U.K. CEOs' Sigh of Relief Over Brexit Deal Already in Question
British business leaders’ relief that a Brexit deal was in sight may be short-lived, as Theresa May faces fresh threats to her plan and leadership.
Less than 24 hours after Chancellor of the Exchequer Philip Hammond and Business Secretary Greg Clark reassured company executives that the Brexit agreement avoids the chaos they feared, the deal is already at risk of unraveling.
Brexit Secretary Dominic Raab stepped down from his post Thursday morning, saying he “cannot in good conscience” support the deal. His resignation will add to questions over whether May can win approval for the agreement or even keep her job, with a no-confidence vote mooted. Work and Pensions Secretary Esther McVey also quit.
On Wednesday evening, the mood was much brighter. Hammond and Clark were cheered on a half-hour call with executives, in their efforts to protect the interests of business.
“There was a sigh of relief,” among those on the call, said Aston Martin Lagonda Ltd. Chief Executive Officer Andy Palmer, who took part. If ratified, the agreement will be “significantly better” than a so-called hard Brexit and includes requests put forward by auto leaders including tariff-free borders, Palmer said in an interview on Thursday. “This deal appears to deliver on the things that we as the industry asked.”
Business has been clamoring for clarity over the U.K.’s post-Brexit trade arrangements since the referendum, with uncertainty leading many to spend millions of pounds on contingency plans to protect themselves in case Britain crashed out of the bloc. If it succeeds, the draft deal will go some way to easing those fears, but it’s unlikely many companies will row back from plans yet as the government faces an uphill battle to get the deal through parliament.
“What companies need in Brexit is certainty,” Rico Back, the CEO of Royal Mail Plc, said in an interview on Thursday. “The paper, which is now a couple of hundred pages heavy, has given a direction and helps us on the way to certainty.”
Hammond told executives on the evening call that while the deal isn’t perfect, there have to be compromises and he was clear that the EU will not go back to the table and start talks again, said two people with knowledge of the matter, asking not to be identified as they weren’t authorized to discuss the conversation publicly.
Barclays Bank Plc Chairman Gerry Grimstone, Airbus SE’s U.K. chief Katherine Bennett and Aviva Chairman Adrian Montague were among executives on the call, one of the people said. John McFarlane, chairman of the finance industry’s TheCityUK lobby group and Barclays Plc -- also on the call -- said in an earlier statement that the agreement shows “constructive progress and presents a pragmatic and workable solution.”
British companies have been bracing for disruptions to their supply chains, labor pools and ability to continuing trading without barriers with the EU. Telecom executives outlined steps they’re taking to avoid problems Wednesday at a conference in Barcelona.
BT Group Plc’s outgoing CEO Gavin Patterson said the phone carrier is building stockpiles of equipment in case there is no deal and preparing for a possible recession. Telefonica SA Chief Operating Officer Angel Vila said the Spanish company will continue to hold off on an initial public offering of its U.K. unit, O2, with uncertainty tied to Brexit.
Questions also remain for businesses around immigration policy, with final details potentially being hammered on in the future trade deal, raising concerns for some. The chief of U.K. pub chain Young & Co.’s Brewery Plc came out swinging against May’s Brexit plans, saying he worries about accessing workers.
“Being based in London and southern England, it is more than our cocktails that are cosmopolitan,” Chief Executive Officer Patrick Dardis said in a statement Thursday, noting that 38 percent of its workforce are EU nationals.
Still, after months of debate, business lobby groups said the agreement represents progress.
“It moves the U.K. one step away from the nightmare precipice of no deal," Carolyn Fairbairn, CBI director-general, said in a statement Wednesday night. “The U.K. has had many months of discussion and division. A long journey still lies ahead but now is the time for decisions.”
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