Would You Run U.K. Plc Like May Runs Brexit? Business Asks
(Bloomberg) -- Theresa May’s government “confuses the hell” out of the European Union and needs to “get unified” if it wants to succeed in Brexit negotiations, according to the head of the U.K.’s main business association.
The damning appraisal by Paul Drechsler, president of the Confederation of British Industry, came even before the stinging parliamentary defeat for the prime minister just as she’s about to face her EU counterparts in Brussels. Referring to May’s squabbling cabinet, in which ministers have frequently espoused competing visions of Brexit, he said he doesn’t know whom to listen to.
“Can you imagine running the board of a company, you evaluate a big investment decision, your board walk out of the room and then they all tell a different story?” he said in an interview Tuesday afternoon. “You couldn’t run a business that way, and you certainly cannot lead the most complex, challenging commercial negotiation ever taken on unless there is one voice behind that negotiation.”
The stern words directed at May’s management of Brexit preceded Wednesday night’s nail-biting vote that saw May suffer her first defeat on the government’s flagship piece of Brexit legislation -- which transcribes EU law into the U.K. statute books and exposed the chinks in May’s armour.
The pro-European wing of her Conservative Party successfully mounted a rebellion to push through an amendment ensuring Parliament will get a vote on the final Brexit deal before Britain leaves the EU. That raises big questions over whether May has the authority to impose her version of Brexit or if lawmakers can mold it.
Brexit Deal Not Certain
For Drechsler, “it’s not obvious that we will reach a deal,” he said.
The outspoken comments from a key business figure demonstrate the level of concern felt by corporate Britain about the direction of the negotiations. Companies are holding back from hiring and making investments while they wait to see the trading relationship and any barriers to trade that emerge as Britain leaves the world’s biggest trading bloc.
Ten percent of companies have started implementing plans for a “no-deal” Brexit, the CBI estimated last month, a proportion that it said will rise to 60 percent by March.
See You in 12 Months
“I know of examples of investment decisions that are either zero or substantially less than they would have been,” Drechsler said. “When you add up what we would all have done, the economic effect will be felt in 12 or 18 months time.”
May agreed to a deal with the European Commission that “sufficient progress” has been made on the rights of EU citizens, the future of the Irish border and Britain’s divorce payment. She returns to Brussels for a two-day summit of EU leaders on Thursday and expects her counterparts will accept the commission’s recommendation that talks can move on to trade.
While Drechsler, chairman of Bibby Line Group Ltd., sees last week’s deal as “very significant political progress,” he said that “as a business person,” he isn’t sure it amounts to much. While praising May’s overtures to EU citizens resident in Britain, he said it still isn’t enough to give them the legal certainty to stay in Britain.
While May’s Conservatives have traditionally presented themselves as the party of business, Drechsler said his counterparts in other major European economies are in much more frequent contact with their governments. He backed Stephen Phipson, the new chief executive officer of the manufacturing lobby group EEF, who on Monday called on the government to give business a key role in the upcoming trade negotiations.
“In the U.K., you have chairmen and chief executives who are running companies bigger than some of the countries involved at the other end of all of this,” he said. “Why wouldn’t you use their experience as opposed to saying we’ll learn it all ourselves?”
The business priority is for transitional arrangements to be agreed upon soon, he said. May is seeking a two-year period after Britain leaves the EU in March 2019 to smooth the path out of the bloc. The EU plans to start talks about transition in January before talks on trade begin in March.
“Until I have details on transition heads of agreement, and how long it will last, I still have considerable uncertainty,” Drechsler said.
“For certain it will be difficult to persuade a board to get behind a major investment,” he said. “The transition’s only valuable from the point at which you fire the gun.”
©2017 Bloomberg L.P.