Published on Tuesday, March 20, 2018

Start making plans for worst Brexit scenario, industry told

Travel companies have been urged to start making contingency plans for a worst case scenario when Britain leaves the EU.

At an ABTA Brexit briefing attended by 150 business leaders, several experts said they were optimistic Britain wouldn't leave the EU without a deal, but they warned it was a possibility.

Neil Baylis, a partner at law firm K&L Gates and head of the London EU trade and competition law group, said he was confident the EU would give the UK a deal similar to Canada's, but including financial services. "I am sure that is going to happen, but it will take some time," he said.

Britain and the EU yesterday announced a proposal for a transition period after the UK leaves the EU next March, which, if agreed, will mean the status quo will remain until the end of 2020. The deal is due to be signed at the EU Council meeting on Thursday.

However, Baylis warned companies against 'undue optimism' and said they should already be looking at their contingency plans in case the UK leaves the EU without a deal, such as setting up a second base within the EU, as easyJet has done in Austria.

While ABTA chief executive Mark Tanzer welcomed news of the proposed transition period he said: "We don't know what or where we are transitioning to.

"It is time for transparency and candour so businesses can start to plan for their future".

"I don't agree with the Prime Minister that no deal is better than a bad deal....the stakes are too high to fall out of the EU with no trade agreement. This is about finding a common agreement that works for both sides."

He said the fact that PM Theresa May has signalled she wants the UK to be given associate membership of the European Air Safety Association, indicated 'signs of realism slowly emerging'.  "So the red lines are starting to turn pink in some areas," he added.

In a panel discussion, MP Vicky Ford, who is chair of the Conservative Back Bench Committee on Brexit, agreed that 'on both sides of the Channel there is increased focus on an aviation agreement'.

She attempted to reassure the audience that her colleagues were 'very focused' on the needs of the travel and tourism sector, as were politicians in other European countries, she said.

She pointed out that Britons make 53 million trips a year to countries in the EU, spending £37 billion and supporting 870,000 jobs, so it's as much in their interest as the UK's to reach a mutually beneficial deal.

RCL Cruises managing director Stuart Leven said he was 'quite optimistic' the UK and EU would reach a deal given the value of UK tourism to the continent, but he agreed 'it is time to do some contingency planning'.

Hotelplan UK chief financial officer Andrew Stewart was less upbeat, citing concerns over the employment of British staff in Europe. He said the environment in the EU was already more hostile than a year ago, with the EU making it more difficult for his company, which includes several brands including Inghams and Explore, to second UK staff to work in Europe.

"They can't stop us seconding staff but they can make it difficult," he said. "I sit here very concerned because we rely on UK staff in resorts and I can't see how practically we can get to a situation where that is feasible post 2020."

However, ABTA's senior public affairs manager Luke Petherbridge said it was 'extremely unlikely' the UK would exit the EU without a deal. "It is extremely unlikely we will end up in a situation where flights won't be able to take off."

UKHospitality chief executive Kate Nicholls said she was 'cautiously optimistic' and she welcomed the 'gift of time' awarded by the transition deal on the table.

"It is inconceivable we will have a situation where flights are grounded [post Brexit]," she said. "EU politicians won't allow it."

Her main concern, she said, was the possibility of a labour shortage post-Brexit, given that there are 150,000 EU nationals working in the hospitality industry in the UK. The transition deal would allow all EU citizens in the UK at the end of December 2020 to remain, but there is no guarantee free movement of people will continue after that date.

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