Having conducted 11 rounds of surveys during the first phase of the Brexit process, we have once again surveyed our experts to get a sense of how they see the second phase of negotiations, on the future relationship, playing out.
- 67% of our experts think a trade agreement on goods will be reached within the current transition period
- By contrast, 74% of our panel think an agreement on services is unlikely to be reached
- An overwhelming majority of our panel (88%) expect the economic impact of the future relationship with the EU to be negative
- 44% of our panel rate the chances of the transition period being extended as unlikely or highly unlikely
- Only a third (33%) expect an agreement to be reached on fisheries during the transition period
- On financial services, the EU will need to reach a decision on the equivalence of the various aspects of the UK’s financial services regulatory regime, our experts thought that such approval was unlikely to be forthcoming, with 54% saying it was unlikely or highly unlikely.
- A majority of our experts (53%) think the UK-EU economic relationship will be similar the EU-Canada free trade agreement
- Just over half (52%) of our panel expect a UK-US trade deal within the next five years
The future relationship will cut across different sectors. The two big elements are goods—notably manufacturing and agriculture—and services. Our experts thought an agreement on trade in goods was more likely than not in the current transition period, due to end on 31 December 2020, with two-thirds (67%) rating it as likely or highly likely.
However, when it comes to services our experts are much less optimistic. A majority (74%) rated the chances of reaching an agreement in the transition period as unlikely or highly unlikely.
Level playing field
One of the central aspects of negotiations on a future trade agreement will be so-called ‘level playing field’ measures. We asked our experts how likely they thought it was that the UK would maintain ‘some equivalent regulatory standards’ with the EU.
Our experts thought it was likely—66% thought it was likely or highly likely—that the UK would maintain equivalent regulatory standards in some areas, though that does not necessarily imply that they think the UK would sign up to EU demands to do this.
We also asked our panel how likely they thought it was that the UK would reach a trade agreement with the United States within the next five years. Our experts thought this was more likely than not, with a majority (52%) thinking it was likely or highly likely.
Our panel were reasonably optimistic that deals would be reached on elements of security co-operation. Some 61% of our experts thought it was likely or highly likely that an agreement on police and security co-operation (internal security) would be reached during transition and 58% thought so on foreign policy, security and defence (external security).
The EU is also set to reach a conclusion during the transition period on the adequacy or otherwise of the UK’s data protection regime, which is a necessary precursor to much future co-operation on internal security in particular. Our experts were split almost down the middle (51%) on whether or not they thought the EU would approve the UK’s data regime.
Financial services & fisheries
Other contentious issues that will come up in the transition period will be financial services and fisheries.
On financial services, the EU will need to reach a decision on the equivalence of the various aspects of the UK’s financial services regulatory regime. Our experts thought that such approval was unlikely to be forthcoming, with 54% saying it was unlikely or highly unlikely.
On fisheries, our panel had a similar view, with 47% saying an agreement would be reached in the transition period.
Extension of transition?
With lots to negotiate in the relatively short transition period, our panel gave their view on the likelihood that this period would be extended. 44% of our experts think an extension of the transition period is unlikely or highly unlikely.
Economic impact & no deal
We asked our experts what they thought the overall economic impact would be on the UK in the light of their expectations for a future agreement.
An overwhelming majority of our panel (88%) expected the economic impact of the future relationship with the EU to be either substantially negative (59%) or slightly negative (29%). Only 5% thought the impact would be substantially or slightly positive.
We also asked our experts to give an assessment of the impact that failing to reach a trade agreement with the EU would have, compared the impact they had previously expected from leaving the EU without a Withdrawal Agreement. The majority of our panel (67%) agreed that the impact would be similar but almost a quarter (24%) thought it would be less damaging. Only 8% thought it would be more damaging than leaving without a Withdrawal Agreement.
Finally, we asked our experts to give an assessment of what they ultimately expected the UK’s economic relationship with the EU to look like, based on previous precedents of EU agreements with third countries.
A majority of our experts (53%) thought the future economic relationship would be similar to the EU’s free trade agreement with Canada. A quarter of our panel thought it would end up more like the EU-Swiss arrangement, with sector-by-sector bilateral agreements. Some 4% thought the UK would end up inside the single market as a member of the EEA, while 5% thought that the UK and EU would continue trading long-term with no agreement, relying on basic World Trade Organisation terms.