Theresa May’s £18bn two-year transition is first step to avoiding BREXIT misery

two year transition Brexit

The Prime Minister’s Florence speech offers a two-year deal with the EU that’s the bare minimum needed for UK exporters.

In today’s high-profile speech to European Union (EU) leaders in Florence, Prime Minister Theresa May proposed a transition deal  of ‘around two years’ that offers UK exporters a vital lifeline, says the international parcel broker ParcelHero.

While the speech avoided specifics, political commentators say a final agreement could mean offering up to £18bn in exchange for continued membership of the single market for two years. ParcelHero’s Head of Consumer Research, David Jinks MILT says: ‘The PM’s speech was intended to unblock clogged negotiations and shows a glimmer of light for British exporters and everyone who ships items to the EU. ‘

Jinks cautions: ‘To be frank, two years is the bare minimum needed by UK exporters and importers to get their plans and systems in place in the face of increased costs and red tape. Many British exporters would prefer a more rolling approach that puts practical solutions ahead of any ideology.’

‘Though not spelled out, the offer of up to £18bn (20bn Euros) in return for two year’s more access to the single market and a far smoother customs transition, could actually be a bargain for UK businesses exporting into the EU.’

‘Theresa May told EU leaders that she wants the final result of Brexit to be remembered “not for the challenges we endured but for the creativity we used to overcome them; not for a relationship that ended but a new partnership that began.” British businesses have had precious little guidance on how that “partnership” with our EU neighbours might continue until now; but the prospect of a two-year extension at least gives time for creative new business plans to be put in place.”

“The Prime Minister said “There is no need to impose tarrifs,” in her speech; but there’s no guarantee the EU will agree. The figure of £11bn in new tariffs we predicted before the referendum still holds good – together with a rise of up to 30% on some imported items as we face new Customs clearance charges, increased transport costs, expensive customs delays and a VAT quagmire just waiting to suck in anyone who trades with the EU.’

‘No deal or a firmish Brexit will mean tariffs on British goods at EU borders and EU goods at UK borders; so a deal has to be struck. The average EU tariff for non-EU imports (and that means Britain post Brexit) is 2.3% and the tariff on British cars would be a whopping 10%, for example. But Britain’s exporters can’t just abandon the EU market as the tariff on UK cars in India (a fast-growing new market) would be up to 125% if the UK ceases to be part of a special EU-India tariff deal. Ouch!’

Jinks concludes by saying: ‘The PM’s positive speech will be welcomed by British exporters and indeed everyone who ever sends parcels into Europe and is unprepared for tariffs and taxes on shipments that haven’t had incurred any such charges previously. Forget two years, keep the transition rolling is our advice!’

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