Parliament's Business Committee accepts that no-deal will be catastrophic and must be avoided

The Business, Energy and Industrial Strategy Committee today, 10 December, published its Report on the impacts of a Brexit on the basis of: the deal on offer to the UK; or, leaving the EU on 29 March 2019 without a deal.

The report updates its findings now that organisations have had chance to consider the details in the Withdrawal Agreement and Political Declaration – and comes out the day before MPs were scheduled to vote to accept or reject the terms of the deal comprising a transition period and a framework for negotiating the long-term relationship between the UK and EU beyond the transition period.

It now seems certain that the vote will be delayed.  An EU spokesperson immediately responded by re-confirming that the Withdrawal Agreement could not be re-opened for further discussion - a view independently confirmed by Ireland’s Foreign Minister, Simon Coveney. Any amendment to the draft Treaty - now that it has been endorsed by the European Council - can only be considered with there is unanimous agreement from the remaining 27 EU nations.

At the same time, a formal ECJ ruling, issued this morning, said that UK could rescind Article 50 unilaterally - halting Brexit without altering the terms of Britain's membership.

Further details in our Insight Dec 4, 2018.

Given that there is little chance of negotiating changes to the deal, the Select Committees conclusions remain valid:  avoid no-deal at all costs and get some certainty so that they can operate today and plan for the future; or seek endorsement from the public now that the terms of Brexit are on the table – via a General Election or a Peoples Vote.

Support for a second referendum is widely reported to be growing in Parliament - and will rapidly become the only way out of the impasse if Mrs May’s deal is torpedoed by Conservative rebels when the meaningful vote on the deal is re-scheduled.

The response from the business community to the Withdrawal Agreement and Political Declaration remains valid – and will have an influence MPs in the choice of a way forward.

House of Commons Business, Energy and Industrial Strategy Committee Report Findings

The views of four business sectors, previously examined, in order to update previous findings - aerospace, automotive, processed food and drink, and pharmaceuticals.  These sectors are varied in structure and vital to the UK’s future manufacturing success.  Their concerns will reflect those of many other sectors that export to the EU – an overwhelming and consistent message that they want certainty.  

The Withdrawal Agreement provides certainty - at least for the transition period - and is therefore preferable to the uncertainty and damage associated with the alternative of a no-deal scenario.

However, there was a strong consensus that: the Withdrawal Agreement would leave them worse off and less competitive than the status quo of EU membership; and that leaving the EU without a deal would have catastrophic consequences and must be avoided.  

While the certainty provided by the assurance of a transition period is essential for businesses, there is significant risk that the time available - and the vague nature of the framework for negotiations - will be used up by another prolonged discussions, leaving them with a further set of major changes to manage.

John ShuttleworthComment