Nervous businesses urge politicians to "take the final step" to trade deal after Brexit freeze thaws

 
Jasper Jolly
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Leaders Meet In Brussels For European Council Meeting - Day Two
Prime Minister Theresa May said talks had been in a "new spirit" (Source: Getty)

Prime Minister Theresa May and EU leaders need to “make the final step” towards starting Brexit trade talks, according to business leaders who cautiously welcomed an apparent thawing of rhetoric at a summit today in Brussels.

Top EU politicians presented a deliberately sunnier outlook on the talks, after their chief negotiator Michel Barnier last week warned of “deadlock” blocking progress.

European nations have authorised work to start on “internal preparations” for trade talks, although sufficient progress for the negotiations to officially begin remains some way off. Speaking in Brussels, European Council president Donald Tusk said he hopes the second phase – after progress on so-called separation issues – will begin in December.

Read more: Tusk: EU leaders give green light to prepare for Brexit trade talks

European Commission president Jean-Claude Juncker said he wants a “fair deal with Britain” and to avoid a breakdown in talks.

Meanwhile, Theresa May welcomed “professionalism and a constructive spirit” from the EU, and said she favours “a united approach” to negotiations.

Not sufficient

The “warm words” from today are welcome, but are “not enough”, according to Carolyn Fairbairn, director-general of the Confederation of British Industry.

She said: “A transition deal by year end is top of the list [of priorities]. We urge the EU to put people before process and take a pragmatic approach to recognising sufficient progress. And the UK must continue to seek to unblock discussions.”

Preparations for a “no deal” scenario will be costly for smaller businesses as well as the large firms which are already well advanced in planning, Fairbairn said.

A “no deal” scenario would involve unsuccessful trade talks, with all trade between the UK and the EU reverting to World Trade Organisation terms, including the abrupt introduction of tariffs in many industries.

Brinkmanship

Allie Renison, head of EU and trade policy at the Institute of Directors (IoD), urged both sides to compromise to protect the interests of both businesses and citizens.

She said: “No one should treat this as a simple game of brinkmanship; the livelihoods of too many businesses and employees are at stake.

“Holding fast to points of principle should not be the overriding concern here, particularly when it comes to moving on to discuss transition and the future relationship.

The British government should not allow “no deal” preparations to become an “overriding fixation for the UK”, Renison added.

Nervousness

City of London policy chairman Catherine McGuinness said: “Business will react to the news from the recent European Council as a case of one step forward and then one step back."

Business needs "firm commitments" on a transitional deal, she added. “Until we get this legal agreement, at the very latest sorted by the end of the year, firms will continue to advance their contingency plans.”

Karen Briggs, head of Brexit at accountants KPMG, said: “Today’s rhetoric looks positive given the amount of expectation management. However, it still leaves businesses in limbo.”

Businesses have started building inventories and reviewing hiring decisions, “nervously pushing bigger financial decisions into the new year,” she said.

Briggs added: “Whilst it’s not tenable to be without a Brexit plan, no business wants to commit to major investment decisions whilst uncertainty remains over whether more progress might now be made in December.”

Read more: Treasury Select Committee to probe "no deal" Brexit's economics

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