U.K. Businesses `Deeply Concerned' at Slow Pace of Brexit Talks
(Bloomberg) -- The U.K.’s five main business lobby groups told Theresa May they’re “deeply concerned” that time is running out for a Brexit deal that protects hundreds of thousands of British jobs, ratcheting up pressure on the prime minister to offer more detail on the future relationship with the European Union.
“In the absence of clarity, businesses will inevitably have to implement plans for a worst-case scenario, which could cost the U.K. economy billions of pounds, thousands of jobs and leave many families without a main income,” the groups said in a letter to May dated Saturday. “An increasing number of companies have made clear that in the face of uncertainty, they are now actively considering moving substantial volumes of work away from the U.K. We know that many more large businesses are close behind in their plans.”
May is under mounting pressure to spell out Britain’s vision for the EU relationship. The premier has promised a white paper on her plans before the summer recess starts on July 24, but must first reach consensus with her squabbling cabinet and party over details including plans for customs and an open border with Ireland.
The letter from the groups follows warnings from aerospace giant Airbus SE and car maker BMW AG that time is short before they need to implement contingency plans. Airbus said on Thursday it may pull investment from Britain in the event May fails to strike a deal, an outcome it described as “catastrophic” and which would threaten its 14,000 U.K. jobs. BMW’s U.K. chief, Ian Robertson told the BBC a day later that without clarity within a couple of months, it would have to prepare alternative plans, damaging Britain.
Get Behind May
“It’s completely inappropriate for business to be making these kinds of threats,” Health Secretary Jeremy Hunt said Sunday in a BBC interview. “We are in an absolutely critical moment in the Brexit discussions, and what that means is we need to get behind Theresa May to deliver the best possible Brexit, a clean Brexit.”
With the U.K. yet to settle the divorce terms with the EU, negotiators haven’t begun formal discussions on the future economic relationship, even though Brexit Secretary David Davis has said he aims to have details of that nailed down by October. For business, the biggest worry is that May fails to reach an agreement. She’s repeatedly said that “no deal is better than a bad deal,” raising concerns that it is an outcome she would accept.
“We’ve got to be free in a negotiation to say if we don’t get the deal that we want, there won’t be any agreement,’’ International Trade Secretary Liam Fox said in an interview aired Sunday on Sky News. “Companies are right to say that if there’s no deal that won’t be good for Britain, but it won’t be good for Europe either. In an era when we’ve got complex integrated supply chains, it will be necessarily bad for both sides.’’
Fox’s desire to keep open the “no deal” option was buttressed by 60 economists, politicians and business people who wrote to May on Sunday saying she should speed up planning for Britain to revert to World Trade Organization rules if Brussels refuses to strike a free-trade deal. The letter was organized by the pro-Brexit group Economists for Free Trade.
“To have any real leverage in the Brexit endgame, the U.K. must reserve the right to walk away without a trade deal,” according to the letter, whose signatories included May’s former Brexit minister, David Jones, and former Chancellor of the Exchequer Nigel Lawson.
Approach Not Working
The business lobby letter to May, obtained by Bloomberg, was signed by British Chambers of Commerce Director General Adam Marshall; Confederation of British Industry Director General Carolyn Fairbairn; Stephen Phipson, chief executive of the manufacturing lobby, the EEF; Federation of Small Businesses Chairman Mike Cherry; and Institute of Directors Director-General Stephen Martin.
The letter also went to European Commission President Jean-Claude Juncker and European Council President Donald Tusk with copies to Brexit Secretary David Davis and EU Chief Brexit Negotiator Michel Barnier.
“Our business members and their European trading partners need faster, more decisive action from both sides,’’ they said. “It’s time to move on. The current approach by the U.K. and European Council isn’t working and threatens growth and jobs.”
They expressed concern that a 21-month transition period to give business time to prepare for Brexit is losing its value because little is known about the conditions after exiting. The period, from Brexit day in March until December 2020, will maintain current regulatory and trading relationships, even though technically Britain will be out of the bloc. The groups said they need more detail on the future arrangements for the border, mobility of labor and regulatory cooperation.
“The original benefits of transition are being wasted as time ticks down,” the business chiefs said. “Every day, larger companies are not only contingency planning, but spending many millions on implementing these plans, without even knowing what to prepare for.”
Medium-sized businesses “are watching and waiting” and can’t plan without clarity, while smaller companies involved in European supply chains are deferring investment, according to the letter.
©2018 Bloomberg L.P.