Concrete progress must be made on future UK-EU trade relations before a financial settlement is reached

Concrete progress must be made on future UK-EU trade relations before a financial settlement is reached

We should all welcome the optimistic vision presented by the Prime Minister in Florence, of building an open and inclusive new partnership with the EU. The speech made clear that Britain would no longer be a member of the single market or the customs union, but would instead forge a new economic settlement with the EU, based on our shared interests and history.

The vision is clearly for an end-state comprehensive trade agreement with the EU which will clearly be far more deeply liberalising, and will contain measures on services trade and domestic regulation that will be trailblazing for current international trade agreements.

The Government will need to clarify how much of the future trade agreement it expects to have developed prior to our leaving. It is in the UK’s interest not to waste leverage it might have had (the financial settlement). It is critical that concrete progress is made on this prior to the UK’s exit and before the money issues are concluded. We cannot pay for an option to negotiate.

It is also unclear how other countries will react at the prospect of the UK outside the EU; but with the interim or transitional measures which the Prime Minister is calling for, and with which the EU has to agree, the danger of these measures is that the Rest of World will assume they are in fact the status quo, and not expend negotiating energy on the UK.

Countries may think the UK will become so locked into the EU’s regulatory system, especially during a period as a rule taker, that it will not be able to attain the flexibility it needs to deliver the Prime Minister’s ultimate and very positive vision, not only for trade deals, but also for the UK’s leadership in the WTO and global standard-setting organisations.

It will be critical that the UK can negotiate fully as an independent nation from day one of Brexit in order to deliver the Prime Minister’s vision. It is also critical that the UK Government, businesses and other stakeholders use the period between now and 2021 to prepare systems to be fully ready for this new reality.

Even with this implementation or transition period, we must not slow down. Firstly, because even in a transition or implementation period, decisions must be rapidly made to ready systems for a different relationship with the EU; and secondly, because this is only the UK’s proposal, and the EU has to agree it – something which we will not be certain about for some time, despite the fact that it is a very generous offer.