What’s next for Brexit?

What’s next for Brexit?

Experts from Mazars, PwC and EY on best and worst Brexit outcomes following the draft deal

What’s next for Brexit?

Following yesterday’s news that a transition period for Britain leaving the EU could be extended until 2022, uncertainty over the Brexit deal shows no signs of abating.

UK business secretary Greg Clark suggested Britain would be open to the 2022 extension, put forward by the EU’s chief Brexit negotiator Michel Barnier to smooth the way for business.

“We expect the politics to grab the spotlight this week, but investors should take the longer term view,” said Mazars’ chief economist George Lagarias. “A weak deal could see slower economic growth over the next years, while a no-deal would see sharper and more immediate economic pain.”

In his view, the sharp polarisation which has characterised the debate over the UK’s exit of the EU has done the economy no favours.

“High-pitched partisanship exacerbates the situation by paralysing policy and decision making and preventing the economy from recovering,” he said.

In Lagarias’ view, the best solution would be an “institutionalised long-term Brexit,” which would give the UK time to find new competitive strengths. The  partisanship would also quieten down in that time, which would be long enough for the economy to settle.

More clarity needed

Accountants have found it hard to plan without knowing what kind of trading relations the UK will eventually have with the EU.

Although Theresa May insisted her draft deal is the best one for the UK, it has faced opposition from many quarters.

This morning, the CBI said businesses had spent “hundreds of millions of pounds” preparing for a no-deal Brexit. Many see that as the worst-case scenario for the UK economy.

“Many businesses are confused about exactly what point in the Brexit decision process will provide the confirmation they need to press the stop button on their no deal planning,” said Mats Persson, EY’s Brexit strategy leader.

“There is also the added complication that the actual legal ratification, as opposed to the meaningful vote in UK Parliament, may not actually be completed until March, cutting it extremely close to exit date.”

At PwC, head of Brexit Andrew Gray said it made sense to continue to prepare for every eventuality.

“We welcome the news that the Cabinet have approved the deal reached between the EU and the UK,” he said. “However there are still a number of hurdles to be jumped before the deal is binding.

“We therefore still urge business to continue preparing for both a deal and no deal scenario until the agreement is ratified.”

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