Nine months into the Brexit divorce negotiations and we finally have a breakthrough. The UK government and EU negotiators have agreed the first stage of the 'divorce settlement' and will now put this to EU heads of state next week for approval. Today's deal covers the Northern Ireland border, citizens rights and the financial settlement. Subject to approval at next week's summit of EU heads of state, talks can now move on to next the stage of Brexit negotiations: agreeing the details of transition and the principles of our future trade relationship.
So what does this mean for businesses and other organisations?
1. It provides more certainty for EU citizens working in the UK and their families. EU citizens in the UK and UK citizens in the rest of the EU have the right to stay. Rights of their children and those of partners in existing “durable relationships” are also guaranteed. If you employ EU citizens you should make sure they are aware of today's agreement; this should provide significant reassurance. There is likely to be a process of applying for 'settled status'; further details should be available next year and employers may wish to help their people with applications when this happens.
2. It kicks the can down the road on the question of the Irish border. It provides some warm words for organisations operating across the Ireland - Northern Ireland border that they will be able to continue to operate pretty much as at present. The agreement does not set out a clear plan on this however; it has a set of principles which contain some tensions within them. It provides the basis for further work but there is still lots to work out and negotiate before we have a clear plan for the border which organisations can action and there is still scope for this to come unstuck.
3. It is the start - not the end - of negotiations on trade and transitional arrangements. These are key issues for businesses: what is the future EU-UK relationship and what are the transitional arrangements towards this? Until these are agreed you need to plan for the 'maximum disruption' scenario: a 'no deal' scenario where we shift to WTO trade terms with no transition at the end of March 2019.
We now need Brexit talks to speed up if they are to agree terms of transition in time for many businesses to avoid starting to implement expensive contingency plans from March 2018.
I have talked to smaller manufacturing businesses who are now planning how they would relocate some of their manufacturing or warehousing operations to the EU in the event of a 'no deal' Brexit; and they have said that they need to know by March 2018 whether there will be a transition period; they have a year lead time to relocate so will start implementing plans in the spring regardless of whether the UK and EU have reached an agreement.
The speed of progress to date and entrenched political views in many quarters mean that EU-UK agreement on these points by March will be difficult. There remains lots that businesses should be doing now to plan for Brexit and things you can do which will put you in a stronger position regardless of the final outcome. I have been working with colleagues and clients to update our guide to preparing for Brexit - with practical ideas you can find here: www.grantthornton.co.uk/brexit
With continuing uncertainty on trade and transition the key thing is to plan: identify your exposure, risks and opportunities. Work out what you need to do and when you would need to do it – how long implementation would take and when you need to take decisions.
Identify things you can do now that will strengthen your business whatever the outcome. And finally, given this continues to be a time of uncertainty, maintain communication with your people, suppliers, customers and investors.
Keep talking and keep planning; and know at what point you need to act regardless of whether government has reached an agreement.
EU citizens in the UK and UK citizens in the rest of the EU have the right to stay. Rights of their children and those of partners in existing “durable relationships” are also guaranteed.