Research

Charles Grant, director of the Centre for European Reform, said: “It suits both the UK government and the EU to pretend that the transition will last only about two years. In fact – as officials on both sides will admit in their more candid moments – it will have to be much longer. Building the border infrastructure at Channel ports will take several years, as will the new IT systems required for customs and registering EU immigrants. Above all, the negotiation of the future relationship – covering trade, research, security, defence and foreign policy – will take at least five years. So any attempt to limit the transition to two years would lead to a cliff-edge – of Britain leaving the single market without new arrangements being in place.”

"It means that 'no deal' overall is less likely," said Charles Grant, Director of the Centre for European Reform think-tank. But the toughest part of the negotiations could be yet to come, with Britain looking to agree a huge free trade deal before March 2019 - a tight timetable seen as unrealistic by Brussels. "In phase two it will emerge that the EU is going to give us a pretty bad deal in terms of what's in our economic interests," Grant said.

"For the moment, the UK still does not know what it wants," said Agata Gostynska-Jakubowska, a research fellow at the Centre for European Reform. "The government hasn't made its position clear on what kind of future relationship it wants."

Charles Grant of the Centre for European Reform, a London-based think-tank, argues that phase two will be much tougher to negotiate than phase one. The clock is ticking towards March 29th 2019, when Brexit is due to happen. It will be hard to agree on a legally watertight, time-limited transition, not least because few experts think a new trade deal can be wrapped up (and ratified) within two years. And when it comes to the trade deal on offer, the EU will say that, if Britain insists on leaving the single market and customs union and retaining the option of regulatory divergence, it can only have a deal similar to Canada’s, which covers most goods but barely any services.

W Brukseli nikt nie liczy, że rozstrzygające dyskusje w tych sprawach zaczną się przed sformowaniem nowego rządu w Niemczech. – Francuskie pomysły napotkają silny sprzeciw, bo rzucają wyzwanie gospodarczej ortodoksji w północnych krajach UE – tłumaczy Agata Gostyńska-Jakubowska z Centre for European Reform, autorka analizy „Nowy deal dla eurolandu: lekarstwo czy placebo?”. Niemiecki minister finansów Peter Altmaier już wczoraj publicznie powątpiewał, czy strefa euro potrzebuje nowych narzędzi do pomocy w razie wstrząsów ekonomicznych.

However, a report released last week by the Centre for European Reform think-tank suggested that “average households have not seen enough of the fruits of economic growth”, with worker compensation growing more slowly than GDP and consumption falling as a share of overall spending.Tuesday’s data highlighted the potential for such trends to continue. Household consumption did rise by a healthy 4.4 per cent year on year in the third quarter, but that paled in comparison with a 20 per cent surge in fixed capital formation.