

This is a good indication that business thinks a transitional agreement is better than a cliff-edge alternative, and that the net impact would be generally positive. However: it is still not good enough, as it does not provide the certainty about UK’s future relationship with the EU that business needs to plan ahead.

London is known for being at the top of the business league table, and government must quickly provide the certainty needed to keep us there.

[1] The survey ran from 7th – 18th August 2017 and canvassed the views of senior business decision makers from 1036 UK firms with turnover <£1m

London First Tweets