Businesses desperately need unity on Brexit

Willem Marx
Source: Getty

As British diplomats prepare for the latest round of Brexit negotiations in Brussels, an uncertain outcome continues to weigh on the corporate sector, particularly in the UK.

On Monday, Theresa May insisted that her government is trying to build “an economy fit for the future,” and she is now stressing how crucial a transition period will be for British business.

But, for many, it must be shocking that this conclusion was not reached on the day Article 50 was triggered.

As UK and EU negotiators sit back down across the table from each other this week, it is increasingly clear how worried firms have become about a Brexit cliff edge.

A CBI survey released this week indicated that almost two thirds of UK businesses have plans to trigger contingency plans within five months. Some of those contingency plans will involve relocation.

And what might be most upsetting to UK businesses leaders is that the greatest sources of uncertainty comes not from the European Commission or foreign leaders, but from the very heart of British government.

It is there that the tussle for the soul of Brexit continues, often behind closed doors.

On Monday, CBI director general Carolyn Fairbairn listed the priorities for British businesses, including a halt to ministerial infighting. “Unity of the government voice, a single cabinet vision, is absolutely vital,” Fairbairn told me. She believes Brexit has created a huge distraction for the UK economy and many of the 190,000 businesses she represents.

The potential impact of uncertainty on trade may deepen too, after the Chartered Institute of Procurement & Supply (CIPS) reported that British businesses are increasingly searching for domestic suppliers, to remove the need for any European participants in their supply chain.

This bolsters the argument that Brexit will raise costs for UK SMEs, and will have negative consequences for Britain’s trading relationship with the Single Market.

And, of course, the uncertainty cuts both ways. Of the EU companies surveyed by the CIPS, 63 per cent said they were planning to relocate aspects of their supply chain elsewhere. In May, just 44 per cent said the same.

Another survey from Ipsos Mori found that four fifths of foreign businesses operating inside the UK are currently not confident about a positive outcome in March 2019.

But that does not stop Theresa May from talking positively about a “new chapter in the story of the British economy”.

May promised that her government would get “the best Brexit deal”. But what that constitutes is, of course, subjective, and comes with a caveat that it can only be the best deal that’s possible under the circumstances.

Right now, the Prime Minister acknowledges that her most pressing priority is to nail down detailed arrangements for what she terms a “time-limited implementation period”.

Such a multi-pronged request is useless unless it comes with what Fairbairn demands: unity, clarity, and – at this relatively late stage – urgency.

City A.M.'s opinion pages are a place for thought-provoking views and debate. These views are not necessarily shared by City A.M.

Related articles