UK Transport and Brexit News & Views No. 26

Mark’s Week

What a Week That Was!  My advice after the tumultuous last few days  is keep calm and carry on preparing and deploying your own Brexit plan. British politics now resembles something out of Dante’s Inferno. Indeed the first of the nine circles he encountered on his descent to hell was limbo, which is an accurate description of where we are now in relation to Brexit. Theresa May (who at the time of writing is the British Prime Minister) should be warned that the ninth and final circle is treachery. But whilst the UK may be in limbo the Brexit clock is ticking here in Brussels. Indeed negotiations should commence next week. I think if we’ve learnt anything from this past week is that firstly, we cannot totally rely on the steady hand of Westminster & Whitehall to guide transport through the Brexit negotiations, and secondly we should expect the unexpected. So are you ready? Don’t wait for the Government to come up with a road map for Brexit because there is a real risk now your company or organisation is going to need its own one.  A plan that prepares you for the worst case scenario on 30 March 2019, but also sets out how you can achieve the best possible Brexit, tested in a war game, and deployed to the people that matter. And those people now include the Opposition parties, devolved administrations, as well as Brussels, Berlin and Paris.

1. Inconclusive General Election forces Brexit rethink
As Britain seeks to come to terms with the inconclusive general election result many key players in British politics in Westminster, Edinburgh, Cardiff and Belfast are urging a rethink on Brexit, most notably Ruth Davison and her calls for an ‘Open Brexit’ that puts trade and the economy ahead of cutting immigration.  It’s worth bearing in mind Scottish Tory MPs now number 13, compared to 10 DUP members – and they will be loyal to Davidson. The DUP have been pursuing a careful line on Brexit, in particular calling for a deal which avoids a ‘Hard’ border with the Republic of Ireland, and a comprehensive customs agreement.   All this represents an opportunity for transport to make the case for the best possible Brexit. It going to be vitally important to speak to all sides of the House of Commons, not just the Government.

2. Mark Watts addresses Orgalime General Assembly
Last week Mark Watts addressed the Orgalime General Assembly on Brexit. Orgalime is the European federation that represents the mechanical, electrical, electronic and metal articles industries which employ over 10.9 million people across Europe, with a turnover of more than €1,900 billion and account for over a quarter of manufacturing output and a third of the manufactured exports of the European Union.  He outlined the 10 principles that will underpin the EU’s Brexit negotiating strategy, and joined fellow speakers from France, Germany and Switzerland to outline how the talks are likely to proceed. He advised how the industry could influence and shape the Brexit negotiations by engaging in Brussels, Berlin and Paris, and made the case for forging alliances with other sectors, including transport, to press for a Brexit which avoids disruption to the supply chain.  Let us know if you would like Mark to speak to your organisation.    

3. Paris reacts to the election results
In France, the new President Emmanuel Macron looks set to win a big majority in the upcoming parliamentary elections, giving France some stability. The feeling in Paris is that Britain is moving in the opposite direction – from stability to chaos. Le Monde suggests that Theresa May “lost her bet” and will be held hostage by the Conservative hard line Brexiteers and the DUP during the negotiations. Libération quotes a high-ranking French diplomat who believes that the new political reality means that Theresa May will approach negotiations with the EU from “a position of very great weakness”. Contact us if you would like a tailored briefing by our Paris office or would like help speaking to the French Government.

4. Berlin reacts to British election results
Angela Merkel has expressed that she sees no obstacles to starting the Brexit negotiations on schedule, i.e 19th June. Michael Fuchs, her senior economic advisor told the BBC that the result means that the PM needs to “face reality” and soften her approach. “Maybe, this is a chance that we can come up to a more reasonable Brexit negotiations because in the last time (recently) I really had the feeling that everything was just being very tough and it doesn’t make sense to be tough.” Contact us if you would like a tailored briefing by our Berlin office or would like help speaking to the German Government.

5. Brussels reacts to the election results
Guy Verhostadt tweeted “Yet another own goal, after Cameron now May, will make already complex negotiations even more complicated.” Donald Tusk tweeted “We don’t know when Brexit talks start. We know when they must end. Do your best to avoid a “no deal” as a result of “no negotiations”. The feeling in the EU is very much that they are ready to start the negotiations as soon as the UK comes to the table.

6. UK industry reacts to the inconclusive election results
The Freight Transport Association (FTA) is calling on the government to review its decision to leave the Customs Union, after what many are calling a vote of no confidence in the PM and her Brexit agenda. FTA has warned that the time used up during the general election has left the country unprepared for the crucial negotiations and are adamant that now is not the time to rush into leaving the customs union as this could leave UK logistics weakened. James Hookham, FTA’s deputy CEO said “Logistics is key to the successful delivery of the nation’s ongoing economic success and must be front and centre as the talks get under way”. The Confederation of British Industry (CBI) has said that it is time to put the economy back to the top of the agenda: “The priority must be for politicians to get their house in order and form a functioning government, reassure the markets and protect our resilient economy. The Road Haulage Association, UK Warehousing Association and Europa Worldwide have also expressed disappointment at the inconclusive result.

7. Election shock won’t halt Brexit but could make it softer
CNN Money are considering what the election results will mean for Brexit. They say it is unlikely that Brexit will be reversed as both Labour and Conservative campaigned on a commitment to honour the result of the referendum. However they write that the process may be delayed if Theresa May struggles to form a government and the likelihood of a “hard” Brexit has gone down. Kallum Pickering, economist at Berenberg Bank said: “If a hung parliament forces a cross party compromise it could lead to a softer Brexit strategy, and may turn out to be positive in the long run after some serious initial confusion”

8. Logisitics company optimistic about their future post-Brexit
Logistics company Suttons sees plenty of scope for growth post Brexit, even though it has already impacted their business in terms of fuel prices and their workforce. They are also seeing downward pressure on volumes, even though they are retaining their customers. Although it is most likely that Suttons will continue to expand in the UK, Managing Director Michael Cundy sees an opportunity for Suttons to be a “bridge” between the UK and Europe.

9. FTA increasing their presence in Brussels
The FTA are stepping up their presence in Brussels. Chief Executive David Wells said: “Europe will always be an important trading block, and therefore critical for the logistics sector. With Brexit looming, FTA is expanding its presence and influence in the capital of the European Union – not, as some might have anticipated, rolling it back.” Recently the FTA drew up a comprehensive briefing paper for their members on the main proposals of the European Commission’s “Mobility Package” as even though they may not come into force before March 2019, they believe the UK road freight sector still needs to pay attention.

10. Seanad hears Irish industry’s worries
Ireland’s business have been highlighting their worries to the Seanad. Kevin Toland, outgoing chief executive of Dublin Airport Authority said that aviation is a particular problem as Ireland relies heavily on the UK for passenger traffic “We’re in freefall in tourism from the UK. It’s falling like a stone,” He said Brexit was negative on the whole, but some opportunities existed including the probable reintroduction of duty free in the UK. The Irish FTA is calling for the appointment of a dedicated Brexit minister and said that there may be problems with goods crossing borders once the UK no longer has to meet EU safety standards.

11. AOA’s new Chief Executive ready to tackle Brexit
Karen Dee, new Chief Executive of the UK Airport Operators Association (AOA), calls for certainty on post-Brexit air services agreements in a recent interview. Dee stressed the need to reduce Air Passenger Duty, which is more than double that of the few other EU countries that charge it. This puts UK airports at a significant competitive disadvantage when the UK needs a competitive aviation sector to ensure British business can take advantage of the opportunities of Brexit. The AOA had released its own General Election manifesto, with the UK’s aviation connectivity after Brexit a top priority, with the second priority being the Aviation Strategy.

12. UKTiE has also put together the latest timetable for Brexit. We will keep this up to date as the process develops: