The Strategist

Theresa May is preparing for the worst

10/10/2017 - 10:05

British Prime Minister Theresa May said that she was ready for the failure of negotiations with Brussels on the withdrawal of the country from the European Union. At the same time, she is optimistic and confident that she will be able to achieve good results.

UK Home Office
UK Home Office
Nevertheless, it is necessary to prepare for the worst development of events, May believes. In particular, Great Britain is reserving the right to impose customs, tax and excise duties on European goods, if, following the results of negotiations on Brexit, London cannot agree with Brussels on concluding a trade agreement.

In any case, the British government also intends to take measures to minimize the negative consequences for companies and traveling citizens.

After the speech in the House of Commons of Great Britain, Theresa May also met with representatives of the British business and banking sector to discuss how to achieve "successful Brexit".

The meeting of the business advisory council was attended by HSBC and Morgan Stanley, representatives of the consulting company EY, as well as businessmen representing Balfour Beatty, Vodafone, Aston Martin, Nestle and others. Participants of the meeting expressed their fears about the possible difficult access for the work of foreign specialists in the UK as a result of Brexit. Theresa May assured all participants of the meeting that companies can count on a two-year transition period.

The companies also asked not to delay the discussion of the final conditions for the country's withdrawal from the European Union. They explained that the investment cycle means that decisions should preferably be taken at the end of this year.

The United Kingdom's finance minister Philip Hammond, business minister Greg Clark, Brexit minister David Davis, minister for international trade Liam Fox and British entrepreneurs earlier discussed ways of an optimal exit from the EU.

"Investments and trade are extremely important for the economic future of our country. Our plan is to maintain trade relations with the EU, which confirms the government's commitment to a smooth exit," said Philip Hammond.

On June 23, 2016, the British voted in a referendum for secession from the European Union, which shocked financial markets. Official negotiations between representatives of the UK and the EU began in June this year, shortly after the British Prime Minister Theresa May's party lost the majority in the parliament, gathering less than half of the vote in the elections.

The leaders of the UK and the EU have a little over a year and a half to agree on a deal that will then be put to a vote in the European Parliament.

The UK will not withdraw from the EU until March 2019. However, lack of progress in the negotiations and the uncertainty about what the terms of the final deal will lead to the fact that various key sectors of the economy, such as the banking sector, for example, are building plans in case of unforeseen circumstances.

There is no such readiness for the worst in other sectors. The retail sector is the last of the key sectors of the UK that warns that the lack of clarity as to whether the UK will remain in the EU single market or whether EU citizens retain the same rights and ease of movement already harms the sector.

The British retail consortium (BRC), the largest trade association of British retailers, in its report stated that the UK government should provide clarity about these items and introduce "a new immigration system suitable for the future, otherwise the country may face a monstrous job shortage".

The service sector accounts for about 80% of the UK economy, and if we limit the constant flow of workers, this will be the worst nightmare for employers.

The retail industry employs 170 thousand people from the EU work, which account for 6% of the British workforce in the industry according to the BRC. In a number of retail sectors, EU workers make up a much larger proportion, as, for example, more than a quarter of workers in the warehousing and distribution sector. A third of the permanent staff in the food and beverage supply chain are EU citizens.

BRC warned that this is not just a threat and that the uncertainty of Brexit really affects the work. 22% of the organization’s members reported that their people, EU citizens, have already left the British workforce.

In addition, 56% of the association members said that "EU colleagues are concerned about their right to remain in the UK."

"The UK’s decision to leave the EU has created uncertainty not only for business but for EU citizens as well: they are real people with families who have their homes in this country and need to earn money. It is completely wrong that they still do not feel safe 16 months after the referendum, "said Helen Dickinson, executive director of BRC.