Businesses may have to wait for last-minute deal
Businesses may have to wait some time for clarity on trading to take place during Brexit as the EU are keen to focus on the split, according to reports from AXA Investment Managers (IM).
Speaking at an event earlier today, AXA IM senior economist David Page said: “The UK obviously wants to focus on the future trading relationship and the future access, but even the sequencing of these discussions is going to prove controversial. While the UK wants to do the two discussions in parallel, the EU want to get the separation bill done first.”
To add to this, it is believed that any deals made on trade are likely to be last minute. Page said: “As with most negotiations, it all comes together at the end. And if we look at what we’ve seen of the EU negotiations over the last six years, we have seen last-minute deals become the norm. And we expect to see a similar pattern with the UK.”
According to Page, this is likely to lead to a tense and rocky road ahead where the insurance industry, along with others, is left to speculate on outcomes.
He added: “This means for the next 12 months, business are going to see a very tough period of negotiations. This is where we would expect the acrimony to come through. This is where we would expect businesses to question where anything is going to be done.”
Even with this in mind, there is strong potential that no trade deal will be made in time for the 17-month cut-off by which point Michel Barnier will need to report back to the European Parliament, leaving the UK to have to revert to WTO rules.
Page believed that this uncertainty, which will affect industries like insurance; he explained: “It’s about how the economy copes with uncertainty. To our minds, the uncertainty that Brexit throws up with regard to both future trading arrangements and the growth of the economy more generally, is going to be an impediment to businesses committing long-term spending - they’re not going to want to invest.”