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Two-year trade extension is 'lifeline of sorts' for business

'Keep Calm and Trade On' - Prime Minister Theresa May delivers a speech in Florence, where she set out her plans for a transitional period from the formal date of Brexit in March 2019, expected to last two years, before moving to a permanent trade deal
'Keep Calm and Trade On' - Prime Minister Theresa May delivers a speech in Florence, where she set out her plans for a transitional period from the formal date of Brexit in March 2019, expected to last two years, before moving to a permanent trade 'Keep Calm and Trade On' - Prime Minister Theresa May delivers a speech in Florence, where she set out her plans for a transitional period from the formal date of Brexit in March 2019, expected to last two years, before moving to a permanent trade deal

BUSINESSES have given a guarded welcome to Theresa May’s proposals for a two-year transition period after the UK leaves the EU in March 2019, which will mean offering up to £18 billion in exchange for continued membership of the single market.

Her much anticipated speech in Florence was intended to unblock clogged negotiations and offer a glimmer of light for exporters and workers.

Effectively, she is saying that EU trade should continue as present until 2021, and that there is no need to impose tariffs where there are none now.

And while there was a lack of detail offered on other key issues like the Irish border question, the ultimate financial settlement with the EU and the rights of EU citizens, businesses say the deal for a time-limited transitional period under the existing rules and structures offers "a lifeline of sorts" for the thousands of companies which had been counting the cost of uncertainty.

"The Prime Minister's constructive tone and clearer offers, particularly on guarantees on EU citizens' rights and UK contributions to the EU budget, represent an important and welcome effort to break the impasse of recent months, which has preoccupied many in the world of business," Adam Marshall from the British Chambers of Commerce said.

But he cautioned that the "significant majority" of businesses in Northern Ireland and Britain had wanted a transitional period that lasted longer than the two years Mrs May is proposing.

He added: "We will challenge both the UK government and the European Commission over the coming months to agree a transition that lasts at least three years from the date of our formal exit from the EU, giving businesses enough time to prepare for a final deal."

Businesses had suggested two years is the bare minimum needed by UK exporters and importers to get their plans and systems in place in the face of increased costs and red tape, and many exporters would prefer a more rolling approach that puts practical solutions ahead of any political ideology.

David Jinks of courier company ParcelHero said: "The offer of up to €20 billion in return for two year’s more access to the single market and a far smoother customs transition, could actually be a bargain for UK businesses exporting into the EU.

"Businesses have had precious little guidance on how the 'partnership' with our EU neighbours might continue until now. But the prospect of a two-year extension at least gives time for creative new business plans to be put in place.”

However, TUC general secretary Frances O’Grady insisted the Prime Minister "is still pretending we can have our cake and eat it" and is not levelling with British people about the trade-offs that will be needed.

She said: “We still need a realistic negotiating strategy for how the government will get a long-term deal that protects jobs, rights and livelihoods, and encourages businesses to invest in the UK.”