The UK government published a white paper on Brexit, outlining its strategy and aims in withdrawal from the European Union.

The paper ‘The United Kingdom’s exit from and new partnership with the European Union’ provided a greater degree of clarity from previous announcements, and more closely addressed funding for SMEs and businesses, the financial services sector, and trade both with the EU and within the UK itself.

SME and business funding

The government said that all European Structural and Investment Funds (ESIFs) signed before 2016’s Autumn Statement would be fully-funded, even if the project terms ran past the UK’s EU departure.

For agreements signed afterwards, the paper stated that the Treasury would honour the funding “if they provide strong value for money and are in line with domestic strategic priorities.”

Addressing successful bids for funding made directly to the European Commission, the government said that they would work with the Commission to ensure payment, and underwrite the funds even if the agreements run past UK departure of the EU.

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By GlobalData

Financial services and passporting
The white paper made it clear that the British government was aiming to withdraw the country from the single market, but outlined that it aimed for a “new strategic partnership” with the EU through an “ambitious and comprehensive Free Trade Agreement.”

The government stated that it sought “the freest possible trade” in financial services, touting London’s status as the “number one financial centre.”

The paper stated that while 5,000 UK firms rely on passporting to provide services across the EU, 8,000 European firms provide services in the UK, and warned that “EU27 firms also have an interest in continuing to serve UK customers.”

The government said: “The fundamental strengths that underpin the UK financial services sector, such as our legal system, language and our world-class infrastructure will help to ensure that the UK remains a pre-eminent global financial centre.”

Trade within the UK

The paper outlines that the UK government will seek to remove the UK from the Customs Union after Brexit, and pursue a “mutually beneficial new customs arrangement,” in addition to a ‘comprehensive’ the Free Trade Agreement to replace membership of the single market.

While stopping short of the exact form it may take, the government said that it sought for trade to be “as frictionless as possible”, stating that it was in the interest of both the UK and EU.

Based on the white paper’s aims, withdrawal from the Customs Union and single market could be seen to cause friction with the desire to maintain the UK’s Common Travel Area (CTA) with the Republic of Ireland.

The government stated that the free flow of goods, utilities, services, and people enabled £43bn (€50bn) worth of trade between the UK and Ireland.

The white paper advocated “as seamless and frictionless a border as possible”, which would, in effect, leave an open border between the European Union and the UK, through which people and goods may continue to cross.

Outlining a commitment to ‘strengthening the Union’ of the UK, the white paper addressed the demands of the Welsh and Scottish governments to remain in the single market and Customs Union.

The white paper noted that Scotland’s exports to the rest of the UK were worth £49.8bn compared with £12.3bn to the EU27 in 2015 and said there would be “no new barriers to living and doing business within our own Union created.”