UK's weakened Brexit negotiating position.

There is a stark contrast between the strength of Brexit negotiating position between the EU and Great Britain and the gap is getting wider by the day. This gap is made more serious by the complexity and sheer variety of Brexit issues.

There was always a timing challenge to meet the two year timescale to complete negotiations from the invocation of Article 50. Originally we thought that this might be on the EU side given the timing of EU elections this year. Following the UK general election we are no longer clear on whether government policy will be a soft of hard exit. It beggars belief that the UK did not wait to invoke Article 50 until after the general election.

There has also been a lack of transparency and indeed engagement on the UK side in its  preparation. This is in stark contrast to the EU which has already published significant amounts of material on its stance on important issues. Furthermore the EU position appears to be unified and according to many sources hard-line.

Making sufficient progress will be testing because the two sides are so far apart on the three main divorce arguments. The first is protecting EU citizens resident in Britain and vice versa. All parties accept this in principle, and the British say it can be dealt with fast. Yet the details are complex; and the EU’s demands give their citizens in Britain more rights than Britons, with full protection by the European Court of Justice (ECJ).

The next problem is how to avoid a hard border with customs checks in Ireland. Again, all sides agree in principle. But since Britain is heading for a hard Brexit, leaving the EU’s single market and customs union, it will be difficult to avoid a border in practice. Much agrifood trade takes place between north and south: what happens if a post-Brexit Britain no longer applies the EU’s high (and rigid) phyto-sanitary standards?

Third and most difficult is money. Almost all EU members appear to agree to want to extract as much as they can from Britain. That is why the gross Brexit bill has mushroomed to as much as €80bn-100bn. No UK government would pay so much.

Finally, while all this goes on, the market will start demanding Brexit transition plans from companies. We expect to start seeing these as part of half year results this year. This also requires that the EU and UK Government start focussing on transitional arrangements.

Dr. Ray NultyComment