BREXIT presents greater costs than opportunities according to a new 90-page report published by the Confederation of British Industry (CBI).
The CBI study, compiled over a six month period, seeks to inform Brexit negotiations by outlining where businesses want to stay close to EU rules and where they want divergence.
The report, called 'Smooth Operations', is based on thousands of conversations with UK businesses and provides an A to Z of the rules that will matter after the transition period. The study outlines that Brexit presents opportunities for rule changes in sectors such as agriculture, shipping and tourism that could benefit the UK economy, but these opportunities for divergence are vastly outweighed by the costs of deviating from rules necessary to ensure smooth access to the EU market.
Another important finding is that changes to rules in one sector have significant knock on effects for companies in other sectors and throughout supply chains.
CBI director general, Carolyn Fairbairn said it is vitally important that Brexit negotiators understand the complexity of rules and the effects that even the smallest of changes can have.
"Put simply, for the majority of businesses, diverging from EU rules and regulations will make them less globally competitive, and so should only be done where the evidence is clear that the benefits outweigh the costs.”
The CBI has devised three principles that should guide both UK and EU negotiators. This includes on occasion where rules are fundamental to the trade or transport of goods, the UK and EU must negotiate ongoing convergence.
CBI Northern Ireland regional director, Angela McGowan believes convergence is essential for frictionless trade in goods in almost every sector.
“As the only part of the UK which shares a land border with an EU Member State, Northern Ireland businesses rely on continued regulatory convergence to support all-island operations and supply chains. Individuals cross the border every day for meetings and commutes, as do goods and services. A significant amount of convergence with EU rules will be necessary for Northern Irish companies to continue operating seamlessly across the island of Ireland. Continued regulatory alignment will also be required to support the all-island Single Electricity Market – a key priority for local firms."
“However, at the same time, it is not in the interest of Northern Irish businesses to fall significantly out of step when it comes to UK regulation and by doing so set up barriers in the Irish sea. Unfortunately, a balance that protects Northern Ireland’s economic prosperity has yet to be identified," she added.
