Busi­ness lead­ers de­mand softer Brexit

Em­ploy­ers’ group calls for in­def­i­nite de­lay to exit from sin­gle mar­ket

The Guardian Weekly - - Uk news - Dan Roberts

Busi­ness lead­ers have de­manded that min­is­ters agree an in­def­i­nite de­lay in Bri­tain’s de­par­ture from the Euro­pean sin­gle mar­ket and cus­toms union to give more time for talks on a long-term trade deal.

In a dra­matic es­ca­la­tion of the bat­tle to soften the gov­ern­ment’s Brexit strat­egy, groups rep­re­sent­ing thou­sands of UK em­ploy­ers pre­sented a united front dur­ing a sum­mit hosted by the Brexit sec­re­tary, David Davis.

“This is a time to be re­al­is­tic,” Carolyn Fair­bairn, di­rec­tor-gen­eral of the CBI, said in a Lon­don School of Eco­nom­ics speech last Thurs­day out­lin­ing their de­mands. “In­stead of a cliff edge, the UK needs a bridge to the new EU deal. Even with the great­est pos­si­ble good­will on both sides, it’s im­pos­si­ble to imag­ine the de­tail will be clear by the end of March 2019.”

Such a com­pre­hen­sive tran­si­tion phase would al­most cer­tainly re­quire tem­po­rary ad­her­ence to EU rules on free­dom of move­ment, ac­cept­ing ju­ris­dic­tion of the Euro­pean court of jus­tice and a ban on im­ple­ment­ing trade deals else­where. But Brus­sels of­fi­cials are likely to also de­mand an agree­ment in prin­ci­ple on the shape of the even­tual EU trade deal, which could lead to such con­ces­sions be­com­ing per­ma­nent.

“March 2019 is 20 months away. Time flies,” the chief EU ne­go­tia­tor, Michel Barnier, warned in a sep­a­rate speech last Thurs­day in Brus­sels in which he claimed that Bri­tain had yet to “face the facts” on Brexit. “What­ever the out­come of these ne­go­ti­a­tions, the mes­sage I would like you to con­vey on the ground is this: the real tran­si­tion pe­riod be­gan on 29 March 2017, the day on which the UK pre­sented its [ar­ti­cle 50] no­ti­fi­ca­tion let­ter.”

Davis was joined by min­is­ters from the Depart­ment for Busi­ness and the Trea­sury, who are known to be more sym­pa­thetic to the need for an ex­ten­sive tran­si­tion phase.

“With ne­go­ti­a­tions un­der way, the sec­re­tary of state for ex­it­ing the Euro­pean Union is de­ter­mined to bol­ster the gov­ern­ment’s en­gage­ment with the busi­ness com­mu­nity on Brexit,” said a gov­ern­ment source an­nounc­ing the sum­mit, which took place last Fri­day.

Other at­ten­dees, in­clud­ing the EEF, for­merly the Engi­neer­ing Em­ploy­ers Fed­er­a­tion, and Bri­tish Cham­bers of Com­merce, were de­ter­mined to use the event to high­light their mem­bers’ con­cerns about the pit­falls of the gov­ern­ment’s cur­rent strat­egy. Terry Scuoler, chief ex­ec­u­tive of the EEF, said: “The brinkman­ship in­volved in tak­ing Brexit ne­go­ti­a­tions to the line, while leav­ing busi­nesses guess­ing about the likely out­come, risks caus­ing se­ri­ous eco­nomic dam­age.”

Fair­bairn added: “The prospect of mul­ti­ple cliff edges – in tar­iffs, red tape and reg­u­la­tion – is al­ready cast­ing a long shadow over busi­ness de­ci­sions. The re­sult is a ‘drip drip’ of in­vest­ment de­ci­sions de­ferred or lost.”

The CBI de­scribes its pro­posed tran­si­tion phase as a “com­mon sense” and “limited” process, but it con­cedes that this would have to re­main in place for as long as it takes to con­clude a longterm free trade agree­ment with the EU.

“It’s es­sen­tially op­er­at­ing on the same rules we have now, al­most like a rollover,” ex­plained Rain New­tonSmith, the CBI’s chief econ­o­mist, who was due to an­nounce the plan in a joint lec­ture with Fair­bairn. “This is not about whether we leave the EU, it’s about how ... this is a prag­matic way of leav­ing the EU.”

Speak­ing be­fore last Fri­day’s G20 meet­ing in Ham­burg, Theresa May said there would be an im­ple­men­ta­tion pe­riod but in­sisted it was only to smooth the path to a fi­nal trade deal.

“We’re go­ing in to ne­go­ti­ate a com­pre­hen­sive free trade agree­ment so we can con­tinue to see that trade – we want to see tar­iff-free trade, we want to see as fric­tion­less bor­der as pos­si­ble,” the prime min­is­ter said.

The Labour leader Jeremy Cor­byn was sched­uled to hold pri­vate talks sur­round­ing the Brexit ne­go­ti­a­tion with Barnier in Brus­sels this week.

It is now more than a year since the EU ref­er­en­dum. It is more than three months since Theresa May trig­gered the UK’s with­drawal ne­go­ti­a­tions, which in prin­ci­ple should be com­pleted next year and signed off by March 2019. From the start, the EU side has been ex­tremely clear about its ap­proach to the Brexit process and its goals. The Bri­tish gov­ern­ment, by con­trast, has been vague about both. The in­sou­ciance, which is partly what got us into this mess in the first place, is sim­ply ir­re­spon­si­ble. Bri­tain needs to show it un­der­stands the se­ri­ous­ness of the sit­u­a­tion we now face.

No one should deny that some of the choices to be made are dif­fi­cult. No one should fail to recog­nise the dilem­mas that they present for the weak­ened Theresa May gov­ern­ment, as well as for Labour. But as the EU’s chief ne­go­tia­tor, Michel Barnier, said in a speech last week: “Time flies.” March 2019 is only 20 months away. Mrs May needs to lis­ten more care­fully, think more imag­i­na­tively and con­duct the ar­gu­ment about Brexit more truth­fully. So do we all.

The real Brexit de­bate should start from a na­tional recog­ni­tion that the pri­or­ity in the talks is to safe­guard the UK econ­omy and the jobs and stan­dard of liv­ing of the pub­lic. A month on from the gen­eral elec­tion, min­is­ters need to show more de­ci­sively than they have yet done in pub­lic that they fully un­der­stand how much is at stake if the na­tional eco­nomic in­ter­est is jeop­ar­dised. All of this may in­volve com­pro­mises on other goals. It will there­fore need po­lit­i­cal guts. But the al­ter­na­tive is more of the cur­rent drift and un­cer­tainty.

A deal is bet­ter than no deal. No deal would mean a re­ver­sion to WTO rules on trade be­tween the EU and the UK. Among other things it would mean, as Mr Barnier points out, that there would be cus­toms du­ties of al­most 10% on ve­hi­cle im­ports, of 19% on drinks, and an av­er­age of 12% on meat and fish. These would be hugely dis­rup­tive shocks with ma­jor eco­nomic and so­cial reper­cus­sions.

Busi­ness lead­ers are wor­ried that Bri­tain is sham­bling to­wards the cliff edge of March 2019. They want min­is­ters to be re­al­is­tic and ac­cept that there must be a com­pre­hen­sive tran­si­tion phase, dur­ing which cur­rent EU rules will ap­ply and Bri­tain re­mains within the sin­gle mar­ket and the cus­toms union. Both gov­ern­ment and busi­ness – along with the trade unions – should spell out their rea­son­ing and their prac­ti­cal con­cerns, with­out cam­paign hy­per­bole, about the im­pact of any other course on jobs, ex­ports and in­vest­ment.

The main po­lit­i­cal par­ties are di­vided about many is­sues. But if Brexit is not to hurt the peo­ple least able to de­fend them­selves, and if Mrs May’s “deep and spe­cial” re­la­tion­ship with the EU after Brexit is to mean any­thing, these re­al­i­ties must be faced. Hard? Yes. But as chan­cel­lor Philip Ham­mond said re­cently, it would be “mad­ness” to do oth­er­wise when ev­ery al­ter­na­tive course of ac­tion is worse.

Getty

Prag­matic … calls for a lengthy Brexit tran­si­tion pe­riod are grow­ing

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