News | Published June 02 2019

CBI sends warning to Conservative leadership over Brexit

The Confederation of British Industry has urged Conservative leadership candidates to rule out a no-deal Brexit, claiming it would do severe damage to businesses. To assess the response of SMEs, we spoke to Stuart Harris, Managing Director of Stuart Harris Associates. 

Speaking to BBC Radio 4, CBI Director General Carolyn Fairbairn said that no-deal “should not even be considered” an option.

Fairbairn urged the prospective leadership to stop 'kidding themselves' with the idea that Britain is ready for no-deal.

She said: "How can you be prepared for £20 billion of increased customs costs? How can be you prepared for tariffs rising overnight? 150,000 businesses with no systems in place to do deal with this.

"This is not a responsible strategy for a government to have."

In an open letter to Conservative leadership candidates, the CBI said that both large and small businesses are “clear that leaving the EU with a deal is the best way forward”.

It also said that consequences in both the short and long-term to British competitiveness globally would be dire in a no-deal scenario.

The letter said the vast majority of firms could never be prepared for no-deal, highlighting small and medium sized enterprises as particularly vulnerable.

Stuart Harris disagreed with the CBI's response. He told us: "As a small business owner, and the professional accountant for many small businesses, the CBI are talking nonsense.

"Small businesses just want to leave the EU as soon as possible.

"Yes, there will be disruption, deal or no deal, but small businesses will just get on with it, and pull the UK economy through as previously.

"A number of people, including Mr Juncker, Tusk and Barnier, refer to the UK crashing out of the EU. They seem to be missing the point : the UK would actually be escaping from the car crash that is the EU. There are a number of reasoned and reasonable arguments that the EU will collapse within 20 years. It might only take the failure of a major bank, say, Deutsche Bank, to set off the domino effect.

"And even if I am wrong, how much is it costing the EU to prop up these failing institutions and countries? Maybe this ought to be analysed with the £350 million per week quoted on the battle-buses ?"

The support of businesses is of historic importance to the Conservatives financially and the impact of Brexit has been clear with overall donations to the party down in the first quarter of the year according to the Electoral Commission.

According to their figures, in the fourth quarter of 2018 the party received £7.5 million in donations, compared to the £3.7 million which came in over the three months to March 2019.

However, Esther McVey, one of 12 candidates known to be standing for the premiership, told the Daily Telegraph earlier in the week that the UK should actively embrace the prospect of a no-deal Brexit.

Other candidates include former Foreign Secretary Boris Johnson and former Brexit Secretary Dominic Raab, who have both declared their intentions to renegotiate the withdrawal agreement currently on the table.

The departing prime minister Theresa May failed to pass the bill through parliament on three separate occasions.

The EU’s chief negotiator Michel Barnier has continually reiterated that the deal on the table is the UK’s only option to leave the bloc in a timely and orderly fashion.

The search for May’s successor will begin when she vacates Number 10 on June 7.

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Authored by

Scott Challinor
Business Editor
June 02 2019

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