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Brexit controversy: UK major business call on PM May to preserve free trade with Europe

Monday, October 10th 2016 - 10:14 UTC
Full article 9 comments
CBI director-general Carolyn Fairbairn, said the letter called for “ruling out of the really worst options, to reassure investors that the UK was still a really good place to invest”. CBI director-general Carolyn Fairbairn, said the letter called for “ruling out of the really worst options, to reassure investors that the UK was still a really good place to invest”.
Mike Cherry, Federation of Small Businesses chairman, said the effect of uncertainty on the market was reflected in confidence at its lowest level since 2012 Mike Cherry, Federation of Small Businesses chairman, said the effect of uncertainty on the market was reflected in confidence at its lowest level since 2012
PM Theresa May said a “trade-off” between controlling immigration and trade with Europe was the “wrong way of looking at things”. PM Theresa May said a “trade-off” between controlling immigration and trade with Europe was the “wrong way of looking at things”.

A group of major business lobby groups has written an open letter urging the United Kingdom government to preserve barrier free trade with Europe. The letter is signed by leaders of the Confederation of British Industry, CBI, and manufacturers' body the EEF.

 The letter says the way in which the UK leaves the EU and on what terms is critical for jobs and investment in the UK. It says defaulting to trading by World Trade Organization (WTO) rules would leave 90% of UK goods trade with the EU subject to new tariffs.

The letter says that would mean 20% in extra costs for the UK's food and drink industry and 10% for car producers. These significant costs would affect British exporters and importers, as well as those in their supply chains, it adds.

“We respect the result of the referendum, but the government must make sure that the terms of the deal to leave ensure stability, prosperity and improved living standards,” the groups write.

“Every credible study that has been conducted has shown that [the] WTO option would do serious and lasting damage to the UK economy and those of our trading partners.”

The letter calls for the government to “give certainty to business by immediately ruling this option out under any circumstances”.

One of the signatories, CBI director-general Carolyn Fairbairn, said the letter called for “ruling out of the really worst options, to reassure investors that the UK was still a really good place to invest”.

“There is a negotiation that's going to take place, and I think businesses completely understand that,” she said.

“But falling into WTO rules in only 29 months from now, would mean up to 90% of goods could potentially have tariffs on them, there would not be the passports for our services industries.”

It increasingly looks as though Britain is heading for a so-called “hard Brexit” - and business leaders are becoming very worried.

At the Conservative Party conference, Theresa May made it clear the country would not remain in the EU's single market if doing so meant losing control of immigration. Yet European leaders insist that free movement of goods and services comes hand in hand with the free movement of people.

The uncertainty - and the prospect of trade with the EU becoming subject to tariffs and other trade barriers - has been driving down the value of the pound, which has been trading against the dollar at a level not seen in more than three decades.

So this letter offers a stark warning. The UK, it says, needs access to the single market. Leaving the EU and reverting to international trade rules would do serious and lasting damage to the UK economy. Costs for businesses would go up. Jobs could be lost.

The letter she signed also says there is a wealth of evidence to suggest EU negotiations will not be completed within the Article 50 two-year timeframe.

“Many areas of regulation now up for discussion are highly complicated... The government should therefore secure agreement of a transitional period, to ensure that businesses can continue to operate with no 'cliff edge' change to current circumstances until regulatory and legal changes can be implemented,” it says.

It concludes that the UK voted to leave the EU but not to cause living standards to decline: “We want a Brexit that safeguards future prosperity for everyone across the UK.”

Mike Cherry, Federation of Small Businesses chairman, said the effect of uncertainty on the market was reflected in its quarterly index, showing confidence at its lowest level since 2012, and causing problems for small businesses.

But he added: “On the other side of that, there are many small businesses looking to overseas markets to export their goods, products and services. For them, this does present a tremendous opportunity to grasp more of the market overseas.”

At the Conservative Party conference last (9 October) Sunday, Prime Minister Theresa May said she would trigger Article 50, the clause needed to start the process of exiting the EU, by the end of March 2017. She said a “trade-off” between controlling immigration and trade with Europe was the “wrong way of looking at things”.

Britain, Mrs May said, had voted to become a “fully-independent, sovereign country” and would “decide for ourselves” how immigration was controlled alongside “the best deal possible” with the EU.

Categories: Politics, International.

Top Comments

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  • DemonTree

    @7 ChrisR
    The latest fall in the pound is due to fears of 'hard Brexit', exactly what *you* want to happen. So don't start blaming Hammond and Carney.

    As for trying to overturn the will of the people, the choice we were given was stay or leave. No one voted on hard or soft Brexit, or specific policies. Some leave campaigners, notably Boris Johnson, claimed that Britain could control immigration and stay in the single market. What makes you think that wasn't what a majority of leave voters wanted?

    How do you decide exactly which immigrants are needed for essential services? Conservatives like to say it causes inefficiencies when governments meddle in the market, does this not apply to staffing too?

    I agree about manufacturing by the way, but the government should have addressed that *before* Brexit.

    @Pugol-H
    Yes, it will hurt the EU too if we default to WTO rules. But the EU is bigger than the UK so more able to absorb the damage, and they are probably willing to take some damage anyway in order to discourage other members from leaving.

    Oct 10th, 2016 - 06:33 pm +4
  • Conqueror

    Where do these greedy people get their figures from? As I understand it, WTO rules limit tariffs between countries to 3%. Certainly there are rules against punitive tariffs. But articles are starting to appear in the British press about the certainty of price rises. This may require new legislation so that a supplier imposing a price increase of more than 3% should have their ill-gotten gains seized. We have seen this before. It happened with decimalisation of our country. Prices do increase over time. But a newspaper used to cost around 2 old pence. Nowadays, one would be pressed to find one on sale for less than 20 new pence. That's profiteering. It happened again with the change from imperial to metric measure. Take the two together and one can probably identify 1,500% profiteering. AND it's yet another attempt to obstruct the will of the British people, democratically expressed. Consideration should be given to indicting such “business” people on charges leading to suitable periods of imprisonment.

    Oct 10th, 2016 - 01:03 pm +3
  • Eilean Siar

    @1

    Not to mention product size decreasing - latest being the the Terry's chocolate orange (now Satsuma sized).

    http://www.unilad.co.uk/grub/terrys-chocolate-oranges-just-ruined-christmas/

    Oct 10th, 2016 - 01:32 pm +3
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