Manageable but material

This report from the UK think tank Open Europe assesses the issues raised by No Deal and proposes an action plan for the UK Government.

Overall, the judgement of this report is that No Deal will cause some disruption, but that much of this can be managed with the right set of responses. Key recommendations Open Europe’s report calls on the Government to urgently:

1. Provide greater certainty for EU nationals and their employers. The Government should achieve this by continuing to push for a bilateral deal with the EU on citizens’ rights and addressing administrative issues with the EU settlement scheme. The Government should also pursue a liberal, pro-business immigration policy in the medium-term, and either reduce the salary threshold for skilled migrants or replace it with a needs-based assessment.

2. Alleviate pressure on UK ports and the Dover-Calais route, by ensuring both import and export processes are as smooth as possible. In particular, non-compliant exporters must be kept away from vulnerable ports – for example, by pre-clearing trucks at regional centres.

3. Effectively communicate No Deal issues, so businesses and individuals are clear on what actions they need to take and what actions the Government has already taken.

4. Provide businesses with greater clarity over the UK’s long-term tariff regime. The current temporary regime offers little certainty beyond an initial twelve months.

5. Avoid imposing any checks or controls at the Irish border. Such a unilateral commitment is insufficient to ensure an open border, but is the only politically appropriate action the Government can take in the short-term.

6. Provide short-term support for sectors and regions hit by new trade barriers. The UK cannot prevent the EU from imposing third country tariffs and checks on UK exports, so mitigation efforts here will have to focus on compensation.

7. Provide continuity for product regulation but put wider economic competitiveness measures back on the table. Unilateral maintenance and recognition of EU product standards will provide importers with short-term regulatory stability. However, the Government should consider wider reforms to boost competitiveness.

8. Continue to pursue continuity agreements for EU free trade agreements (FTAs), but temper expectations of a quick trade deal with the US. The UK should only sign major deals when it has a clearer idea of its trade policy objectives, and be realistic about the practical and political obstacles to a US FTA.

9. Pull available economic levers to offset any disruption, in both the short-term and the medium-term. There are a variety of actions, such as reducing income tax or corporation tax, which the Government can pursue to support the economy, maintain business and consumer confidence, and ensure the UK is seen as open to business. The precise consequences of No Deal are difficult to predict with any certainty.

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