A transitional Brexit deal must be struck urgently before it becomes "too late" to protect businesses on both sides, a leading lobby group has warned.
In a report due to be published tomorrow TheCityUK will warn that the value of a transitional deal is rapidly diminishing, and will be of limited value if agreed next year.
The report, which is being released ahead of the EU Council meeting on Thursday, warns that businesses will be "disappearing by the day" if a deal is not in place within a matter of weeks, noting that although firms will have "different cut-off points for activating contingency plans", clarity will be needed by the first quarter of next year "at the latest".
Miles Celic, chief executive of TheCityUK, said: “EU and UK negotiators cannot delay discussing a transitional deal any longer if they want it to hold any real value. Firms are beyond the planning stage now. If they haven’t done so already, most will be ready to press go on their contingency plans in the New Year. They can still take their foot off the accelerator if a transitional deal is agreed, but without progress soon, it may be too late. Once businesses start moving, there is no reverse gear. It is simply not efficient or economically viable to move operations twice."
Celic warned the cliff edge scenario could pose a "very high risk" to jobs, capital and inward investment, not just to the UK but Europe as a whole.
“The resulting fragmented markets will be of benefit to no-one, with costs likely to increase for customers right across the continent," he added.
The paper argues for transition to be "as close as possible to the status quo", including retaining "all of the rights and obligations" of the Single Market. In the longer term, TheCityUK argues that the UK must not be a rule-taker.