Just under two weeks ago, Theresa May announced the go-ahead for a third runway at Heathrow, following years of analysis and debate.
The decision was a complex one and certainly one of the PM’s toughest since taking up office in July. This, though, is dwarfed by another issue which had dominated the news agenda even before then: Brexit.
The two decisions share some similarities. Both were fought between two main contenders which, in the case of Brexit, was between the Remain and Leave camps, while Heathrow’s main competitor was Gatwick. Both decisions were sure to have significant implications for the attractiveness of London as a global hub.
There is, however, one major difference.
As the decision propels Heathrow – Europe’s biggest airport – further on to the international stage, its plans, such as cost and timing projections, have largely already been drawn up. Brexit plans, on the other hand, have not. In fact, a strategy for the latter is some way from completion.
Formulating a strategy of this nature is no mean feat, not least because there is no precedent from which the UK is able to take a steer. And with the rest of the EU27’s eyes closely monitoring progress, there’s no room for error – it’s imperative that the government gets it right first time.
With Article 50 due to be triggered by the end of March next year, the UK has two years in which to complete negotiations. With so much riding on this, it is unlikely that plans will be finalised before 2019.
Take the recent trade deal between Canada and the EU, which took no fewer than seven years to complete. Or for continuity’s sake, the review on airport expansion: initial government proposals on airport capacity in the South East began in 1990 – some 26 years ago.
While we don’t anticipate negotiations to take quite that long, it does highlight the need for a transitional agreement to ensure that, over the coming years, the UK’s exit from the EU runs as smoothly as possible.
This is important for a number of reasons. It will give businesses across the spectrum the confidence to know how they can continue to trade, as well as to defer taking any location decisions until the end result of the negotiations is known.
An agreement will also go some way to reassuring European and international stakeholders that the UK is able to meet demand and is very much still open for business.
Without an interim agreement, the UK faces a cliff-edge of uncertainty. Uncertainty lowers confidence; a lack of confidence results in a slowdown of markets, and a delay in business decisions. With rates at a record low and inflation rising, uncertainty is something the UK can ill afford.
Whatever the transitional agreement might look like, the important thing to remember is that getting negotiations right first time is imperative – if that takes a transitional arrangement which lasts for some time, then that is what the UK must do.
For all sectors, be it financial services, manufacturing, or national infrastructure, the less turbulence caused by Brexit, the better the outcome for everyone.