The UK should stay in the single market and customs union until a final Brexit deal is in force, according to the CBI. Carolyn Fairbairn, head of the business lobby group, said it was impossible that all the details of a new trade deal with the European Union would be in place by March 2019. That is when talks about the UK's withdrawal are due to formally finish.
To minimize disruption, UK businesses need a bridge instead of a cliff edge for the new deal, she said. Businesses are delaying investment because of the uncertainty, according to the CBI, whose members employ nearly 7 million people. The government said it was working with businesses to ensure the Brexit process was smooth.
While we will be leaving the single market and the EU customs union, we want to achieve a comprehensive free trade agreement that allows for the most frictionless possible trade, a government spokesman said.
In a speech at the London School of Economics, Ms Fairbairn said it was common sense to stay in the single market and customs union until a trade deal was in place.
This is not about whether we are leaving the EU, it is about how, she said. Once the Article 50 clock strikes midnight on 29 March 2019 the UK will leave the EU.
Her comments were backed by Labour, which said it wanted an early commitment to strong transitional arrangements on similar terms to those currently in place.
Without that commitment, and without a bridge to new trading arrangements with the EU, there will be growing uncertainty for businesses and investment decisions will be delayed, said Keir Starmer, Labor's Shadow Secretary of State for Exiting the EU.
The CBI said businesses feared they could be forced to adapt twice - first to a transitional arrangement, and then to the final trade deal. That would be wasteful, difficult and uncertain in itself, Ms Fairbairn said.
The urgency is simply growing. March 2019 is tomorrow for a lot of businesses. They are having to make their plans now, she said.
CBI's proposal was backed by a range of business bodies, including from retail, aerospace and manufacturing. Terry Scuoler, chief executive of the manufacturers' body EEF, said: The absence of any clarity for businesses makes this a sensible approach to transition.
The TUC also supported the move, saying it's crucial that we get the transition right as we leave the EU.
The CBI's comments come ahead of a government conference on Friday with business figures from sectors across the UK. The event, to be hosted at Chevening House in Kent, is part of government plans to work more closely with industries over Brexit.