Wednesday 29th March 2017 saw Prime Minister Theresa May trigger Article 50 of the Treaty on European Union, formally beginning the process of the UK leaving the EU just over nine months after the referendum result. Addressing the House of Commons on the same day, the Prime Minister declared her desire to create a “stronger, fairer, better Britain”. Just a few weeks later, Mrs May was in front of 10 Downing Street calling for an early general election, to enable her to continue to deliver ‘certainty, stability and strong leadership’.
However, with the election now looming as well, many businesses remain unclear as to exactly how the two-year negotiation process will make this new era in British business “better” than the previous one in which the UK was an EU member. “The spectre of a cliff edge situation has become a realistic scenario”, says Karen Briggs, head of Brexit at professional services company KPMG, despite Mrs. May’s dedication to ensuring the UK gets the best deal during the negotiations.
“Although individual companies have different levels of Brexit exposure, the majority are deep into scenario planning and some firms are beginning to reconfigure their businesses”, says Karen. “This means talking to and reassuring staff, seeking new regulatory approvals, and shifting certain parts of their operations.” She believes that the UK is becoming a less attractive country for business and, as such, “it has become untenable to not have a Brexit plan.”
David Sproul, senior partner and chief executive of Deloitte, reiterates Karen’s feelings: “While the hope is that the UK can secure the best possible deal on trade and market access, businesses must continue to plan for an exit in 2019, several years of trade negotiations, and a transitional phase to bridge the two”.
So what is the forecast for the next two years of business as those in power after the election dust settles, wrangle the UK’s exit deal? Many are predicting that economic growth will slow throughout 2017 and 2018, with some expecting the slowest growth since the 2011/12 Euro crisis. Access to EU markets will be a key factor for business, but with the government determined to take the UK out of the single market at the same time as leaving the EU, this too remains largely uncertain. Beyond 2018, it’s very hard to predict exactly what will happen until it is known exactly how successful the Prime Minister’s negotiations have been.