Brexit: The rocky road that leads to All Fools’ Day

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Brexit: The rocky road that leads to All Fools’ Day

Plan B or not Plan B? That is the question.

The answer from most members of Britain’s parliament is that Theresa May’s Brexit Plan B looks remarkably like her Plan A which they roundly rejected last month.

The House of Commons will this week on the prime minister’s new proposals and on a number of amendments tabled by MPs with the intention of preventing the UK from crashing out of the European Union without a deal of any sort.

Regardless of these amendments, the likelihood is that negotiations will drag on with more to-ing and fro-ing between London and Brussels. Meanwhile Brexit day, March 29, draws ever nearer.

The past week has, at least, narrowed the ground. clear there are two serious options for Britain:

A VERY SOFT BREXIT

It

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Britain stays in the Customs Union. It would be free to make its own trade deals with third countries but would have to abide by EU rules and tariffs. In return it would have access to the European Union’s gigantic Single Market.

Britain could enter such an arrangement as a member of the European Free Trade Association. But it doesn’t have to join EFTA and might prefer not to, since the EFTA countries have all accepted the freedom of movement that the British government has adamantly opposed. Could Britain stay in the Customs Union without allowing open access for EU workers? Maybe – since it is clear Mrs May’s government does not intend to impose very stringent restrictions.

A soft Brexit of this sort would be a good outcome for British expats. Under a deal provisionally reached by the British and Cypriot governments, trade would continue to flow, and the residency rights of British citizens here would

be protected, as would the rights of Cypriots in Britain.

A VERY HARD BREXIT

Britain is on course to leave the EU on Friday, March 29. On April 1, All Fool’s Day, it would start conducting its business under the rules of the World Trade Organisation.

There seems to be a belief in Britain that the WTO is a bit like the EU, but with softer rules. Not so. It is an organisation for governing world trade: nothing more, nothing less.

The UK is already a member. In fact, it is a member twice over, in its own right and as part of the EU. But, come April 1, British companies can’t just rock up to EU countries – or any other countries, for that matter – and say: “We’re operating under WTO rules – let us in.”

Procedures would be needed to re-establish the autonomy of the UK from the rest of the EU. In particular, it would have to agree on schedules for tariffs on goods.

The British government has stated that, in the short term, it would simply replicate the schedules of the EU to smooth the transition. That might be easier said than done and it would still be necessary for the UK to negotiate with other countries with which the EU has free trade agreements, a lengthy procedure to say the least.

The imposition of tariffs on trade with the EU would increase costs for both UK importers and exporters.

The Centre for Economic Performance estimates that a “no-deal WTO rules only” scenario would reduce the UK’s trade with the EU by 40% over ten years. This would mean a fall in income per head of 2.6% per year (net of the savings from no-membership fees). For expats there would be other problems. Sterling would fall. Private pensions might not be paid and residency rights would not be guaranteed.

TAKE ADVICE

This is a worrying time for expats and I don’t want to pretend that I have the answer to all their problems. But it is vital that you take sound financial advice and my company, the Woodbrook Group, is happy to offer its services.

We are an international firm of financial advisers. Our team of highly experienced consultants can help you with solutions tailored to your unique situation in these unsettled times.

We can’t make Brexit go away. But we can help you to steer your way through it. Michael Doherty is CEO of the Woodbrook Group in Limassol, Tel.: +357 25272820 www.woodbrookgroup.com contact@woodbrookgroup.com

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