News ID: 275590
Published: 0814 GMT October 17, 2020

UK economy not ready for no-deal Brexit, say business leaders

UK economy not ready for no-deal Brexit, say business leaders
OLI SCARFF/AFP/GETTY IMAGES
Employees assemble motorcycles at the Triumph Motorcycles factory in Hinckley, UK.

Business leaders have warned Prime Minister Boris Johnson that Britain’s economy is ill-prepared for a no-deal Brexit while companies face severe disruption from the coronavirus pandemic.

Business groups called for an urgent resolution in the Brexit talks after the prime minister told UK businesses to get ready for trading with the EU on terms “that are more like Australia’s” – code for leaving without a deal and relying on World Trade Organization terms, the Guardian reported.

Carolyn Fairbairn, the director-general of the CBI, said: “After four years of negotiations and so many hurdles crossed, this is no time to give up. Neither side can afford to fall at the final fence. A deal is the only outcome that protects COVID-hit livelihoods at a time when every job in every country counts.”

Mike Cherry, the national chairman of the Federation of Small Businesses, said firms were not ready to cope with a no-deal Brexit with only 10 weeks before the end of the transition period at the end of December.

“They’re being told to both prepare and simultaneously manage a fresh set of COVID restrictions. Many simply don’t have the time or money to make adjustments, even if they want and need to,” he said.

The pound fell on the international currency markets after Johnson’s televised intervention, sliding from a high of $1.2956 against the US dollar on Friday morning to a low of about $1.2869, before gradually recovering its losses. The currency also sold off against the euro, falling from €1.1050 to a low of about €1.0991 before staging a recovery.

The fightback for the currency came after Ursula von der Leyen, the European commission president, said talks would continue next week in London – fueling bets among global investors that a compromise could still be reached.

Analysts said the UK prime minister’s statement was a choreographed set piece designed to force the EU to back down, but warned the chances of no deal were rising.

Neil Wilson, the chief market analyst at the financial trading platform Markets.com, said: “It’s not entirely bluff – the UK would through gritted teeth accept no deal because politically Johnson is taking so much flak over the pandemic that he has no room to ‘let the country down’ over Brexit.”

Although time is tight, he said an agreement could still be made at the 11th hour, suggesting that an informal meeting of heads of state in Berlin on November 16 could be the crunch point.

Ian Wright, the chief executive of the Food and Drink Federation, said a no-deal Brexit would cause severe disruption for business, damage food security and push up prices in the shops for consumers.

“The prime minister’s statement signals that we are heading into very dangerous territory. The perils of a no-deal exit for GB food and drink manufacturing remain as real as ever. We need leaders on both sides to find a way past the current impasse in order to progress talks,” he said.

Earlier this week, the Organization for Economic Co-operation and Development warned that a disorderly Brexit would threaten Britain’s economic recovery from the coronavirus pandemic.

 

   
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