Moving on from the cost of exit

Tomorrow, the Prime Minister travels to Florence to make a much trailed speech that aims to break the current impasse in the Brexit negotiations. Until we hear what she has to say, we don’t know whether it will be the game changer that many are hoping for. Expectations are currently high, especially given the EU Summit next month which will determine if sufficient progress has been made on the key withdrawal issues to allow talks on the future relationship between the UK and the EU to start.

The most contentious issue appears to be the so-called divorce bill. In the scenarios outlined in our paper, Analysing the EU Exit Charge, we put the net figure at between £5 billion and £30 billion when rebates and spending returned to the UK are taken into account. A transparent discussion on methodology, such as the one we use, will be key to finding agreement on the financial elements of the withdrawal and of any transitional arrangements.

In recent weeks, members have told us that what they would like to see most from the Prime Minister and her government is leadership and a clear vision for the UK. That is what is needed from the Florence speech – the Prime Minister moving beyond settling accounts and other withdrawal issues to the UK’s future relationship with the EU.

By seizing this opportunity, we could avoid a looming crisis of confidence for business that could create long term damage to the UK economy. It will deliver a degree of certainty to investors and the wider business community, reassuring them of the UK’s commitment to being a trusted partner in a world of strong economies.

Against this backdrop, the figures which are being talked about as a potential offer by the Prime Minister to settle the UK’s liabilities and maintain our membership of the single market through a transition period seem fair and reasonable compared to the value of the economic relationship between the UK and the EU27.

More importantly, in my view, it is a price worth paying when the long term cost to the UK economy of not reaching a quick agreement could be significantly more.