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Getting Brexit done

Boris Johnson makes getting Brexit done sound easy. He could find a number of pitfalls along the way, which won’t be good news for accountants or their clients.

16th Dec 2019
Partner An unnamed firm
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Big Ben and Houses of parliament, London

I don’t know why but seeing Boris Johnson celebrating his election victory when I woke up on Friday morning, my mind instantly presented recollection of another Conservative Prime Minister, Neville Chamberlain cheerily informing the nation that he had achieved “peace in our time”.

You don’t need to be historian to know how that sad tale ended.

On thinking a little more deeply, I have identified rather more parallels than might have been expected between the two situations.

Mr Johnson seems confident that he will “Get Brexit done”, first by implementing his withdrawal agreement by the end of January, which shouldn’t be a problem given his massive parliamentary majority.

But the next stage presents more of a concern. Like Mr Chamberlain, the premier apparently feels certain that you can get the Europeans to back down and negotiate favourable trade terms for the UK before the end of 2020.

Similarly, given his very close relationship with President Trump, our man even reckons that he can get a fantastic arrangement in place with the United States in a similar period.

It is certainly not beyond the realms of possibility that the UK could cut some kind of deals in less than a year, but the only way to do this would be to accept desperately unfavourable terms (for example remaining in the EU in all but name), given that the other parties will have us over a barrel.

For accountants, this would be the equivalent of a small firm partner telling her largest and pushiest clients that you want to scrap the current fee arrangements and renegotiate them from scratch. I suspect that very few readers would want to take that kind of risk.

To this point, readers may wonder why any of these issues are relevant for the profession.

Impacts on accountants

The state of the economy will inevitably impact on our own businesses, with prospective changes affecting our ability to recruit and retain good employees, pay the bills and, most importantly, generate healthy fee income. In addition, those of us who work with clients overseas will be interested in movements in exchange rates.

Already, in the aftermath of the election, the stock exchange has shown a healthy improvement, while the pound literally rallied overnight.

Far more significant will be the impact on our clients. Please forgive me for overlooking Northern Ireland, where the consequences would appear to be dire, to the extent that for the first time ever, the combined Unionists do not have the majority of parliamentary seats.

Elsewhere, while the mini boom arising from an election that has not ended in a hung parliament will undoubtedly be of benefit.

My concern is that if Boris Johnson sticks to his word (and who could doubt that he would ever do anything else?) then like Mr Chamberlain, he could well be finding himself with a few problems in connection with the European mainland come the beginning of 2021.

At that point, on the basis that no sane British negotiator could accept the terms offered by Europe in what is effectively a fire sale, he will have no choice but to facilitate exit from the European Union with no kind of deal.

That would be bad enough anyway, but the timing could be unfortunate, since the aforementioned President of the United States of America is currently sabotaging the World Trade Organisation, refusing to sanction the appointment of new judges to arbitrate our disagreements. In any event, the WTO barely involves itself in services, which would be of greater significance to many accountants than trade in goods.

This means that the oft-cited WTO terms, which would be hard enough to operate in any circumstances, might effectively not even be worth the paper they’re written on.

There should be fun times ahead as we discover whether the country has elected the next Neville Chamberlain or Winston Churchill.

Replies (9)

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Hallerud at Easter
16th Dec 2019 11:44

I somewhat agree- we are either getting a bare bones deal and out at December 2020 or Boris goes back on his word (surely not) and triggers one of the two allowed for extensions to try to get something a bit more comprehensive.

"Come I to speak of EU's funeral.
It was my friend, faithful and just to me:
But Boris says it was ambitious;
And Boris is an honourable man."

(Apologies Will)

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By mumpin
16th Dec 2019 13:47

There was a recent exchange of letters in the Telegraph which concluded that Neville Chamberlain was much maligned and that he knew exactly what he was doing which was buying time in which to properly prepare for war.

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By meadowsaw227
18th Dec 2019 09:56

I would certainly re negotiate with my "biggest" client if I knew he wanted to still trade with me and had been an out and out t055er for three years

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18th Dec 2019 11:28

I think you are seeing this the wrong way round. By requiring trade terms to be agreed by the end of next year, Boris is doing the same thing he did successfully with the withdrawal agreement. He is publicly burning his bridges and threatening no deal if necessary. It strengthens his hand, not weakens it. That is fundamentally why he got Brexit done and Teresa may didn't.

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Replying to JDBENJAMIN:
By justsotax
18th Dec 2019 11:48

erm….he hasn't got Brexit done yet....just a small point....

On the other hand I do hope he does get a good deal....its what we were promised....I can't wait for the 'benefits'.

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By AdShawBPR
18th Dec 2019 11:35

Don't you always set a deadline for your clients or on any project? Seems sensible to me. Especially if your client was a windy politician! With his majority he can always extend it anyway. And international trade is not a zero sum game. Arguments always seem to talk about a winner and a loser but the right deal should give benefits to both parties so both can be better off. One reason people voted to leave is to take back some control. We are now free to weigh up what the EU are offering against what the US and others are offering and take a view. This certainly won't be a walk in the park but your point about shares and the exchange rate would seem to indicate outside investors at least, who have a less blinkered view of the UK than we ourselves do, think positively about our situation. (Or maybe just a better one than they had before!) Rather than Chamberlain or Churchill though, I hope we have more of a J F Kennedy who said, we do these things "... not because they are easy, but because they are hard." Shoot for the moon!

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By Paul Kolovski
21st Dec 2019 10:38

For 3 1/2 years the EU has bullied, threatened, cheated, and lied to Britain. Boris has done what we should all do to bullies, hit back. The EU will cease to exist in a few years, it will either become a soviet style dictatorship, or, it will disintegrate in bankruptcy, probably the latter now it can no longer milk Britain dry.

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Replying to Paul Kolovski:
By Ruddles
11th Jan 2020 22:53

Paul Kolovski wrote:

For 3 1/2 years the EU has bullied, threatened, cheated, and lied

Oh, the irony.
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By gpyyow
02nd Jan 2020 16:48

Disappointed that you have brought politics into this forum.

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