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22 July 2016 | By Josh Hardie Insight

Paving the way for EU negotiations

Insight: Josh Hardie, deputy director-general, CBI

As everyone searches for clarity about what Brexit means, businesses have outlined the principles that should underpin future UK negotiations with the EU

In the wake of the UK’s decision to leave the European Union, everybody is looking for clarity on what it will mean for people, for businesses and for our position in the world.

The shape of our future trade relationships dominates many of the questions. And as the creators of economic growth, jobs and prosperity in our communities and regions, businesses have a vital role to play in any post Brexit negotiations.

We can only make the best of the situation if we have a true partnership between the government and firms of all sizes across the whole of the UK. By working together, we can identify the opportunities outside the EU – while safeguarding many of the benefits of continuing a close relationship with Europe.

And by recognising that clarity must come from them, as well as government, businesses are committed to providing as unified a voice as possible to define the key priorities for renegotiation.

The business priorities

To support this, the CBI has sought the views of more than 500 of our members. And while opinions vary between businesses depending on how they interact with Europe, five clear principles have emerged that they regard as key to future negotiations between the UK and the EU.

Top of the list comes the clear call: we must continue trading easily with our neighbours. With 45 per cent of the country’s exports destined for the EU and 53 per cent of imports drawn from it, maintaining easy access to this market, with minimal barriers, is a major business concern.

Our members also highlight the need to strike a balance between UK and EU-led regulation in the future. In areas where the EU currently facilitates international collaboration – including aviation, medical licenses and climate change – we still need to be involved. And we need influence over new EU rules and standards that may well still apply to the UK’s trading businesses post Brexit.

When many of the regulatory issues at stake can be complex, this will require a long-term strategy and close collaboration between government and those business sectors affected.

Access to skills

British businesses recognise public concern over immigration. But to thrive and grow, they also need to be able to access talent from across the world.

We have one of the highest employment rates ever, but companies still struggle to fill those jobs that are the least attractive to British workers, particularly in agriculture and hospitality. Skills shortages are severe in key industries, such as manufacturing and construction. And although it is vital the UK upskill its domestic workforce, free movement from the EU has helped companies overcome skills and labour shortages, and brought valuable talent into our workforces.

Business and government need to work closely to build an immigration system that boosts the economy and society. We need to seek reassurances for EU migrants already in the country – and UK citizens’ resident in the EU – with clarification about how they can remain once the UK has left the EU.

The same applies to European students looking to study in the UK – a valuable source of income for our world-leading universities.

Broadening horizons

Of course the UK’s international opportunities are not just restricted to the EU – and the possibilities for new trade deals with established and growing markets are exciting. But the EU’s trade deals with third party countries have already helped to bring many barriers down. CBI members are clear they want to protect preferential access to markets through these deals, whether they are in force or close to completion.

Success here – and in forging new relationships – will require a clear strategy and careful prioritisation. The new Department for International Trade has a big job to do. And businesses that have the expertise should be willing to step in where civil service resource is tight for all necessary negotiations.

Protecting investment

Finally, businesses that have matched EU investment in projects that support infrastructure, small and medium enterprises, research and innovation, and the rural economy, are in need of urgent assurances that promises will be honoured.

Uncertainty is already putting off some UK businesses and universities applying for EU funding, while others report that opportunities to collaborate with EU organisations to access such funds have started to shrink.

Longer-term, the UK government will have to establish priorities for continued investment in the areas currently covered by EU funding. The future of agriculture, regional funding to spread prosperity across all regions of the UK, and a strategy for R&D will all need to be considered.

By putting the spotlight on protecting such investment, alongside securing trading relationships with the EU and further afield, influence over regulation and access to skills, businesses are clear they want to help make the most of the negotiations about Britain’s future.

They recognise that managing these priorities will be a balancing act, but as they knuckle down to get on with their day jobs, at the root of them all is a simple message: a new era of partnership is needed, between the government and firms across the country – small, medium and large – so the UK can seize the best opportunities on offer outside the EU.

Read more about the business principles for the UK-EU negotiation in the CBI's Shaping Our Future report