CBI urges government to engage with business over no-deal Brexit

The CBI says the government is failing to communicate with business over the likely negative consequences of a no-deal Brexit

The Confederation of British Industry (CBI) set out 200 recommendations for the UK government, the EU and companies to accelerate plans for dealing with a possible no-deal Brexit on 31 October as part of a study, ‘What comes next? The business analysis of no deal preparations’.

The CBI studied existing plans set out by the UK government, European Commission, member states and companies and concluded that neither the UK nor the EU are ready for no deal. The International Monetary Fund says UK gross domestic product (GDP) could fall by 8% in the event of no deal, and the CBI is concerned that trade barriers could become permanent, making the UK less attractive as a place for non-European companies to establish operations.

With the likelihood of no deal increasing, the CBI has published ‘practical steps’ that all parties can take to ‘reduce the worst effects’.

Despite spending billions on preparations, UK business have been hampered by ‘unclear advice, timelines, cost and complexity,’ the CBI said. Analysis of different sectors of the economy suggests that 24 out of 27 sectors would be disrupted by a no-deal Brexit. While larger companies in regulated industries such as financial services are prepared for no deal, many smaller companies in less regulated industries are not, it said.

Josh Hardie, deputy-director general at the CBI, urged the EU to match ‘sensible’ mitigation measures being developed by the UK. While damage from Brexit cannot be removed, it can be mitigated by both sides, he said.

Meanwhile, prime minister Boris Johnson has announced a series of measures to shore up the economy in the event of no deal, including £300m of funding for Scotland, Wales and Northern Ireland, set to be announced today during a visit to a Scottish military base. This follows the announcement over the weekend of £3.6bn in funding for 100 towns in England.

Johnson also wants to spend up to £100m on Brexit-related advertising in the next three months alone, according to a report in the Daily Telegraph.

Michael Gove, in charge of government plans for Brexit, said over the weekend that no deal is now the ‘working assumption’. A further £1bn in funds is expected to be made available for no-deal planning later this week, according to Treasury sources quoted by the BBC, and Chancellor Sajid Javid promised funding for 500 extra Border Force officers.

Despite the funding promises, the CBI said the UK government has failed to engage sufficiently with business. It said that monthly meetings of the EU Exit Business Advisory Group, suspended in April, should be resumed by the end of August to share information with business, and substantial work was needed to establish vital communications channels between business and government.

The government needs to spell out what it means by ‘temporary measures’ such as tariff arrangements and a host of provisions for Northern Ireland, it said, as it also urged government to re-organise its advice for businesses by sector and job function to make it more accessible.

It also called for firm deadlines for launching a communications strategy, completing vital legislation, publishing details of government preparations and testing crucial IT systems.

Meanwhile, it urged the EU to prepare to launch new negotiations after 31 October to deal with the Irish border and third-country deals for a range of industries including financial services. It also calls on the EU to match mitigation measures already put in place by the UK including cabotage for EU aviation and haulage to reduce chaos at the border.

Businesses should immediately resume no-deal preparations, it said, while noting that it’s likely the economy will be less prepared than it was for the aborted no-deal deadline in March. It also called on firms with European headquarters or other connections to contact their EU representatives to express concerns about the level of preparations, while simultaneously working to establish lines of communication with the relevant government departments to help mitigate negative consequences.

And finally, it called on businesses to prioritise their people in the event of no-deal Brexit, with communications prepared and signed off in advance to be able to inform and reassure employees as quickly as possible.

CBI report: What comes next? The business analysis of no deal preparations

Tom Reeve | 29 July 2019

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