Ibec - for Irish business
 
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Overview of Brexit tracker

15 December 2017

UK commitments on Ireland, the border and the all island economy are very positive and far-reaching. The agreement of all sides to the continuation of the Irish-UK Common Travel Area is a major achievement that will benefit businesses and workers. Other areas are not so clear cut. It is difficult, if not impossible, to square the UK commitment to avoiding a hard border on the island of Ireland, with leaving the Customs Union and Single Market, while also ensuring Northern Ireland does not diverge from Britain. Yet that is the clear commitment that the UK has provided, including accepting a default to “regulatory alignment” with the EU if no solution is agreed.

What does this mean for business? The progress to phase two certainly reduces the possibility of “no-deal”. While references to “regulatory alignment” perhaps point to a future EU-UK deal on the softer end of the spectrum, even if all the current talk is of a Canada-style free trade agreement. However, the contradictions in the UK’s political objectives and the commitment to no hard border call into question the capacity of a minority UK government to actually deliver. Breaking established commitments would likely collapse trade talks, while eroding UK “red lines” on the Customs Union, Single Market and ECJ jurisdiction risks further destabilising Theresa May’s government. Politicians will have to find a way through. The fact that Irish issues will remain a distinct strand of talks into the second phase is a major achievement and will keep minds focused.

An early agreement on a much-needed transition phase could provide the UK with the time and political space it needs to reconcile its stated negotiating objectives, phase one commitments, and what is actually realistically achievable.