May was, it turns out, telling the truth when she said Brexit does mean Brexit – the UK is leaving the European Union. Putting it another way, she is taking every company in the United Kingdom out of their current regulatory environment and promising to create a new one.
All existing relationships and legislative frameworks will be will be stopped – even if current Directives are imported.
I give the transport sector as an example as it is one of the few sectors that May and the Brexit ministers never mention and clearly is not a priority.
For transport companies being taken out of the single market means, to give just a couple examples, airlines leaving the Common European Aviation Area which allows them to fly between any EU member state airports. Airports and air-traffic controllers leaving the Single European Sky which co-ordinates air traffic management across Europe. Hauliers will no longer be able to make multiple stops in more than one Member State. Ports and airports being outside the customs union means every shipment coming in and out the UK needs inspecting. And this is not even to start on the Free Trade Agreements with third countries around the world that will no longer apply to the UK companies.
It is as wide-reaching for any sector.
May is clear that she wants co-operation and a good deal, and she expects the EU to play ball. The problem is, even with an EU that is well-dispositioned (which currently it is not), absolutely everything needs to be re-negotiated – even if only to find a deal for certain sectors to re-enter the single market which she seems to be hinting at.
To create these legislative frameworks have taken decades to create, they now all need to be re-negotiated in just a couple of years – and all at the same time. Furthermore, for the areas that where we do leave completely, the UK will then need to create new agencies and set new legislative frameworks (and politicians will have to debate, decide budgets and vote on what these are) without being side-tracked by housing, NHS, immigration, education… the list goes on.
The reaction in Brussels and Berlin has been brutal and swift. Guy Verhofstadt, the European Parliament’s chief negotiator, said Britain has chosen a ‘hard Brexit’ and whilst he welcome the ‘clarity’ he said ‘the days of UK cherry-picking and Europe a la carte are over.’ A clear signal he will oppose any deal that allows the UK to hold on to bits of membership when it leaves. The EU chief negotiator Michel Barnier said an ‘agreement on orderly exit is prerequisite for future partnership’, signalling the two-year timeframe outlined by May is unrealistic.
Companies will have to work hard to explain what they do, how they do it, and what practical relationship they want with the European Union and the world. The regulatory environment in which they operate will change fundamentally. This is both an opportunity and a threat. The government is setting a cracking pace, the challenge is to keep up or be left behind.