Brexit is back on the front pages with a bang this week and it promises to be making plenty more headlines between now and the end of the transition period on 31st December.

As the EU trade team arrives in London today to start the latest round of negotiations, hopes of reaching the free trade agreement that Boris Johnson had previously said was ‘oven-ready’ were being talked down by both sides.

The two big sticking points; fishing and state aid.

On fishing, the EU still seems to think that it can somehow demand access to British waters, and more importantly its fish stocks, after the UK leaves the union.

This is a sensitive issue for the UK. EU membership has decimated the UK fishing industry and Michael Gove’s own father lost his business when we joined.

Such was the strength of feeling on this issue that at the height of the referendum campaign, Nigel Farage sailed a flotilla of trawlers down the Thames to Parliament, only be met by a remain flotilla populated by a well-oiled and hostile Bob Geldof and friends. It was one of the most visually powerful moments of the campaign and a big own-goal for the Remain campaign.

It is highly unlikely that the UK will back-down on this issue, although that could see access for UK-caught fish into the EU market being curtailed.

Then there is state aid. The EU argues it is unfair for the UK Government to have the power to prop up British businesses that are in trouble. The UK argues that as a sovereign country, it will make this decision itself and the EU hasn’t used these criteria when negotiating trade deals with other sovereign countries.

Again, this is something that the UK is unlikely to back-down on, so the question is now whether the EU will compromise on these issues or whether they will dig their heels in and trigger a no-deal Brexit.

Possible Outcomes

Both sides claim they don’t want this, but in the past few weeks, the UK has begun to sound less concerned about it. Both Boris Johnson and his senior minister have been unequivocal about the fact that they will walk away if a deal can’t be struck by mid-October.

And as if to emphasise this point, the UK has this week decided to publish the “Internal Market Bill” which is designed to protect trade between the four countries that make up the UK.

This has been reported in the UK media as undoing parts of the withdrawal agreement and while delving into the detail reveals that its impact isn’t quite as dramatic as that, the timing of its publication should leave no-one in any doubt that this a shot-across-the-bows for the EU negotiation team.

The message is clear. The UK is serious and if the EU doesn’t compromise, it is not afraid to leave to WTO terms.

So, how should companies in the UK respond to the rising noise around Brexit?

A No Deal Brexit is still a distinct possibility and companies should be prepared for that. But the UK Government is planning for it too and will get the country and its economy as geared up as possible despite these unprecedented circumstances.

If No Deal is the outcome, businesses need to be ready to tell the Government what they need as quickly as possible. There will be a short window to get things prepared, so having effective public affairs representation will good lines of communication into 10 Downing Street will be crucial.

But No Deal is by no means certain. As former Brexit Secretary David Davis argued in the Sun last week, “the last three weeks will matter more than the first three years.”

The impending deadline and new domestic legislation will do a lot to focus the minds – and that is true of both sides.

It is still in everyone’s interests to find a deal and while all the UK’s No Deal planning is necessary as a fall-back option, it is also likely to be part of a strong negotiating tactic to get the EU to concede more ground.

The EU, for their part, doesn’t appear to have wholly adapted its approach from the days when it was talking to the Theresa May government and was used to getting everything it wanted.

This is no longer the case and the sooner their negotiating team realises this the better.

David Spencer – Managing Director, Barndoor Strategy and a former advisor to Rt. Hon David Davis MP.

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