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Staying in EU to October 31 welcomed - but don't waste the extra time

Mrs May at Emergency Summit

Uniformly business and consulting leaders have welcomed the EU's decision to grant an extension to the UK's leaving date to October 31 — but with a warning too; crisis averted, but don't waste the extra time and get a political deal done.

Carolyn Fairbairn, CBI director general, tweeted in the middle of the night, "This new extension means imminent economic crisis has been averted, but it needs to mark a fresh start. For the good of jobs and communities across the country, all political leaders must use the time well. Sincere cross-party collaboration must happen now to end this chaos."

Speaking at an Institute for Government event later Fairbairn commented that "brief relief" for businesses worried about the "cliff edge" of a no deal "will be quickly followed by frustration, exasperation, we're still here. Six months will come around extremely quickly and I think members will already be thinking 'but that's the run-up to Christmas'.

"I'm afraid there will be no dancing in the streets around this and I wouldn't expect much in the way of ramming down of no-deal planning."

Fairbairn said that the government should use the next few months to set up a process to find an acceptable Brexit compromise, and that it should go beyond politics.

"Our huge hope off the back of this six-month reprieve is that it's used to set up a process and it's not just people locked in a room on their own which we've seen in the last few days."

She said there should be a three to four-month initiative bringing together civic society other stakeholders to try to frame a Brexit solution.

"It could ask the question 'what kind of Brexit do we want?' We should have done it two years ago, why don't we do it now? Me personally, I might have liked a slightly longer extension to enable that to happen, but actually this focuses minds," she argued.

Dr Adam Marshall, director general of the British Chambers of Commerce, said businesses will be relieved, "but their frustration with this seemingly endless political process is palpable".

"For most businesses, the 'flextension' agreed by the European Council will be preferable to deadlines that are repeatedly moved forward at the last possible moment.

"This extension buys Parliament some time to come to a consensus, but they can't afford to squander it. Politicians must urgently agree on a way forward.

"It would be a disaster for business confidence and investment if a similar late-night drama is played out yet again in October. Our businesses and our communities need answers to plan for the future, and the government must return its focus to pressing domestic issues, which have been ignored or marginalised for too long.

"In the event that the Withdrawal Agreement is passed by Parliament, businesses need a clear timetable and fair warning of the UK's planned exit date, particularly those trading in countries where the UK has not yet finalised much-needed trade continuity agreements."

Their remarks mirror the reaction of European President, Donald Tusk who commented, "This extension is as flexible as I expected, and a little bit shorter than I expected, but it's still enough to find the best possible solution. Please do not waste this time."

In its instant analysis of the agreement, Brexit Partners points to three key elements of the EU offer:

  • The offer is "only as long as necessary" — and "no longer than 31 October." Time has been granted for the UK to ratify the Withdrawal Agreement
  • The UK "must hold the elections to the European Parliament" on 23 May. If it fails to do this, the UK will leave on 1 June — "deal or no-deal"
  • There is no possibility of re-opening of the Withdrawal Agreement negotiations.

Amanda Tickel, Global Brexit Lead at Deloitte, said: "Business reaction to a further extension is muted — on the plus side it removes an immediate unknown. But those that have extensively prepared, for two different dates already, are frustrated to now have a third date to work towards.

"Prolonged uncertainty is continuing to delay investment, with cash reserves running high at some of the biggest U.K. businesses. Regulated sectors such as financial services and pharmaceuticals have already had to move parts of their business or functions to other EU countries as a result of regulatory pressure to be prepared so they now face a further period of limbo."

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