The hope was that this would open up the way to a more positive dialogue with the EU. Unfortunately, since her speech, the underlying and longstanding divisions within the Prime Minister’s own party have returned to the centre stage which must have left many in Europe wondering what is going on in the UK and whose “red lines” really count.
Uncertainty remains the key sentiment. Most businesses are convinced that a transitional period is essential after March 2019. However, the Chancellor, Philip Hammond has acknowledged that a transitional period is a wasting asset, the longer it takes to nail down exactly what it involves, the less valuable it becomes.
For many, the suggestion that it might be February or March 2018 at the earliest before the broad terms of a transitional arrangement are agreed, makes it too late. There is evidence that the uncertainty is beginning to cause delay in investment decisions as boardrooms remain cautious about making commitments that might ultimately turn out to be premature, unnecessary or ultimately just wrong.
Our own research looking at how ambitious businesses can defy gravity in an age of uncertaintyhighlights how some are already taking measures to ride out the post Referendum storm. More than half of mid-market businesses (56%) have increased their cash reserves since the Brexit vote, half of mid-market leaders are reducing their investments in preparation for Brexit and 54% are postponing or cancelling acquisition plans.
Business is not expecting absolute clarity on the eventual terms of a transitional deal but it does require a clear steer as to the likely end destination so as to provide sufficient certainty to facilitate medium to long term planning with the required level of certainty.
The fact that divisions in the Government have left open the possibility of a complete breakdown in the talks without any kind of trade deal presents an alternative that makes any kind of planning all but impossible.