Why many businesses will despair at the thought of going through yet another vote

'Business leaders will have to grit their teeth and deal with whatever politics throws at them'

A second referendum could raise further uncertainty for businesses (PA)

While the UK business community is breathing a sigh of relief over a recent agreement between the Government and the European Commission on the first phase of Brexit talks, the hard work is far from over. If you thought making even the limited progress we achieved on the Irish border question was difficult, just wait until we get on to discussing our future economic relationship with the EU.

The fraught discussions over Northern Ireland’s place in the Brexit talks have raised to prominence the idea of ‘regulatory alignment’ – in essence, how closely our rules on things like product standards and customs will track the EU’s regulations after the UK leaves.

This goes to the heart of the Brexit conundrum – the more our rules on things like product standards change, the more flexibility we will have for trade deals outside of the EU, but only at the risk of reduced access to our largest trade partner. Currently, more than half of our members at the Institute of Directors (IoD) want to maintain alignment with EU rules on goods and services, considerably outnumbering the 22 per cent that would sacrifice market access in order to change the rules.

The challenge for business is that Brexit falls far beyond the bounds of their normal interaction with government. When a party produces a typical policy – raising a tax or building a road, for example – companies can work out how it will affect them, if at all.

With Brexit, businesses can do some scoping out on particular issues, such as import tariffs or regulations specific to their sector, but so much is unknowable at this stage. When the Cabinet is yet to come to a collective agreement on the UK’s future relationship with the EU, how can firms possibly make any fixed plans? What reassurance is possible for companies depends entirely upon the process of Brexit, not the final outcome.

At the IoD, we have strongly campaigned for a political agreement to be reached by the first quarter of next year on the transition period after March 2019. This would avert the immediate risk that firms trigger their more drastic contingency plans, by opening an EU subsidiary or moving staff, for example.

Agreement on transition buys time for negotiation, but does not settle our final relationship. It will be March before the talks on a trade deal begin in earnest. At that point, the Government will have to start making hard choices on what it wants – or is prepared to tolerate – in a deal with the EU.

This will be a gruelling process, where tiny details can suddenly become deal-breakers – who cared a few months ago about chlorine-washed chicken? At the end of it, the hope is that the EU and the UK can agree a deal which preserves a reasonable level of economic integration, while being acceptable to voters both here and on the continent. It is a balancing act of quite incredible delicacy.

Many businesses will despair at the thought of going through all of that, only to have everything thrown up in the air again in another referendum. This isn’t a unanimous position, of course. There are companies that would prefer, even at this stage, that we reversed course. Ultimately, business leaders will have to grit their teeth and deal with whatever politics throws at them. The only thing I’m confident in predicting now is that there are bound to be a few surprises still to come.

Stephen Martin is the director general of the Institute of Directors