Thread by @pmdfoster

Heads up. CBI chief: "2020 is the most important year in a generation.”

For all the trash talk of 'getting #Brexit done' the CBI boss @cbicarolyn has given salutary i/v to @ft.com - it begs some big questions

1/short thread

ft.com/content/7b3ac8…

@cbicarolyn @FT First the interview itself - key point is that relations between politicians and business are at lowest ebb "for decades" - both parties peddling impractical extremes, from "Singapore" to massive renationalisation programmes... /2

@cbicarolyn @FT So question: how likely is that we return to having fact-based conversations about the future?

If @BorisJohnson wins a majority, #Brexit will go over the line and very quickly he will bump up against the reality of a July deadline to decide if they will extend transition. /3

@cbicarolyn @FT @BorisJohnson There is an assumption among some pundits that he will - he'll have no choice - but equally he may have no political space either.

Talking to people in both Whitehall and Brussels, I hear a lot of bracing for a 'skinny' FTA by 2020. /4

@cbicarolyn @FT @BorisJohnson At that point, I find myself wondering if business groups that have to some degree sat on the fence in the #brexit divorce proceedings (though not so much @CBItweets) get very much more direct with the politicians? /5

@cbicarolyn @FT @BorisJohnson @CBItweets Does legal guillotine of #brexit descending open the door to more straight talking?

I ask, since it means business can no longer be accused of 'stopping Brexit' or 'playing politics' - which was hard given that their customers, investors, employees are split like everyone /6

@cbicarolyn @FT @BorisJohnson @CBItweets Business is naturally wary of picking fights with government - "we have to work with these people" is the mantra - but if @BorisJohnson is hurtling hard towards skinny FTA/WTO terms, that will mean biz groups, and biz more generally can make fact-based case of the cost of this/7

@cbicarolyn @FT @BorisJohnson @CBItweets It may, of course, make no difference.

It may simply be that @BorisJohnson can't face negotiating a 10bn+ a year finance package to extend transition for 2021, 2022.

Because each #brexit cycle the climbdowns get more precipitious. /8

@cbicarolyn @FT @BorisJohnson @CBItweets Because from what I hear in Brussels, suddenly changing your mind in November to say 'help, yes please, we want to extend transition' will be too late. The guillotine will have fallen, the magic ersatz membership of Article 50 will not longer apply; you'd need whole new treaty /9

@cbicarolyn @FT @BorisJohnson @CBItweets At which point, things will get choppy, since the 'equilibrium' models of the cost of a Canada-minus/WTO #Brexit might say it will cost 4%-7% of 'lost' GDP by 2030, but that doesn't necessarily mean 0.4%-07% a year...which sounds manageable...it will likely be harsher than that/9

@cbicarolyn @FT @BorisJohnson @CBItweets Because politics & the news cycle is about volcanoes, not glaciers.

As we fall back onto skinny equivalence regimes; basic veterinary agreements; SCCs perhaps for data, uncertain regulations for IP, for example - *individual* sectors may feel much deep dislocations /10

@cbicarolyn @FT @BorisJohnson @CBItweets This won't exactly be 'no deal', since the UK will have paid the bar tab to 2020, grandfathered the rights of EU Citizens and, nominally at least, 'sorted' the Northern Irish border Q - tho whether it can be operational by Dec 31 2020 is really unclear / 11

@cbicarolyn @FT @BorisJohnson @CBItweets But if @BorisJohnson doesn't have the political space to use all five years of his term, if he gets it, to do a smooth exit, then we may find ourselves building off a low base - a basic 'zero tariff, zero quota' FTA, as a best case, which of course doesn't mean no friction. /12

@cbicarolyn @FT @BorisJohnson @CBItweets Business will need to ingest new processes, buy new software, hire new people and train them in processing customs clearance forms etc, third country VAT issues, perhaps...because that "Super Canada Plus" FTA with "no political alignment" might be really quite skinny. /13

@cbicarolyn @FT @BorisJohnson @CBItweets Because if @BorisJohnson is set on doing a trade deal with the US, it gets quite binary, quite quickly.

So would the EU do a hasty NZ-style veterinary agreement with UK up-front, to reduce border checks? /14

They might (tho tough in timeframe) but only because it would tie UK hands when it came to doing, say, a trade deal with US that has different standards...in which case would UK want it? If not, that's lots more friction for no obvious immediate gain. /15

The point is that even a 'skinny' FTA will likely (given noises from EU side) come with some disproportionately demands for alignment - the EU is clear that the UK size/proximity means it wont be treated like Canada' /16

So it'll be "Canada plus" - just in the opposite sense to what @BorisJohnson means!

Will any of this make fact-based conversations easier? I really don't know.

Business is browbeaten, will the realities make it rediscover the stomach for a fight? We'll see soon enough. 17/ENDS

@cbicarolyn @FT Omitted to credit @DanielThomasLDN for the i/v