July 18th, 2018 / Insight posted in Blog

Brexit Blog – It’s all White now

So we are well into our second summer, since Article 50 was invoked. The talk now is all about political infighting and the most intractable issue in British politics for generations is heading for the buffers – hard. A hard Brexit maybe?…..

Since my last blog, we now have the Government’s Brexit White Paper – released on 12 July after much debate in and outside Chequers. Two Cabinet Ministers resigned, several junior Ministers exited – altogether not Mrs May’s unifying moment.

The White Paper attempted to clarify many issues for business as well as pointing out the many challenges. The White Paper is long on text, full of conditional verbage and decidedly woolly.

In short, the idea is to stay in the Single Market for goods, but not for services.

The proposal is to have a phased introduction of a new Facilitated Customs Arrangement (FCA) that removes the need for customs checks and controls between the UK and the EU27 – as if in a combined customs area – whilst enabling the UK to control its own trade tariffs for its own trade with the rest of the world.

The proposal is that the UK keeps the benefits of the customs union (free flow of goods, no hard border with Eire) without sacrificing the opportunity of agreeing trade deals with other countries, i.e. the USA.

Timescale? Phased – however long that is.

As for services, including financial services, this is addressed as ‘respecting the right of the UK and the EU27 to control access to their own markets’. The new (proposed) regulatory arrangements should be based on ‘the principle of autonomy for each party’. The separation of goods and services will be key.

The UK Government’s intention is to leave the EU Single VAT area (no surprise here) and the UK will maintain sovereign discretion to set its own VAT rates. The White Paper proposes ‘the application of common cross-border processes and procedures for VAT & Excise’ to facilitate frictionless trade in goods. There is very little detail beyond that. So rest assured that VAT is likely to be an even more complex issue for businesses to grasp in our future Brexit world.

Politically, Theresa May must be mightily relieved that Parliament is now into the summer recess – no more votes to agonise over, no more concessions to yield, no more resignations… for now.

Attention now switches to Brussels, because of course lest not we forget, Michel Barnier et al have to agree the White Paper proposals.

Word from the EU suggests that he is not convinced that the White Paper will be the basis of a final agreement. The priority is Ireland and getting the withdrawal agreement over the line for autumn.

Come October (if we even have a deal), it is back to Parliament for the final vote – where Mrs May will be treading on eggshells as the political infighting plumbs to new depths.

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