Brexit Deal Could Help Unlock U.K. Investment, CBI Says

(Bloomberg) -- Leaving the European Union with an “ambitious deal” on trade will help unlock U.K. investment and lead to a gradual improvement in growth, the Confederation of British Industry said Monday.

The CBI’s view, accompanying their latest economic forecasts, could boost Prime Minister Boris Johnson’s election campaign, which has focused on the need to “get Brexit done.” That’s despite the next stage of Britain’s departure from the EU set to be even more torturous than the current one, according to trade experts.

The prime minister is campaigning on a pledge to leave the EU early next year and sign a trade agreement before a transition period expires at the end of 2020 -- a timetable that may be overly-ambitious. It will be crucial that the next government is clear it will take the time necessary to get a deal done, the CBI’s chief economist Rain Newton-Smith said in an interview.

“This is going to be a process. It isn’t like you’re going to have this wall of investment that is suddenly unleashed,” Newton-Smith said. Nevertheless, “if firms can see a close deal with the EU on the horizon, with no further Brexit cliff-edges to worry about, investment will be unlocked,” she said.

In its latest outlook, the business group forecast a “modest” growth rate of 1.3% this year and 1.2% in 2020, before a pickup to 1.8% in 2021 as global headwinds and Brexit uncertainty wane. The forecasts are based on leaving the EU with a transition agreement on Jan. 31, with a “clear line of sight to an ambitious deal for all sectors that delivers tariff-free trade and close alignment on rules.”

The CBI said momentum in the economy is currently subdued, and noted its forecast is subject to a high degree of uncertainty. Under a scenario of further Brexit turmoil, the group sees growth of 1% and 1.6% in 2020 and 2021 respectively.

To contact the reporters on this story: David Goodman in London at dgoodman28@bloomberg.net;Jill Ward in London at jward98@bloomberg.net

To contact the editors responsible for this story: Paul Gordon at pgordon6@bloomberg.net, Lucy Meakin

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