'No deal Brexit could stall improvements into Yorkshire transport networks' - CBI boss

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Investment to improve Northern transport and education will become more difficult to enact if we fail to secure a deal with the European Union, the head of Britain's biggest business organisation has said.

Carolyn Fairbairn, director general of the CBI, said that a strong economy was needed to ensure that both Government and business had the confidence to increase spending into areas vital to the North's economy.

Carolyn Fairburn

Carolyn Fairburn

She told The Yorkshire Post that investment into infrastructure and skills in the north was "absolutely vital" for British productivity and living standards but that this would be less likely to attract both private and public money if the economy shrank.

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And Ms Fairbairn said that, increasingly, business leaders were growing less confident about their ability to compete on a long-term basis due to the ongoing uncertainty over tariffs and disruption to supply chains.

"Investment in Northern infrastructure has been a CBI priority and absolutely remains one," Ms Fairbairn said.

PM Boris Johnson

PM Boris Johnson

"It is vital for productivity and living standards and it absolutely requires investment.

"That will be hugely easier if we have 1 to 1.5 percent growth, which is what we think we can get if we secure the transition period, versus the risk of recession, which as we know creates its own dynamic, affects consumer confidence and fundamentally reduces the willingness of private companies to invest and the ability of government to spend.

"So I do think that the knock on implications for some of our really big priorities. And it is not just transport. Skills are hugely important for Yorkshire, where digital skill gaps are particularly serious.

"In order to make those investments we need our economy to be flourishing and it will set us back just at a time when we need that einvestment to be firing on all cylinders."

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Ms Fairbairn made the remarks during a fact finding mission around the country to compile evidence as to what a no deal exit would mean for each region, findings which will be presented to Prime Minister Boris Johnson in the coming weeks.

Mr Johnson has made clear repeatedly that Britain will leave the EU on October 31, with or without a deal, but has said that the former was his preference.

This week he has commenced talks with European leaders in a bid to reframe the withdrawal agreement they signed with his predecessor Theresa May.

During her visit to Yorkshire Ms Fairbairn said that larger businesses were making preparations for a no deal exit but that some were having to spend "tens of millions of pounds" on stockpiling ahead of the annual Christmas rush.

However she warned that small businesses had done enough to mitigate against the imposition of new tariffs and disrupted supply chains.

She said: "Most big companies have prepared pretty well. We had big retailers who, broadly speaking, are prepared or are in throes of preparing for October, as they did for March.

"What was really interesting for retail, which is a big sector for Yorkshire, is that it is costing them more because it is the Golden Quarter in the run up to Christmas. So they talked about tens of millions of pounds extra in terms of stockpiling for that quarter.

"Manufacturers are doing the same kind of thing, in as far as they can. What comes over really strongly is the complexity. Most businesses are dealing with complex supply chains, so any delays at borders or delays for their supply chain, are having a knock on impact for them.

"What I would say though is that SMEs still have done relatively little. That came over very clearly."

Ms Fairbairn said she felt that Yorkshire's economy was "pretty well diversified" but that its key areas of strength, specifically in her view retail and advanced manufacturing, were the most exposed to a no deal scenario.

"You clearly have a strong retail sector and the fact that this requires logistics to work very well is an area that comes through quite strongly. Following no deal these supply chains will be in trouble."

The business leader warned of "two layers of impact" to British business and that business leaders were craving clarity and the ability to speak out about concerns without being accused of scaremongering.

"We do have to anticipate some really quite serious disruption," said Ms Fairbairn.

"Another message that has come over from our meeting is that they are looking for honesty about that and the ability to be able to speak up on these things without it being called Project Fear.

"It is so complex to be able to manage the supply chains to be able to manage the supply chains we have coming in to our manufacturing and retail sectors.

"But almost more significant is that we are hearing more and more about the impact on long-term competitiveness.

"It is almost thinking about where we are going to be in five or six years time if we have a no deal Brexit. What we know is that no deal is the beginning of uncertainty and not the end of it. It is a very chaotic place to be.

"And quite a lot of our members are saying is what it is affecting or ability to compete.”