A bad Brexit will cost Britain dear in lost business
There is no time to lose. We are approaching a watershed, where a trickle of lost opportunity could become a flood and even an emergency. This makes the next European Council vital, for our economy and across the EU. To avert serious economic cost, the stalemate must be broken. The evidence is piling up and must not be ignored by either side
In surveys by the CBI and the Bank of England, about 40 per cent of businesses say they’ve delayed or cancelled new investments because of Brexit uncertainty. Large companies are scrapping plans for innovation centres, logistics hubs and office buildings. Small companies are holding back on recruitment or plans to export. Whether the impact is 4,000 jobs or four, the result is missed opportunities. opportunities. Lost investment that not only means jobs never created but also lower productivity and living standards in the years ahead.
Brexit is also harming recruitment. Four in every ten businesses surveyed by the CBI say Brexit has made it harder to find and retain people. This is felt across all sectors: from universities and tech companies seeking the best from global talent pools to construction businesses, tasked with building infrastructure and 300,000 new homes a year, finding that EU workers are not returning after holidays, with Christmas breaks coming; crops going
unpicked in Cornwall; public services, already struggling and now seeing fewer vital workers wanting to come to the UK - for example, a 96 per cent reduction in nurses applying to work
here from the EU.
Most companies now have contingency plans in the event of a no-deal scenario. There is no desire to press go, but 10 per cent of these businesses have already started implementing
them. Without further clarity another 25 per cent will follow by the end of the year. Another 25 per cent by the end of March. That’s 60 per cent by Easter. Thousands of jobs leaving the
UK, and in most cases irreversibly.
Financial services are often used as the example, but this is happening across sectors, across regions. Multinational broadcasters are eyeing Berlin and Amsterdam, automotive firms are overhauling supply chains, and telecoms firms are building databanks in Latvia. It’s not just large companies. The CBI has heard from SMEs making sheds in Belfast, skateboards in Somerset and cancer drugs in the Midlands, all considering moving production to France or Dublin.
We must be clear – it is the spectre of no deal that casting such a long shadow. Companies are preparing for the worst while still hoping for the best. Negotiators on both sides should be under no illusion about the impact of no deal. Rising costs for consumers and businesses, disruption at ports and airports, confusion over everything from contracts to chemicals regulation, uncertainty for citizens, and cross-border services in disarray.
A fragile picture, but one that can be repainted if progress is made now — 75 per cent of the UK’s biggest companies with contigency plans say agreement on transitional arrangements would give them enough certainty to put these plans on hold. That’s a prize worth fighting for.
The budget highlighted the opportunities that lie ahead for the UK – to be a leader in the fourth industrial revolution and build a high productivity, knowledge-led economy. But this is only possible if we secure a good Brexit. A bad Brexit would stop us in our tracks. And the starting point must be a breakthrough in Brussels in three weeks’ time.
Three things are needed. First, on citizens’ rights, “touching distance” needs to become a proper deal that sets minds at rest for 4 million people; second, a commitment to the Good Friday Agreement and Common Travel Area that supports the people and businesses of Northern Ireland; and third, a financial settlement that recognises the value of the £600 billion annual trade between the EU and the UK, with clarity from the UK and flexibility from the EU.
These are times of great change and I remain hugely optimistic about the UK’s future. But without urgency, clarity and unity on both sides, leading to progress in Brussels in December, I fear that the flow of lost opportunity will turn into a flood, hitting the most vulnerable in our society hardest.