The process towards Brexit: Theresa May’s 10 deals to strike Adrian Gahan Managing Director, Sancroft 23 November 2016 1 L o n d o n | W a s h i n g t o n
Deal 1: A deal within the Conservative Party Imperialists (Davis & Fox) Exaggerated sense of unilateral British power • • Economic liberals (but only understand trade in goods) • Sovereignty, not immigration • Insufficient attention/understanding of politics in continental Europe Nationalists (May & Timothy) • Economic nationalism- Govt picking winners (Nissan) • Political populism – smash UKIP and Labour • Immigration controls before trade ALBINOs (Hammond & Clark) • A Little Brexit in Name Only • Wish to avoid WTO cliff edge 2 L o n d o n | W a s h i n g t o n
Deal 2: A deal with Parliament • Bluff called by High Court judgment • Govt now needs to bring Brexit strategy to Parliament • Reluctance is not about negotiating tactics • Govt currently does not have a Brexit strategy • Parliament will not block Article 50 3 L o n d o n | W a s h i n g t o n
Deal 3: Article 50 The Divorce Settlement • Article 50: “By end of March 2017” • Two year deadline unlikely to be extended (2019 EU elections & 2020 EU budget) • Will only cover the basics: - EU/UK citizen reciprocal rights - budget contributions - EU institutions in UK, staff, pensions - No formal talks on long term deal until out 4 L o n d o n | W a s h i n g t o n
Deal 4: Future UK/EU economic relationship Expect ratification 2026-2030 (if ever?...) Source: Deutsche Bank, July 2016 5 L o n d o n | W a s h i n g t o n
Deal 5: Interim UK/EU Deal (2019-2025?) • Likely 8-10 years between exiting EU & new trade agreement • What do we do for the 2020s? WTO terms? • Or ‘temporary cover ’ with an interim deal? • To be negotiated simultaneously with Article 50 • How much of single market will UK continue to have access to post March 2019? • Budget contributions? CAP/CFP? ECJ rulings? Free movement restrictions? This is where you should be focusing your attention 6 L o n d o n | W a s h i n g t o n
Deal 6: WTO Deal • UK already a member of WTO, but unable to submit own schedule until UK portions agreed with EU • First agree with EU MS on UK schedule (tariffs/quotas/subsidies) • Then need approval of 162 members. Each theoretically has a veto • No trade deals until schedule agreed – timeline & process as yet unclear 7 L o n d o n | W a s h i n g t o n
Deal 7: Bilateral Trade Deals • 53 trade deals we currently enjoy via EU • Cannot sign any deals until exited EU • Countries willing to strike UK deal while EU trade relationship unclear? • Will then take 8-10 year negotiations per deal. • First UK bilateral trade deals early 2030’s? 8 L o n d o n | W a s h i n g t o n
Deal 8: Co-operation on CFSP/J&HA • UK in strong bargaining position – stronger since Trump win Deals 9 & 10: Scotland and Northern Ireland • Economic & social relationship between NI & RoI • Brexit in breach of Belfast Agreement? • Second Scottish independence referendum? 9 L o n d o n | W a s h i n g t o n
Summary: Ten deals to strike 1. A deal within the Conservative Party 2. A deal with Parliament 3. Divorce settlement (Article 50) 4. Future UK/EU economic relationship 5. Interim UK/EU deal 6. WTO deal 7. Bilateral trade deals 8. UK/EU agreement CFSP/J&HA 9. Deal with Scotland 10. Deal with Northern Ireland 10 L o n d o n | W a s h i n g t o n
Points to remember 1. The Govt does not have a plan. So you need to present them with one. 2. Do not allow them to use you for spin 3. Beware the cliff edge in 2019 4. Push for the principle of an interim deal 5. Push for what you want to see for your sector in that interim deal 6. New trade deals are not going to bail you out until the 2030s, if ever. 7. Any trade deal struck before then will be political theatre – beware cosmetic trade deals secured simply to get runs on the board 11 L o n d o n | W a s h i n g t o n
The winners & losers of globalisation Explaining Brexit and Trump in one graph Source: Branko Milanovic , 2012 12 L o n d o n | W a s h i n g t o n
Adrian Gahan Managing Director Sancroft 46 Queen Anne’s Gate London SW1H 9AP adrian.gahan@sancroft.com Tel: 0207 9607905 13 L o n d o n | W a s h i n g t o n
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