Beckie Hart: The dangers of a no-deal Brexit

Many business leaders hope Boris Johnson will deliver a Brexit deal, Picture: PA
Many business leaders hope Boris Johnson will deliver a Brexit deal, Picture: PA
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Alongside the ever-changing political manoeuvres something solid; a Queen’s Speech will take place in October.

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A chance for the government to set out a new domestic agenda; an overdue opportunity to transform skills, broadband connectivity, infrastructure and living standards in this country.

This could not be more important. Growth has stalled in the UK; our productivity lags international peers. Regional inequality is a blight that needs addressing; our northern cities need connecting, schools need more funding and the challenge of climate change needs relentless focus.

All these priorities rely on a strong economy. But a stark choice lies ahead. Any prospects for a transformative Queen’s Speech rest squarely on what kind of Brexit is delivered. Without a deal, the economy will suffer badly. Leaving the EU with a deal will support economic growth.

This is why I invited the Director General Carolyn Fairbairn to Leeds last week to meet with local businesses. What they said was clear especially on how current uncertainty and exchange rate fluctuations are driving down investment. They were united in one message for government: strain every sinew to get a deal.

The businesses in the room and those I meet on a daily basis also recognise the hard choices politicians will face over coming weeks and have two important new messages they want to them to hear.

First, a no deal outcome is the beginning of years of chaos: a swamp rather than a cliff-edge. It can sound like a glorious, leap to freedom. But that’s dangerously false. The second message from British business is that being prepared is not the same thing as being protected. Firms are doing everything they can to be ready for a no deal outcome, from stockpiling and currency hedging to new EU registrations and moving supply chains. They welcome government investment and energy. At the CBI we are doing all we can to support them, but it is impossible to protect many businesses against the impact of no-deal.

The evidence of no-deal already affecting businesses was equally alarming. Billions of pounds are being spent on preparation. Stockpiling, relocations, new customs systems, draining the coffers that could be spent on wages, new products and services.

Contracts are already being lost to competitors weaponising uncertainty against UK rivals. Businesses who need to import from smaller firms in the EU are seeing some of them turn their back on the UK. They have no intention of becoming customs experts when they have a market of 500 million to sell to.

I lost count of those businesses in our region telling me how unsettled their EU staff were – so vital for services, construction and other sectors. The toll on our co-workers, friends and neighbours who have built their lives here over is a disgrace. Many are now voting with their feet.

Perhaps most concerning of all, the UK’s long-held reputation as a stable, common-sense place to do business is being openly questioned.

Beckie Hart is regional director of the CBI