The clear Brexit message from business: get a deal

I have spent recent weeks speaking to hundreds of businesses across the UK, from entrepreneurs to multinationals, retailers to tech start-ups. They are united in one message for the government: strain every sinew to get a Brexit deal with the EU.

Members of the CBI understand that politicians are facing desperately hard choices and want them to hear the economic evidence direct. This is not politics, spin or “Project Fear” scare tactics. It is what British businesses are saying.

One of the loudest messages is that no-deal Brexit is not the end of chaos for business, it’s just the beginning. As one chief executive put it to me, it’s a swamp not a cliff-edge. No deal can sound like a glorious leap to freedom, a clean break. But that’s dangerously false. For thousands of companies it would mean extending crippling uncertainty against a new backdrop of ill will.

We will be having the same conversations, over and over, about trade on the Irish border, alignment of rules and regulations, and EU budget payments that must be honoured. We would also encounter new barriers to trade, and EU citizens in the UK and vice versa would face uncertain futures. Business contracts, flows of data, and professional services would be left in a state of legal limbo. Once we’re in the swamp, it will be hard to escape it.

Firms are equally clear that being prepared is not the same thing as being protected. Many are doing all they can to be ready for no deal. They welcome government investment and energy. The CBI is supporting them. But it’s impossible to protect everyone against the impact of no deal. You can put sandbags down against floodwaters, but that’s all.

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Take the automotive manufacturer I met last week, whose 10 per cent profit margin could be wiped out by tariffs. Or a university which is already losing lecturers and researchers to Canada and Australia. Or the Yorkshire-based family business that has no choice but to import all its components from Europe. If the pound falls further in the event of no deal, it is at risk of insolvency. People’s jobs and livelihoods are at stake.

The evidence of no deal already affecting businesses was equally alarming. Billions of pounds are being spent on preparing. Stockpiling, relocations, and new customs systems are draining the coffers that could be used for wages, new products and services. Contracts are already being lost to overseas competitors who weaponise uncertainty against UK rivals. Smaller EU firms are choosing to turn their back on UK customers — why bother to become customs experts when there is a single market of 500m people to sell to.

I lost count of the number of businesses that told me how unsettled their EU staff were. The toll on co-workers, friends and neighbours who are so vital for services, construction and other sectors is nothing short of a disgrace. Many are now voting with their feet.

While the majority of big businesses feel they have done what they can, small firms are woefully unprepared, with neither the time nor resources to act. The tens of thousands of entrepreneurs who sell into Europe are stuck fast. Even those with cash and expertise cannot cope with new tariffs and trade barriers that will threaten their existence.

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The UK’s long-held reputation as a stable, common sense place to do business is being openly questioned. As the drama unfolds, slowly but surely more investors are changing the channel.

This must stop. It’s time to get back to what really matters. Britons can drive our economy forward and lead the world in areas from zero carbon energy to life sciences and fintech.

Businesses have a simple message for government. Get the deal our country deserves. Put as much effort into getting a deal as preparing for failure. The Queen’s Speech in October setting out the agenda will be an overdue opportunity to invest in our country’s future. Imagine how much can be achieved if we have a deal. And just how hard it will be if we don’t.

The writer is CBI director-general


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