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.
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.