Business leaders respond with caution to PM’s Brexit speech
Theresa May’s proposals for an “implementation period” after Brexit offer a way out of the “uncertainty caused by the stalled negotiations”, according to one of Wales’ largest business groups.
The Federation of Small Businesses (FSB) Wales said its members would be pleased to be facing only one set of changes as Britain leaves the EU.
FSB Wales policy unit chair Janet Jones said: “There are only 18 months left on the Brexit clock and we are edging ever closer to a cliff edge if negotiations fail. It really is make or break time for British businesses, who are not feeling confident about investing or expansion while the UK’s future relationship with the EU after March 30, 2019 remains unclear.
“Today’s intervention must now be a catalyst for both sides at the negotiating table to show a willingness and determination to progress initial negotiations and move on to discuss the main economic issues at stake, including a comprehensive and ambitious free trade deal.
“What small businesses need now is a commitment to secure the rights of EU citizens living and working in the UK. Entrepreneurs or those working in a small business here have the right to know their future too.”
Mrs Jones was reacting to the Prime Minister’s speech in Florence yesterday in which she set out her ideas about the transition from Brexit and proposed a “creative solution to a new economic relationship”.
Other business groups also welcomed the tone of Mrs May’s speech. Adam Marshall, director general of the British Chambers of Commerce, said business leaders would judge the speech on whether it helped “break the stalemate” between the UK and EU that has left firms “counting the cost of uncertainty”.
“The Prime Minister’s constructive tone and clearer offers, particularly on guarantees on EU citizens’ rights and UK contributions to the EU budget, represent an important and welcome effort to break the impasse of recent months,” he said.
But Mr Marshall said “a significant majority” of businesses wanted a transitional period that lasted longer than the two years the Prime Minster proposed in her speech in Florence.
“We will challenge both the UK Government and the European Commission over the coming months to agree a transition that lasts at least three years from the date of our formal exit from the EU, giving businesses enough time to prepare for a final deal,” he said.
CBI director-general Carolyn Fairbairn said both sides needed to show leadership to turn the proposals into action. She said: “Firms will welcome the proposal of a ‘status quo’ transition period for business that averts a cliffedge exit. This mirrors exactly the CBI’s proposal made nearly 80 days ago and, if agreed by the EU, will protect jobs and investment on both sides of the Channel.”
She added: “Millions of EU workers and their families in the UK need certainty and vice versa. Committing to enshrine their EU rights into UK law goes some way to doing that, but until agreement is reached, individuals will still not be clear what their future holds.
“Negotiators must now move the talks on to trade and transition as soon as possible. More tough choices and compromises await and listening to firms will help ensure agreement on a comprehensive version of what our future economic relationship with the EU will look like.”
TUC general secretary Frances O’Grady accused the Prime Minister of failing to come clean about the difficulties ahead in the Brexit negotiations.
She said: “Reality has begun to break through into the Government’s Brexit strategy, as Theresa May finally admits that a smooth transition period is desirable and necessary.
“But the Prime Minister is still pretending we can have our cake and eat it for a long-term deal. She is not levelling with British people about the trade-offs that will be needed.
“We still need a realistic negotiating strategy for how the Government will get a long-term deal that protects jobs, rights and livelihoods, and encourages businesses to invest in Britain.”
The pound slipped against both the dollar and euro as the markets reacted to the speech. Hamish Muress, a currency analyst at international payments firm OFX, said that while Mrs May tried to outline an “optimistic and upbeat relationship” with the EU, her speech did little to satisfy investors.
“The pound was sold off as traders looked for hints around future access to the Single Market and were disappointed not to find them in the Prime Minister’s speech,” he said. “Not even the pledge for a two-year transition period could stem the pound’s losses, particularly against the euro.”
Mr Muress said investors will now patiently wait to hear what Mrs May delivers at the Tory conference in Manchester in October.
“The Prime Minister is likely to double down on this rhetoric when she takes the stand at the Conservative Party conference next month and traders will be watching developments closely.
“The markets want a firm commitment to a soft Brexit and future access to the Single Market, but it doesn’t look like Theresa May will be pushing for this – at least for the time being.”
Miles Celic, chief executive officer of TheCityUK said the ball was now in the EU’s court to respond in a positive way to Mrs May’s proposals.
He said: “The Prime Minister has set out a clear path – one which will help deliver some much-needed certainty for business. In calling for a time-limited transitional period under the existing rules and structures, she has echoed our industry’s priorities and the calls of businesses on both sides of the Channel.
“Similarly, since the start of the Brexit negotiations, we have been clear on the benefits of mutual regulatory recognition. It’s very positive to see that the British Government supports this principle – one which is in the best interests of all parties. The ball is now firmly in the EU’s court and the clock is ticking. Any further delay in progressing negotiations risks additional and unnecessary economic disruption for customers across Europe.”