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  1. Wealth
March 20, 2018

Cliff edge averted. What now for Brexit?

By Alec Marsh

The announcement of a 21-month transition deal after Brexit ends fears of Britain facing a ‘cliff edge’ on departure from the EU and augurs well for the future, writes Alec Marsh

Ageing and millennial fans of Dad’s Army, continuingly replayed presumably for reasons of popularity or economy by the BBC, will recognise the metaphor of the image above.

You can see France from these Kentish chalk cliffs. And now, perhaps we can see the future, too.

For months, grieving and recalcitrant Remainers — the Anna Soubry types — have warned of imminent collapse of the British economy from the reconfiguration of its economic and political relations with the European Union. The cliff edge has been intoned. We’re all doomed, they’ve said.

But now, following a weekend of talks in Brussels, chuckling David Davis, the Brexit secretary, and Michel Barnier, the EU’s chief negotiator, have emerged into the sunlight announcing that a transition deal is done.

The current trading status quo, or at least most of it, will stay in place until December 2020 and in the mean time Britain can start negotiating its future trading relationships elsewhere.

To the aggressive Remainers it must seem as if the Titanic suddenly awoke from its stupor and veered away from the iceberg. Yes, they crow about the ceding of fisheries rights for longer than certainly Scottish fisherman desire; yes they note gleefully that the ‘back stop’ position concerning North Ireland’s border may mean Britain remaining in the customs union and is a repudiation of the prime minister’s stated intentions; yes, they delight that the rights of 4.5 million EU citizens in the UK already — plus any more that come here — have been confirmed. Finally they note that Britain will be a rule-taker until nigh on 2021.

But the good news is that there was enough here to keep the Brexiteers happy.

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And business leaders have greeted the news with measured delight. Catherine McGuinness, the City of London’s policy chief hailed the announcement: ‘Before the announcement firms were peering over the precipice,’ she declared. ‘They are now on firmer ground and we hope that the regulators will be tasked to work together by the UK and EU to underpin this political commitment and give firms the certainty they need.’

The transition deal, subject to ministerial approval at the end of the week, is all but done and it shows that pragmatism is beginning to hold sway. That the international trade secretary Liam Fox can now wield his red briefcase in anger around the world is certainly to be welcomed — and only appropriate.  The waiting game is over, the phoney war of Brexit is nearing its end. The future is coming.

And at the heart of that future is the UK’s future trading terms in goods and services with the EU. That this needs to be effectively seamless, the world of business understands. That it needs to cover financial services the world needs to understand, too.

Aside from some, say, in France, who rub their hands together at the prospect of luring back one or two of their banking compatriots whom they have lost to London over the last decade, and perhaps one or two others, most recognise that it’s in no one’s interest to undermine London’s financial lead. Even the prime minister of Luxembourg — which could well benefit in terms of asset management from London’s relatively, decline noted this in The Sunday Times at the weekend.

And as I wrote in a recent leader in Spear’s, the economic future of the EU may well be healthy now, but over the longer term demographic forces are at play that mean the bloc would be crazy to keep a demographically healthier nation such as the UK at bay. In 30 or so years time there will be fewer than two workers for every pensioner in Germany, Italy or Spain. So who’ll be serving the coffee? The ratio in the UK will be 2.5.

As the ongoing Skripal affairs shows for international affairs, Britain and the EU need each other. That as many argue pointing this out undermines the case for Brexit is rather beside the point. Brexit is happening, like it or not.

But future cooperation, be it military, diplomatic or economic will have to continue.

And as our own Mark Carney observed, London is the ‘investment banker’ of Europe, and the EU would be foolish to deny itself the expertise, efficiencies and services of the City of London and the UK’s wider financial industries. Just as the Davis-Barnier conjunction showed on Monday, and as we saw in December when the ‘divorce’ proceedings were agreed apparently against all odds, pragmatism does seem to be prevailing. After months of the fog of politics and rhetoric, the channel towards the future of British European relations is clearing. Now that the cliff edge has been averted it is time to work towards a pragmatic future, one that benefits both parties for the decades ahead.

Alec Marsh is editor of Spear’s


A thought — will the Skripal poisoning ease Brexit talks?

Brexit transition could be ‘good news’ for immigration

Spear’s interview: Clarissa Eden on Churchill, the folly of Suez and Brexit

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