Roundup: Business leaders warn bad Brexit deal amid financial turbulence
Britain’s captains of industry have joined forces to urge Prime Minister Theresa May’s government to work with the business world in its Brexit negotiations as the country’s financial market is overshadowed by the turbulence.
They want May to negotiate a barrier-free access to the EU single market and uninterrupted access for Britain’s financial services sector.
The Confederation of British Industry and the manufacturer’s organization EEF are among the main signatories to an open letter sent to the government.
Their plea came at the end of a “roller-coaster week” for the British pound which at one point saw it being exchanged on a one-for-one basis with the euro, as well as a nose dive against the dollar.
The pound slid to a 31-year low and British government bond prices slumped this week as investors feared Britain was heading for a hard Brexit.
All eyes will now focus on Monday when the London stock markets open, and also when politicians gather at Westminster after a conference season break.
Earlier this week, May in her speeches to the Conservative Party conference made it clear that she will not show her hand as Brexit negotiations take place.
Critics of that approach have said even though Britain needs to have ammunition for its delicate negotiations with Brussels, the finance and business worlds need to see signs of certainty for the future.
The business leaders said in their letter,”the way in which we leave the European Union (EU) and on what terms is of critical importance to jobs and investment in the UK. 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 letter added that business leaders are clear about what their priorities are in the upcoming negotiations.
They said that the government has committed to a bespoke arrangement. They believed this must deliver barrier free access to the EU’s single market, which is vital to the health of British economy, especially to the manufacturing and service sectors.
“Uninterrupted access for our financial services sector is also a major priority,” They said. “The sector employs thousands of people up and down the country and is critical to growth and job creation among small, medium and large British, and international businesses.”
They added that leaving the EU without any preferential trade arrangement and defaulting to trading by standard World Trade Organization rules would have significant costs for British exporters and importers, as well as those in their supply chains.
The business leaders warned that 90 percent of British goods trade with the EU would be subject to new tariffs.
“That would mean 20 percent in extra costs for our food and drink industry and 10 percent for our car producers,” they suggested.
“Every credible study that has been conducted has shown that this WTO option would do serious and lasting damage to the UK economy and those of our trading partners. The government should give certainty to business by immediately ruling this option out under any circumstances,” they said.
There is a wealth of evidence, said the letter, to suggest EU negotiations will not be completed within the Article 50 two-year time frame.
“Many areas of regulation now up for discussion are highly complicated; whether in financial services, data protection regimes or the interconnection of energy supplies. 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,” the letter said.
The open letter has been signed by Carolyn Fairbairn, the CBI’s director general, Chris Southworth, secretary general of the International Chamber of Commerce UK, and Julian David, CEO of the technical industry organisation, techUK.
Meanwhile the Daily Telegraph reported on Saturday that 3.6 million people from EU member states currently residing in Britain will be allowed to stay after Brexit.
The newspaper quoted unnamed government sources as saying that most will have earned the right to stay under a five-year residency rule, with the rest being granted an amnesty. The worry is that many Europeans will head to live in Britain ahead of an expected “cut off point.”
Officially the government says that the question of residency will be one of the matters for discussion with Brussels and will depend on what arrangements are agreed for Britons living and working with the EU area, once Britain leaves.