http://pacificenergyassociates.com/news/brexit-means-brexit-but-the-big-question-is-when/

1. Brexit means Brexit … but the big
question is when?
http://pacificenergyassociates.com/news/brexit-means-brexit-but-the-
big-question-is-when/
22 Aug 2016
Two months ago on Tuesday, Britain voted to leave the European Union.
The shock was immense; the fallout dramatic. But then summer came. The
early turbulence subsided and normality (more or less) returned.
Brexit, though, has not yet begun to happen.
The government does not know what it wants and is not yet equipped to ask
for it. Britain and the EU, it is increasingly clear, are far more intimately
enmeshed than the leave camp had claimed. For all the leavers’ assurances,

2. extricating the UK from the bloc, negotiating new relationships
with Europe and the rest of the world – and ensuring that Britain’s laws
and practices adapt – is a gargantuan undertaking.
The referendum result, however, is a political reality. The 52% of leave
voters – and the politicians who represented them – expect it to be acted
upon. So two months on, where does Brexit stand?
The machinery – and the cost
One of the first acts of the new prime minister, Theresa May, was to
establishtwo new ministries: the Departments for Exiting the European
Union, led by David Davis, and for International Trade, headed by Liam
Fox.
Neither is yet fully up and running. Worse, a predictable and potentially
damaging turf war already appears to be under way between Fox’s ministry
and the last of the cabinet’s three Brexiteers, Boris Johnson at the Foreign
Office. That aside, International Trade has so far secured about 10% of the
trade negotiators it needs. (Britain has few skilled personnel because the
EU negotiates trade deals for its members. Canada, in contrast, has 300.)
Meanwhile, DExEU, as it is known, has hired – mainly from elsewhere in
the civil service – 150 of the 250-300 total staff it is expected to employ,
and reportedly has yet to move into its permanent home. Some meetings
still take place in Starbucks on Victoria Street, London. With the civil
service a fifth smaller since 2010, fast-stream recruits are being drafted in,
but negotiators, lawyers, economists, regulatory experts and management
consultants from the private sector will prove essential.
They will not come cheap: experienced senior personnel from the likes of
KPMG, PwC, Linklater’s and McKinsey cost up to £5,000 a
day, recruitment consultants say, or will be seconded on annual salaries of
up to £250,000.
Some estimates suggest “full Brexit” may take 10 years and involve up to
10,000 people, not only in the new and other so-called “hot” departments
such as foreign, home, environment and business, but across the civil
service nationally, at an administrative cost of close to £5bn.

3. Hannah White, Brexit lead at the Institute for Government, claims such
figures are “finger in the wind” stuff, but warns that with all the
government has set out to achieve besides Brexit, “There is clearly going to
have to be a really, really strong process of prioritisation.”
The model – and why it matters
The government has not yet decided what trade relationship it wants with
the EU. A huge amount hangs on the choice between “membership of” and
“access to” the EU’s single market.
European leaders have repeatedly stressed that membership of the single
market as part of the European Economic Area (like, say, Norway) will
mean accepting EU immigration, obeying EU rules and making a
contribution to the EU budget. Single market membership would make
Brexit a lot easier to implement and could – according to the Institute for
Fiscal Studies – be worth roughly 4% to the UK’s GDP. It is, however,
unacceptable to many leave voters.
One alternative is a free trade agreement with the EU giving Britain access
to the single market on improved World Trade Organisation tariffs, such as
Canada’s recent deal. Although that may be politically acceptable it would
take longer to agree and could hit the economy harder – especially the all-
important services sector; trade deals are invariably much tougher on
services than on goods.
Recent signs indicate the government may be mulling a deal outside the
single market as the only option acceptable to voters. May has spoken of a
“bespoke” agreement, and ITV’s Robert Peston reckons Whitehall is aiming
for a deal based on Canada’s, albeit with “a bespoke add-on for services”.
The City reportedly wants an arrangement along the lines of the complex
patchwork of bilateral sectoral accords Switzerland has agreed with the EU
for access to parts of the single market – though the Swiss, problematically,
had to accept freedom of movement and EU regulations as part of their
deal.
Before any decision can be made, DExEU has to work out exactly which bits
of single market membership – including non-tariff barriers, the common
regulations, licences and standards that, for example, give UK banks their

4. “passport” to operate across the EU – are most valuable, and what they are
worth.