On Sunday, 2nd October, in her opening speech at the UK Conservative Party Conference, Theresa May put an end to the months of waiting following the Brexit referendum, and finally provided an outline of how her government intends to move forward with their separation from the EU. She announced that Article 50 will be triggered by the end of March 2017, which will begin a two year negotiation process to establish the new EU-UK relationship.
May’s government will introduce a “Great Repeal Bill”, to be approved by Parliament, which will retract the 1972 European Communities Act, which brought the UK into the EU and will transfer all EU laws into the UK’s national statute book, so as to ensure a smooth legal transition.
May also set the tone for the British negotiating strategy, stating that she would be seeking a full legal, political and economic separation from the EU, in order to create a fully independent UK which would have “the freedom to make our own decisions on a whole host of different matters, from how we label our food, to the way in which we choose to control immigration”. By this May is clearly indicating that a “Hard Brexit” is the goal, with the UK leaving the single market and putting an end to freedom of movement. If these strong statements of intent are to be fully adhered to in the negotiations (and are not just pre-match fighting talk) then the most likely outcome will be a free trade agreement.
For Irish businesses, this has many serious repercussions, and opens up many questions around the possibility of trade quotas, regulatory divergence in the area of food safety, animal health and labelling, as well as that creation of a border between Northern Ireland and the South. With the UK outside the single market and customs union, it will also be free to enter into trade agreements with any other country, leaving Irish products at risk of market displacement in the UK by cheaper imports. Australia for example has already come forward to say that they wish to begin trade negotiations with the UK immediately, so that an agreement can come into force as soon as the UK leaves the EU in 2019.
This “hard Brexit” talk has already made its impact felt on the markets, with Sterling falling to a 3-year low against the Euro to €1.1438, and the expected trend heading towards parity. With many Irish exporters locked into Sterling based contracts, this leaves them at a major loss. Beyond that, the weaker pound will cause imported goods into the UK to rise and also benefits UK exporters, over their Irish counterparts.
By Alison Graham
European Affairs Executive