“There is a risk,” the Brexit secretary told BBC journalist Andrew Marr last Sunday, “in trying to focus just on the downsides.” He went on to say that the new free-trade deal between the UK and EU will be “the most comprehensive ever”.
David Davis is not the only one feeling a measure of optimism as the 12-month countdown to Brexit day on 29 March 2019 begins. Our latest small business confidence index returned to positive territory this quarter after a steady decline last year. Continued progress on Brexit talks will be key to ensuring this upward trend continues in the months ahead.
A transition period lasting until the end of 2020 is a key ask for small firms and it’s been a relief to see a real commitment to avoiding a cliff-edge moment in recent days. Having some certainty about what the regulatory landscape will look like immediately after our withdrawal makes it much easier for firms to plan, invest and grow.
Nine in 10 small firms that sell overseas export to the single market, so it’s vital that Davis makes good on delivery of unprecedented access to it for a non-EU country. He also needs to maintain access to the dozens of global markets that we currently enjoy free trade with thanks to EU membership.
At the same time, the government should exercise its freedom to agree new trade deals during the transition period. Our research shows that half of small exporters want to see a trade deal struck with the US post-Brexit. One in four are calling for trade agreements with Canada and China. They’ll be looking for signs of progress on such deals in the months ahead.
Granting the UK freedom to enter into new trade talks was a crucial development. So too was the offer of permanent residency for EU workers that arrive in the years leading up to December 2020. One in five small employers has a member of staff from Europe on their books. In the majority of cases, these are mid or high-skilled workers bringing expertise that are difficult to find here in the UK.
Losing access to EU talent could cause a real shock to the economy. The settled status application process must be as streamlined as possible, and not place any undue burdens on small business owners or their staff.
Confidence among ministers and the small business community is good to see, but with less than 365 days to go until Brexit day, some pressing questions remain: how do we avoid a hard border on the island of Ireland? What happens to our local business support landscape if we lose the EU funding that supports it? How do we ensure that European investors can back our businesses once passporting rights are withdrawn?
Davis is absolutely right to say we shouldn’t only focus on the downsides. We can certainly iron out a Brexit deal that works for small firms. The risk, however, is that a year is not a great deal of time in which to achieve it.
Mike Cherry is National Chairman of the Federation of Small Businesses (FSB)
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