Business chiefs urge collective Cabinet position on Brexit transition period

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Company bosses have urged the Cabinet to end their public arguing over the potential terms of a Brexit transition phase and come to a collective agreement as soon as possible.

The Institute of Directors (IoD) set out a range of options including membership of the European Economic Area (EEA) and extending the Article 50 negotiating timetable, which will currently see Britain quit the European Union by the end of March 2019.

It comes amid increasing Tory tensions over the Brexit process, with Cabinet ministers publicly disagreeing over a potential transition agreement.

The Government believes Britain will leave the EEA when it leaves the EU and is not seeking an "off the shelf" deal but a bespoke arrangement.

The IoD said prioritising an agreement to extend Brexit talks under Article 50 would be "on paper the simplest solution", giving more time to negotiate a trading relationship.

But it acknowledged that option would be "very politically challenging" for both the EU and some Brexit-backing MPs.

Staying in the EEA and therefore single market during a transition period, an "off-the shelf" model being touted in some quarters, would give the UK a degree of autonomy but is "not straightforward" and the IoD warned that the tight timetable could complicate negotiations.

Another option would be to prolong the application of EU law, as cited by the European Council in its original negotiating guidelines, which would be easier to put in place in time, and would be more comprehensive, but would leave the UK with less control than the EEA approach.

A transitional customs agreement could also accompany any of these options to replicate the benefits of being in the customs union, including maintaining common external tariff alignment and continuations to transpose customs and VAT legislation.

Allie Renison, head of EU and trade policy at the IoD, said: "Businesses will be pleased that ministers increasingly acknowledge the importance of a transition period in the Brexit process to minimise economic disruption.

"There is now a window of opportunity for the Government to flesh this out as a policy objective in order to reassure companies that a smooth and orderly Brexit is on the cards.

"Prioritising interim arrangements and thereby mitigating the risks of EU exit means the eventual opportunities aren't diminished by short-term chaotic cliff edges.

"The IoD has put forward this range of options for transition in the hopes that it sparks a proper debate on the practicalities of how best to Brexit.

"We look forward to engaging with both the Government and the EU on these proposals."

Labour MP Darren Jones, a leading supporter of the Open Britain campaign group, said: "British business is rightly fed up of ministers fighting like cats in a sack over the detail of transition, our future immigration policy, and other aspects of Brexit."

A Government spokeswoman said: "We have been clear that we believe an implementation period is in the interests of both the UK and the EU, providing certainty to businesses and citizens, and ensuring we avoid any cliff-edge as we move to our future partnership.

Last week, Chancellor Philip Hammond and International Trade Secretary Liam Fox publicly offered different views on how the free movement of EU citizens would play out.