A whole-economy view of the UK-EU negotiations
6 January 2017
Telegraph article: Business ready to make the most of Brexit
The following article has appeared in The Telegraph:
Reaction to the departure of Britain’s EU ambassador earlier this week highlights the deep ongoing political divisions following the referendum. Business, however, is focussed on making a success of Brexit. Firms across the UK are determined to achieve an exit from the EU that enables our economy and communities to prosper.
There are certainly no calls from the CBI for unnecessary delays. The business community is 100% committed to making this work, and work well. At the same time, we will make no apology for highlighting the complexity of the task facing the country or for setting out the steps needed to get Brexit right.
To that end, the CBI has held thousands of conversations with member companies and trade associations in the past five months. Companies of all sizes and sectors, in every corner of the UK, are working together with the CBI to lay out the opportunities, concerns and questions that matter to our economy as we approach the negotiations.
One thing that’s clear is that making a success of Brexit is far from the only priority for business. Putting a modern Industrial Strategy in place is potentially as big a prize, a chance to fix the UK’s productivity problems and even out the regional inequalities that have dogged our country for generations. A collaborative strategy to getting both Brexit and our own economy right through an effective Industrial Strategy will give us the best chance of creating a more prosperous, fairer and more inclusive society.
But making a success of Brexit will not be without its challenges. Given how deeply the UK economy is integrated within Europe, there will be difficult decisions to make. The responsibility of business is to ensure that the Government makes those choices armed with the best evidence about what really matters for firms on the ground, rather than just in the offices of Whitehall.
The UK urgently needs a ‘whole economy’ approach to Brexit. Since the referendum, the CBI has examined 18 different sectors in depth, from farming and manufacturing to chemicals and life sciences. What is most striking is how interconnected the modern UK economy is. It’s clear that the UK cannot afford to leave any sector behind in the negotiations – to do so would be to damage others. To take some examples, many legal requirements have knock-on effects for multiple sectors. Regulations governing energy and the environment affect construction, housing and manufacturing. Other sectors provide essential foundations for the wider economy – for example, the UK’s world-leading financial services sector oils the wheels of the real economy and its future matters for any firm seeking loans, capital, insurance or pensions.
While each sector has different top-line priorities, there are common principles that unite them. Firms want to know how easy it will be to trade with their largest and nearest market and, critically, what rules they will be working with on the day after Brexit. Of course, they are keen to learn how the Government can make the most of a renewed focus on global economic relationships. But they also need to know how a new migration system will allow them to access the skills and people they need to succeed. Too many parts of our economy face people shortages despite companies investing over £45bn a year in training.
Firms are practical and need practical answers to their questions. Take the aviation industry, which employs nearly one million people. It needs to know what agreements will be in place to ensure the smooth transport of holiday-makers, workers and goods on the day after the UK leaves the EU. Logistics companies, hauliers, manufacturers and retailers want to know the same thing. Our world-beating creative industries, which employ more than two million people in music, television, film, video games and architecture, need to know what will happen to the current Intellectual Property regime and data regulations. They also care about our trade terms, services rights, international agreements and access to skills.
Companies keen to avoid disruption and uncertainty are understandably concerned about the process of reaching and implementing any final settlement. Like the Prime Minister, we hope a deal can be achieved within the two year window. But if not, firms need to know that provisions are being made for trade to continue. They are seeking those reassurances as soon as possible. And either way, as the Prime Minister has rightly recognised, there will need to be time for business and government to make practical adjustments once we know what any new rules look like. Let me be clear, this is not a back-door route to keeping the UK in the EU, but pragmatic and sensible planning to ensure a smooth exit.
No-one wants to see new tariffs on our manufacturing exports to our largest trading partner. But we also need to work out how our world-class services sector can maintain preferential rights to operate within the EU, and how all firms can avoid significant delays at ports and airports if new customs checks and facilities are required to move goods to and from the Continent.
The CBI and the wider business community stands ready, sleeves rolled up, to help the Government navigate the coming complexities. This depends crucially on an open and honest dialogue, and business welcomes the engagement with government so far. We will continue to provide the evidence our negotiators need. Deep industry input into the Brexit negotiations could not be more important. The Government must enter negotiations with a full understanding of the implications of the tough decisions that lie ahead.
So, while it’s true that not everyone shared the same view going into the Referendum, achieving a successful Brexit that allows all parts of Britain to prosper is a major test for us all, and one we must pass with flying colours together.
Carolyn Fairbairn is the Director-General of the CBI