Businesses in favour of post-Brexit free trade but divided over impact of transition plan

The results of a survey carried out by lobby group London First and Lloyds Banking Group found that 40% of UK businesses thought a transition arrangement would have a positive impact, with 18% believing a transition period would have a negative impact on their business.

A high proportion of businesses said transitional arrangements should be in place soon: 21% of the 1,000 businesses surveyed wanted it in place by the end of 2017 and a further 22% said they needed to know what arrangements would be by June next year.

A similar opinion was expressed in June in a letter from a group of business organisations to the government, which said there should be 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.

At the time Brexit expert Guy Lougher of Pinsent Masons, the law firm behind Out-Law.com, said a transitional arrangement was “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”.

Over half the respondents to the London First survey said they had put investment or recruitment on hold, revised their supply chains, or faced reduced demand from their customers as a result of Brexit.

The results of the survey were published as the Trades Union Congress (TUC) general secretary, Frances O'Grady, and the Irish minister for foreign affairs and trade, Simon Coveney, both called for the UK to stay in the EU customs union and single market post-Brexit.

Speaking in Cambridge on Saturday 9 September, Coveney said there needed to be a “substantial transition period that allows everyone to prepare adequately for new realities”, which maintained the status quo for businesses with regard to the customs union and single market. Coveney also said the Brexit agreement between the EU and UK should maintain the “all-island economy” between Northern Ireland and the Republic of Ireland.

Meanwhile, in a speech on Monday to the TUC Congress, O'Grady said the UK should stay in the single market and customs union and “put jobs, rights and livelihoods first”.

A fortnight ago the Labour Party made its first commitment to campaign for the UK to stay inside the EU's customs union and single market for a transitional period after Brexit takes place in 2019.

Last week the UK's 'Repeal Bill', which will bring about Brexit, had its second reading in parliament. Pinsent Masons' Lougher said the European Union (Withdrawal) Bill was a “hugely significant” piece of legislation which would attract significant debate.