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A sigh of relief and a deep breath: the City reacts to 11th-hour Brexit trade deal

THE sigh of relief which greeted Boris Johnson’s last-gasp post-Brexit trade deal with the EU was tempered by concerns that British businesses have less than a week to adapt for the “gargantuan task” of its implementation.

Johnson said the successful conclusion of talks to agree an accord, after four years of often rancorous negotiation, would “bring prosperity to both sides of the Channel.”

But it comes against a backdrop of chaos at the port in Dover and just seven days before transitional arrangements are due to end, during which MPs must scrutinise and pass the laws needed before a December 31 deadline.

Adam Marshall, director general of the British Chambers of Commerce which represents thousands of UK businesses, said: “After four long years of uncertainty and upheaval, and just days before the end of transition, businesses will be able to muster little more than a muted and weary cheer.

“While firms will welcome the agreement of a new foundation for UK-EU trade, they are now faced with the gargantuan task of adapting to new arrangements with scarcely a week before they take effect.

“Let’s not forget that many businesses are already on their knees from the impact of the Coronavirus crisis, and most will have fewer resources available to implement the necessary changes with furloughed staff and Christmas holidays.

“Governments on both sides must recognise the impossible task they have set businesses and give businesses time and breathing space to adjust to new realities. It is normal for free trade agreements to come with phasing-in measures, and this one should be no different.

“Now that the two sides have reached agreement, we call on them to proceed speedily to ratification to give certainty to our economies and trade, and to allow businesses to look to the future.

“It is now time to bring the political drama of the last four years to an end, and to replace it with pragmatism and determination to make the new UK-EU relationship work. The agreement can and must be a starting point for deeper cooperation as we restart, rebuild and renew our economies.

“With greater clarity on the terms of trade, businesses can plan, invest, and look once again toward new opportunities.”

Sally Jones, Brexit strategy and trade leader at accountancy giant EY, said: “The agreement does not mean that businesses will no longer need to make any changes to their operations – far from it – but rather brings certainty on many of the new trading rules that will apply after the end of the transition period, most notably tariffs.

“The immediate effects of leaving the single market and customs union will be experienced by businesses (particularly those who move goods across UK borders) and employers. Whilst many companies have prepared as much as possible, reports consistently suggest a lack of readiness particularly amongst smaller businesses — a key element of cross border supply chains.

“The end of the Brexit transition period will instigate the biggest simultaneous change to the UK’s trading, regulatory, immigration, and judicial system in decades. With no precedent for such wide-ranging implications and critical outstanding questions on how new processes will work, predictable and unpredictable disruptions to business continuity are guaranteed.

“There is simply no way that businesses can be fully prepared for what’s coming as they haven’t known, up until this point, what they are preparing for. Delays in the rollout of UK government systems has also left traders unsure of what they need to do to remain trading with the EU in 2021.”

Miles Celic, chief executive officer of preofessional services industry body TheCityUK, said: “The successful conclusion of these negotiations will be greeted with relief by businesses in all parts of the UK and Europe. We congratulate the negotiators for getting this deal over the line.

“While a deal is welcome, financial and related professional services are clear-eyed about the need for both sides to continue to develop the relationship in services in the years ahead.

“The task now must be to move the deal rapidly through ratification, allowing both sides to use this agreement as a foundation on which to build, and not a ceiling to future ambition.”

Neil Carberry, Chief Executive of the Recruitment and Employment Confederation, said: “It will be a huge relief to businesses across the country that a trade deal is now in place, and we look forward to its speedy ratification.

“But a deal on 24 December leaves businesses with little time to get their heads around the new rules. While we can celebrate this big step, we must turn quickly to keeping the wheels of trade turning, especially set against the background of the pandemic.

“It is crucial, therefore, that companies are supported through the next few months with help-to-comply prioritised over enforcement.

“This deal is a start. But it now needs to be smoothly put into action – the deal has to work for people, not just politically.“

There was also concern that the text does not include any discussion of the UK’s vital services sector.

Daniel Pinto, boss of Stanhope Capital Group, commented: “Boris Johnson reached a deal with Europe but his purported victory is bittersweet. In fact, this agreement should be less criticised for what it contains than what it does not contain – namely the future of financial services, a subject which British negotiators did not even put on the agenda although the sector represents a huge part of UK GDP.

“The City now needs to take its future in its own hands. Post Brexit, it should lure international companies and revamp its regulatory framework to make it much more flexible. Above all, London should aim to become the financial capital of choice for fast growing SMEs and entrepreneurs, with the promise of easy access to venture funding and public markets.”

But Paula Smith, head of banking and capital markets at KPMG UK, said: “The deal agreed between the UK and EU is unlikely to radically alter things for banks. With financial services largely off the table in Brexit negotiations anyway, firms have spent the past four and a half years readying themselves.

“This, allied to their stronger capital positions as a result of the tougher regulations introduced since the financial crisis, means the banking sector is now more robust than in the past.”

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