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Transitional single market arrangement is critical, say businesses and expert

Five of the UK's major business organisations have signed an open letter to the government calling for continued access to the EU single market until the UK's departure is agreed and implemented.19 Jun 2017

The British Chambers of Commerce, the Confederation of British Industry, the manufacturers' organisation EEF, the Federation of Small Businesses and the Institute of Directors called on the government to “engage continuously” with UK business interests as negotiations take place.

The UK talks with the EU over Brexit formally begin today and the split is due to take effect in 2019.

In the letter the organisations call for a tariff-free goods trade agreement between the UK and EU, regulatory equivalence and mutual recognition of standards on an ongoing basis to ensure continued mutual access for both goods and services, and a flexible system for the movement of labour and skills.

EU law and Brexitexpert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com, said maintaining current arrangements until Brexit takes place was vital.

“The joint letter from the UK’s business organisations emphasises the need for a transitional arrangement, to maintain the status quo until a final settlement with the EU is agreed and implemented,” said Lougher. “This will be a critical objective to achieve, because the process of negotiating the UK’s future trade deal with the EU is likely to take much longer than the two year period provided for by Article 50.”

Lougher said meeting the business organisation's objectives would be “extremely challenging” with significant time pressure.

“The joint letter also emphasises, understandably, the ultimate objective of a final trade deal which delivers as frictionless trade as possible with the EU, alongside a flexible system for the movement of labour and skills between the United Kingdom and the European Union, that enjoys public support,” Lougher said. “The objectives in the joint letter are laudable ones and the hope is that they can be achieved.”

Under the previous government prime minister Theresa May said leaving the EU meant the UK would have to leave the single market. However following the result of the general election earlier this month May's mandate for a so-called “hard Brexit” could have been weakened.

A number of other organisations have also warned of the impact of leaving the single market in the year since the UK voted in favour of Brexit. Last July the head of the Financial Conduct Authority said the country should push for continued access to the single market for financial institutions, while think tank the Institute of Fiscal Studies said the move would depress tax receipts and impact gross domestic product.