- Reuters/Francois Lenoir
- Deutsche Bank argues that UK needs to strike a transition deal with the EU by end of March 2018.
- Without such a deal, companies could trigger their worst case Brexit scenarios.
- The bank’s Brexit timeline shows how little time is left to sort out Brexit.
LONDON – Britain leaves the European Union on March 29, 2019. That is the one certainty in Brexit talks right now. Everything else is still up in the air.
Heading into the end of 2017, more than six months after the UK triggered Article 50 and began the formal process of leaving the EU, Britain and the bloc’s other 27 members are struggling to find common ground, and the likelihood of striking a transitional deal – allowing for a smoother exit for the UK – by the end of the year is dwindling.
Many businesses and lobby groups have called for a transitional arrangement of some sort to be agreed before 2017 is out, as a means of preventing the triggering of Brexit contingency plans that would see firms shifting staff out of the country into EU-based offices.
“Transition loses value the longer uncertainty about it persists,” Deutsche Bank strategist Oliver Harvey writes in a note distributed to clients last Thursday.”
“As of August, only 11% of IOD membership had activated contingency plans, but this number was set to increase due to the lead times for switching supply chains and relocating operations.
“The CBI suggests that 60% of businesses may have triggered contingency plans for Brexit by the end of March absent guarantees on a transitional deal. Bank of England officials have said a transition is needed by the end of the year to prevent the relocation of financial services to the continent.”
Harvey’s note – in which he argues that it is “now more uncertain” that the UK and the EU will agree a transition deal during 2018 – includes a handy timeline of what to expect over the coming 18 months. It shows that without a transition deal in place, firms based in the UK could start to trigger their worst case scenario contingencies by the end of March – less than six months time.
Here’s the timeline:
- Deutsche Bank
And here’s Harvey once again:
“We had assumed that a transitional deal could be reached quickly in 2018, meaning minimal disruption to the economy. This is now more uncertain. Unless and until the problems presented above are resolved, it seems likely that at least some corporate contingency plans will be triggered next year with or without agreement in December.”