Threat of No-Deal Brexit Isn’t Likely to Win EU Concessions: UK Business Chief

By and | June 14, 2019

Threatening to leave the European Union without a deal isn’t likely to win Britain concessions from the bloc, the country’s biggest business group said in a warning to candidates jostling to succeed Prime Minister Theresa May.

“I’ve never felt it was a particularly credible negotiating threat,” Confederation of British Industry Director General Carolyn Fairbairn said in an interview. “Because it was a bit like saying ‘If you don’t do what I want, I’ll shoot my foot off.’ It was something right from the beginning that was so harmful to us.”

Fairbairn’s words came before the 10 Conservative Party leadership candidates were whittled down to seven in a vote on Thursday. And while she declined to name specific politicians, it’s a shot across the bows of candidates including the favorite, Boris Johnson, who said this week that the option of a no-deal Brexit is a “vital tool of negotiation.”

Brexit is already exacting a toll on U.K. business in the form of lost orders and customers, a drop-off in investment and increased costs for stockpiling and other no-deal preparations, Fairbairn said. That heightens the urgency to resolve the impasse and move on to other things companies care about, such as improving infrastructure and plugging skills gaps, she told Bloomberg.

“It’s not that the Brexit uncertainty and fear of no deal is going to have an impact in the future, it’s having it right now,” Fairbairn said. “This is a situation of enormous urgency.”

Fairbairn’s comments add to a series of warnings from the U.K.’s top business groups.

Politicians have been ‘chasing rainbows,’ the British Chambers of Commerce said, while the delay to Britain’s split from the EU has meant ‘no good news’ for employers, according to Make UK, the biggest manufacturing lobbyist. The Institute of Directors warned that companies are under-estimating the threat of no-deal and the Federation of Small Businesses said the Tory leadership contest only adds to their confusion.

The fallout from a no-deal split will go beyond the immediate effects, according to Fairbairn. The greater risk is the “long-term impact of losing the ability to trade frictionlessly with our closest market of 500 million people,” she said.

“We’re talking too much about the short-term disruption and the empty shelves and poor availability of lettuces; it almost trivializes it,” Fairbairn said. “For me, the real risk of no-deal is it triggers a serious decline in our competitiveness for the long-term.”

As well as Johnson, pro-Brexit candidate Dominic Raab has said he’s prepared to leave the EU without a deal, while Sajid Javid has said he’d prefer no-deal to no Brexit at all. Other contenders, including Michael Gove and Jeremy Hunt, have signaled they’d prefer to delay Brexit if necessary. Matthew Hancock — like Fairbairn — says no deal isn’t a credible threat, while Rory Stewart has said he’d entirely rule it out.

Read More: Here’s How 11 Tory Contenders for UK Prime Minister Plan to Fix Brexit

In the current leadership contest, “what we feel is not coming through enough is the extent of the real challenge to business at the moment and the importance of resolving that uncertainty,” Fairbairn said.

The chief of Britain’s biggest industry group, who was awarded a damehood last week, has written to all the candidates demanding they champion business and secure a Brexit deal that protects the economy. She said she’d had “good responses,” but didn’t say which candidates had replied. Fairbairn also said:

  • Businesses are still preparing for all eventualities, including a no-deal Brexit
  • She’s concerned about “the number of our members who say that they are losing customers,” and this is now “quite widespread”
  • Some companies will be less ready for a no-deal Brexit at the end of October than they were in March, because they can’t afford to prepare again for the eventuality
  • All the CBI’s counterpart organizations in Europe are opposed to a no-deal Brexit.

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