CBI: Brexit agreement necessary to unlock UK investment and growth
Leaving the European Union with an “ambitious deal” on trade will help to unlock UK investment and lead to a gradual improvement in growth, the Confederation of British Industry said yesterday.
Accompanying their latest economic forecasts, the CBI’s view could boost Prime Minister Boris Johnson’s election campaign, which has focused on the need to “get Brexit done”.
That is despite the next stage of Britain’s departure from the EU set to be even more torturous than the current one, according to trade experts.
The prime minister is campaigning on a pledge to leave the EU early next year and sign a trade agreement before a transition period expires at the end of 2020 – a timetable that may be overly ambitious. It will be crucial that the next government is clear it will take the time necessary to get a deal done, the CBI’s chief economist Rain Newton-Smith said.
“This is going to be a process. It isn’t like you’re going to have this wall of investment that is suddenly unleashed,” Ms Newton-Smith said. Nevertheless, “if firms can see a close deal with the EU on the horizon, with no further Brexit cliff-edges to worry about, investment will be unlocked”, she said.
In its latest outlook, the business group forecast a “modest” growth rate of 1.3 per cent this year and 1.2 per cent in 2020, before a pick-up to 1.8 per cent in 2021 as global challenges and Brexit uncertainty wane.
The forecasts are based on leaving the EU with a transition agreement on January 31, with a “clear line of sight to an ambitious deal for all sectors that delivers tariff-free trade and close alignment on rules”. The CBI said momentum in the economy is subdued, and noted its forecast is subject to a high degree of uncertainty. Under a scenario of further Brexit turmoil, the group anticipates growth of 1 per cent and 1.6 per cent in 2020 and 2021 respectively.