CBI chief warns of the impact of no trade deal with the EU
Director general of the Confederation of British Industry [CBI], Dame Carolyn Fairbairn, has warned that the dual impact of the Covid-19 pandemic and failing to agree a post-Brexit trade deal could cripple British businesses.
Negotiations over a UK-EU trade deal have been continuing remotely during the coronavirus crisis, but there has been limited progress due to differences on key issues such as fisheries and the need for a so-called “level playing field” in the realms of regulation and competition.
The government is targeting the attainment of a comprehensive free-trade agreement with the bloc by the end of the year, but it has repeatedly insisted that it will not seek to extend the window, namely the post-Brexit transition period, beyond December 31, 2020.
Dame Carolyn said that meeting the challenges posed by Covid-19 had wiped out any buffers or stockpiles set aside to cope with a no-deal exit from the EU single market and customs union at the end of the year.
She said: "The resilience of British business is absolutely on the floor. Every penny of cash that had been stored up, all the stockpiles prepared have been run down.
"The firms that I speak to have not a spare moment to plan for a no trade deal Brexit at the end of the year - that is the common sense voice that needs to find its way into these negotiations."
If there is no second spike of Covid-19 cases, the OECD has predicted that the UK will endure the worst economic contraction among the major European economies.
With the focus of businesses firmly on Covid-19 as opposed to contingency planning for no-deal, Dame Carolyn fears that the cliff-edge of December 31 will place more of a burden on the shoulders of business.
She said: "If we have a political timescale that takes us to a brinkmanship deal in December that will be catastrophic for British business - they will not be ready.
"Small businesses were not ready last time there was a no-deal Brexit threat - this time they will not have had a moment to prepare for it."
Dame Carolyn took the time to pay tribute to the government for the support measures it has put in place for businesses during the pandemic, calling them “vital” for the economy to hibernate, and urged ministers to prioritise employment for young people and investing in green industries once the economy begins to fully reopen.
She said: "Government realises it needs business and business understands how much it needs government.”
Addressing the post-Brexit trade negotiations, a government spokesperson said: "We've been clear that we want to reach an agreement with the EU this year and we are prepared to work hard to accelerate talks. This was what both sides agreed to in the political declaration.
"If we don't negotiate a Canada-style FTA [free trade agreement], we'll leave with an Australia-style relationship. Whatever happens we will be leaving the single market and customs union at the end of this year.
"We have taken unprecedented action to support businesses through this pandemic and to ensure the UK's economic recovery is as strong and as swift as possible. Extending the transition period would simply prolong the negotiations and create more uncertainty for businesses."
Meanwhile, Dame Carolyn will step down as CBI director general in November to be succeeded by Tony Danker, who is currently chief executive of Be the Business and a former policy adviser to the Treasury.