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A no-deal Brexit would have profound economic consequences with GDP shrinking by up to 8%, putting thousands of jobs at risk, the Confederation of British Industry is to warn.
The business body is urging MPs to back Theresa May’s deal, describing it as a “solution” businesses can work with as it delivers a transition period and avoids a “hugely damaging cliff edge”.
It says if parliament does not agree, it must immediately outline its plan to avert no deal and secure British jobs.
With just four days to go before the prime minister’s last-ditch attempt to get parliamentary approval for her deal, the CBI is piling on the pressure to avert a no-deal outcome, which it believes would be a disaster for Britain.
In a keynote speech on Friday, its director general, Carolyn Fairbairn, will call on MPs to “safeguard the security and prosperity of our country” and put jobs and the economy ahead of politics when they vote on Tuesday.
Her plea comes a day after the car industry revealed it was already in the grip of a Brexit chill. The Jaguar Land Rover (JLR) chief executive, Ralf Speth, said the company’s “liquidity” would be at stake in a no-deal scenario, and Honda announced it would put production on hold for six days in April because of Brexit to assess the impact of delays on the Dover-Calais freight route on its production lines. If the impact is negative, production could be paused for longer, experts believe.
At a meeting of business leaders in Bristol, Fairbairn will say: “Next week, they [MPs] face a test. If they meet it with yet more brinkmanship, the whole country could face a no-deal, disorderly Brexit. The economic consequences would be profound, widespread and lasting. GDP would decline by up to 8%, meaning less money for our public services and those who rely on them.
“Businesses would face new costs and tariffs. Our ports would be disrupted, separating firms from the parts they need to supply their customers.”
With the future of the country at stake, she said it was no time for political brinkmanship. “It’s too big a gamble to simply hope that parliament will blink at the brink,” she will say.
The consequences of the Brexit impasse are rippling beyond domestic borders. Small to medium-sized businesses say they are struggling to cope with the prospect of a cliff edge, farmers warn they could be hit by a six-month export ban to the EU and on Thursday the Japanese prime minister, on a visit to the UK, said it was “the wish of the whole world” that the UK not crash out of the EU.
The CBI represents most of Britain’s biggest businesses and has been warning of the potentially devastating consequences of uncertainty over the future of Britain’s relationship with the EU since the referendum in 2016.
In December it told MPs that “despairing businesses” were already triggering no-deal contingency plans with hundreds of millions of pounds of investment being relocated out of the UK.
On Thursday Speth said the deal was “not perfect” but that it was important to avert disaster. He said JLR, which has announced 4,500 redundanciesworldwide, most from Britain, could not stockpile the 25m components it uses on its UK production lines every day.
“If I miss one part, I cannot produce one car and that means [for] a stoppage of about one day I miss about £80m to £100m,” he told the BBC.Advertisement
Asked if it could result in JLR closing, he said: “Can you imagine if you have losses of £80m to £100m a day, how long the liquidity of the company will last?”
The CBI fears that MPs intending to vote against May’s deal do not grasp the consequences of failing to agree a Brexit plan.
Speaking at the Bristol Old Vic, before an audience of senior figures from the region’s leading firms, Fairbairn will say no deal would also damage the city’s burgeoning services sector.
The CBI’s warning about a drop in Britain’s output is based on International Monetary Fund figures and chimes with analysis from the Bank of England in November, when its governor, Mark Carney, said GDP could shrink by up to 8% in 2019 while house prices could fall by a third.
In the worst-case scenario, unemployment would rise to 7.5% and interest rates could reach 4% – good for savers but disastrous for borrowers whose mortgage payments could double.
Fairbairn will also criticise MPs and other public figures who have blamed the nation’s problems on migrants. She will say the idea that “businesses turn to foreign labour because they are too lazy to invest in workers here” is a “myth that has been gaining currency”.
“I hear politicians say it who should know better – and pull them up on it every time – because it couldn’t be more wrong.”
She will urge the government to rethink its post-Brexit immigration policy, which discriminates against the lower skilled and low-income workers who may “harvest our food, build our homes, care for us in our hospitals and [in] our old age”.
Fairbairn will also ask businesses to “speak up” and tell the nation about the “scale of overseas workers’ contribution” and not let lies take hold. “It is up to us,” she will tell business leaders in the audience, “to explain.”