Brexit uncertainty utter kryptonite for investment

“The upcoming General Election must break the Brexit gridlock in Parliament,” said John Allan, as he kicked off the CBI’s Annual Conference.

As much as business might be excited about the prospect of other trade deals, basic maths ensured that remaining aligned and competitive with the EU remained vital.

“Currently no party has the answers. It’s not as simple as ‘getting Brexit done’. Or ‘sorting Brexit in six months’. Or even, ‘stop Brexit’,” he said. “Whatever happens in this election we’ll be negotiating with the EU for years to come. Whether as a close friend or distant neighbour. So we need to have an honest conversation.”

And he argued business needed to be part of that conversation – it has the expertise to help in continued negotiations with the EU; to build public support; and thereafter to grow trade and exporting across the world.

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Transcript

Ladies and gentlemen, a very warm welcome to the CBI’s 2019 Annual Conference. Thank you to our strategic partners, Accenture and Hays. And what a day ahead.

Over 1,000 businesses, the whole spectrum of British industry.

Shipbuilders and steel workers, broadcasters, bakers, and blockchain innovators, university deans and road maintenance teams. And for the first time in this election – all three party leaders, making their pitch to business at a moment when the fate of business is more uncertain than ever.

Now this morning I just want to say a few words on our conference theme: ‘tomorrow’s business’ and reflect on where we are – as businesses – and more widely, as a society.

Brexit

Starting with Brexit. Because frankly, we cannot afford a repeat of 2019. Or 2018. Or 2017. This election must break the Brexit gridlock in Parliament.

Business has borne 3 years of uncertainty – utter kryptonite for investment. Many firms have stalled their plans. Some have moved their headquarters from the UK.

And investment has now fallen for six quarters in a row… absolutely unprecedented at this point in the economic cycle.

But actually, we are lazy if we just talk about uncertainty. The stakes are far higher. The reality is – no matter who wins this election we can only revive our economy if we get the right relationship with the EU.

One which will ensure a Welsh aerospace engineer can jump on a flight with a suitcase full of parts to repair a plane in Italy that’s running late.

One which will ensure oranges from Seville can reach supermarkets in Belfast overnight – still fresh.

And one which will ensure our film crews who have seen the UK dominate nearly a quarter of box office sales this century can keep to their finely tuned film schedules, whether in the French Alps or Croatian islands.

In short, the next government will need to answer no smaller question than how to keep our integrated, interconnected, international industries thriving. And give investors every possible reason to choose the UK.

Businesses are excited about the possibility of other trade deals. But they also do the basic maths. Half our trade is with the EU. A further 13% is covered by EU trade deals – so almost two thirds in total.

While only 15% of our trade is with US. Even less – 11% – is with Asian economies. We can only protect the two thirds if we are aligned with our largest partner.

Aligned means competitive. And only from a competitive platform can we move forward with heads held high.

But currently – no party has the answers. It’s not as simple as ‘getting Brexit done’. Or ‘sorting Brexit in six months’. Or even, ‘stop Brexit’.

Whatever happens in this election we’ll be negotiating with the EU for years to come. Whether as a close friend or distant neighbour. So we need to have an honest conversation.

Going forward, government needs to welcome the economic evidence. If we want to be the best in the world at exporting, and attracting investment, we need to be in the best in the world at working with business.

So today, we have an offer – and a challenge. From the heart of business to the next government: we can work with you. We have expertise. From the factory, laboratory, and office floor.

And we have a concrete proposal. A framework – for future business engagement architecture. To help anyone who wants to – cabinet ministers, policy-makers, and MPs – consult with businesses of any size, any sector, and any part of the UK.

To help you continue negotiations with the EU. To build public support through a transparent, fact-based approach to trade, drawing in trade unions and consumer groups. And after that – to grow our trade and exporting across the world with bold ambition.

Reflecting on 2019

But, beyond Brexit, it is also important to reflect on what business has achieved over the last year. Starting with the fundamentals.

We know it’s been a tough year for business. Growth isn’t where we’d want it. But given what the UK has faced there is a reason why we are – at least – still growing. Why we have record levels of employment. And why wages are finally outstripping inflation.

It’s because businesses – for all the uncertainty – are doing what they do best: innovating, supporting their people, and delivering for communities across the UK.

And despite the uncertainty, it is clear that over the last year, in many areas the voice of business has been heard.

On skills – the government has agreed to re-introduce visas so that international students can now stay for two years after graduation to find work.

After the CBI called for an end to the neglect of further education, in February the government announced a £400m funding increase for colleges.

We saw success for the CBI’s digital infrastructure campaign with a record £5bn announced for universal broadband earlier this month.

In energy – for months, the CBI has been the strongest voice of any business organisation calling for a net-zero carbon target. To the extent that both parties are now competing with each other to be the most ambitious on decarbonisation.

And, one of my personal highlights of the year.

In 2019, the CBI has had more conversations than ever before with businesses who want to engage with schools, and inspire young people.

There is a fantastic stat from the Gatsby Foundation. That if a young person has 4 interactions with business at school they are 5 times less likely to be unemployed as adults. Whether it’s offering work experience. Taking to the stage at an assembly. Or becoming a mentor.

So at the CBI, we’ve been leading a campaign. To help more schools connect with businesses and vice versa. And I am lucky to hear from businesses every day, who are stepping up to this challenge.

These are just a few examples of our work over the year. But none of this would be possible without you, our members. So thank you. For your evidence, insight, and support. And for showing, beyond doubt, that business is a force for good.

Conclusion

So that’s our plan going forward:

• Secure that all-important relationship with the EU based on frictionless trade, aligned regulation, and support for our service sector.
• Work with government to keep putting forward the evidence to strengthen our economy, ensuring the voice of business is heard.
• And seize this opportunity – a chance for business to lead, to show the difference we can make.

I look forward to joining you all on the journey.