Business leaders demand softer Brexit
Employers’ group calls for indefinite delay to exit from single market
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.
Pragmatic … calls for a lengthy Brexit transition period are growing