The head of the business group that represents truckers has warned that final Brexit negotiations face another cliff edge next summer if any transition deal is not extended.
Aidan Flynn, who heads the Freight Transport Association Ireland, said the talks aim to clinch a comprehensive free trade agreement between the UK and EU because prime minister Boris Johnson’s government is insisting on wrapping up the negotiations at the end of December 2020.
Truckers are in the frontline of Brexit because they will have to navigate any new customs agreements that finally emerge.
“We have now only 14 months to do a trade deal and you would imagine that will build up to another cliff edge in June and July next year,” said Mr Flynn.
The comments come as even the British support for Mr Johnson’s new transition deal he struck with the EU this week remains on a knife-edge, with MPs preparing for a debate and vote today.
John Cronin, partner and head of Brexit at law firm McCann FitzGerald, said the transition deal could unfreeze investment decisions in Ireland as the threat of the UK crashing out of the EU recedes. The deal includes provisions for London to keep Vat revenues raised in the North, but it also can vary Vat rates to match any reduced rates on goods that apply in Ireland, presumably to discourage smuggling.
Currency and stock markets are likely to react sharply to the vote. With the pound being the main barometer to the ups and downs of the Brexit saga, the fortunes of a large number of Irish companies are exposed to the outcome of the vote.
A surge in Irish shares — in particular bank, property, and travel companies — this week was halted in its tracks after the DUP withdrew its support for the new transition deal. Joshua Mahony at online broker IG said markets were facing into “a historic weekend after three arduous years of negotiations”. Rejection would probably lead to a sharp drop in sterling, he said.
“For sterling traders, we appear to be just two weeks away from two vastly different scenarios for the pound, as they seek to take advantage of a resolution to this current deadlock,” said Mr Mahony.
However, shares in UK-oriented businesses, such as housebuilders and retailers, could rocket to record highs if parliament approves the government’s Brexit deal, investors say.
They also predict the pound will rally by around 5%. However, sealing the deal now could send the second-tier Ftse 250 index, a closely watched barometer of Brexit risk, surging around 5%, according to an informal poll of analysts by Reuters.
“If the deal is agreed [by parliament], there will be more upside on rates, equities, and forex, [foreign exchange],” said John Normand, head of cross-asset fundamental strategy at JP Morgan.
Mr Normand reckons sterling could strengthen up to 5% while UK shares rise up to 10% by the end of the year. However, Mr Johnson is set to lose the vote on his Brexit deal by four votes, according to Sporting Index, a spread-betting firm that has correctly called earlier ballots.