Businesses ‘dismayed’ at Brexit division in Westminster

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The British Chambers of Commerce, representing 75,000 businesses with five million employees, attacks the country’s political leaders over Brexit on Sunday, accusing them of “division and disorganisation” that is putting the economy at serious risk.

It says businesses are so dismayed at the lack of leadership and unclear messages that many are considering contingency plans and preparing for lower levels of investment. The broadside, delivered by the director general Adam Marshall, appears to be aimed primarily at Theresa May’s government, which he says must urgently announce a clear plan for a post-Brexit transitional period in which there would be little change to trading arrangements with the EU so that companies can plan ahead. But he says the lack of clarity and absence of leadership is a problem “across Westminster”, suggesting Labour and other opposition parties, as well as the Whitehall machine, are also failing to rise to the challenge of Brexit.

“Some very big decisions lie ahead,” Marshall told the Observer. “Getting the twin challenges of Brexit and the economic fundamentals right will require leadership, consistency and clarity – after a year in which business has been dismayed by what it sees as division and disorganisation across Westminster.”

He adds: “Businesses have been very patient in waiting for clarity on Brexit in the 18 months since the referendum. That patience is now wearing thin. Businesses want answers, they want clarity and they want results.”

Staying in the single market and customs union

The UK could sign up to all the EU’s rules and regulations, staying in the single market – which provides, free movement of goods, services and people – and the customs union, in which EU members agree tariffs on external states. Freedom of movement would continue and the UK would keep paying into the Brussels pot. We would continue to have unfettered access to EU trade, but the pledge to “take back control” of laws, borders and money would not have been fulfilled. This is an unlikely outcome and one that may be possible only by reversing the Brexit decision, after a second referendum or election.

The Norway model

Britain could follow Norway, which is in the single market, is subject to freedom of movement rules and pays a fee to Brussels – but  is outside the customs union. That combination would tie Britain to EU regulations but allow it to sign trade deals of its own. A “Norway-minus” deal is more likely. That would see the UK leave the single market and customs union and end free movement of people. But Britain would align its rules and regulations with Brussels, hoping this would allow a greater degree of market access. The UK would still be subject to EU rules.

The Canada deal

A comprehensive trade deal like the one handed to Canada would help British traders, as it would lower or eliminate tariffs. But there would be little on offer for the UK services industry. It is a bad outcome for financial services. Such a deal would leave Britain free to diverge from EU rules and regulations but that in turn would lead to border checks and the rise of other “non-tariff barriers” to trade. It would leave Britain free to forge new trade deals with other nations. Many in Brussels see this as a likely outcome, based on Theresa May’s direction so far.

No deal

Britain leaves with no trade deal, meaning that all trade is governed by World Trade Organisation rules. Tariffs would be high, queues at the border long and the Irish border issue severe. In the short term, British aircraft might be unable to fly to some European destinations. The UK would quickly need to establish  bilateral agreements to deal with the consquences, but the country would be free to take whatever future direction it wishes. It may need to deregulate to attract international business – a very different future and a lot of disruption.

His comments reflect a deep frustration not only over the lack of a Brexit strategy but a broader sense within the business community that political leaders are failing to think ahead to how the UK economy can best function and play to its strengths outside the EU. The impression of turmoil and confusion deepened on Friday, when the Labour peer Lord Adonis resigned as May’s infrastructure tsar in protest at her handling of Brexit, which he described as “a dangerous populist and nationalist spasm worthy of Donald Trump”.

Before Christmas the prime minister achieved a breakthrough when the EU agreed sufficient progress had been made to allow negotiations to move on to future trade relations early in the new year. But no sooner had she done so than she suffered a first serious Brexit defeat in the Commons, when Tory rebels voted with opposition parties to demand a meaningful vote on the final deal. As minds focused on the next crucial stages of talks, and the approach of a vote as early as next October, internal arguments have broken out afresh in Conservative and Labour ranks over how to move forward.

Michael Heseltine, the pro-EU Tory peer and former deputy prime minister, caused ructions last week by suggesting that a Labour government led by Jeremy Corbyn could be less damaging than Brexit driven through by his own party.

Meanwhile, the Labour leader is facing calls from his own party to take a stronger anti-Brexit line. A growing number of MPs, councillors and activists want the party to commit to staying in the single market and customs union at the very least, with some saying he should hold open the option of campaigning at a future election to stay in the EU to safeguard jobs.

The Wirral MP Alison McGovern argues in the Observer today that Labour must fight to maintain as close a relationship as possible with the EU. Chuka Umunna, the former shadow business secretary, said: “Constant fudge compromises our ability to effectively take on the Tories on this – the biggest issue of our generation – which is why, as a minimum, we should be arguing for the UK to stay part of the single market and the customs union permanently.”

Lord Malloch-Brown, a former diplomat and Labour Foreign Office minister under Gordon Brown, who is heavily involved in a new organisation, Best for Britain, which seeks to mobilise civil society against leaving the EU, argued that Labour risked missing its chance of power if it continued hedging its bets on Brexit. He said Corbyn did well in June’s general election because his policy on leaving the EU was vague enough to attract a substantial number of anti-Brexit Tory voters and very large numbers of pro-EU, internationalist-minded young voters. But they would desert him if they thought he supported Brexit.

“Both those groups are vulnerable groups because the Tory vote that came over is not going to stay if it concludes that Labour is really a party of Brexit,” he said. “And the young vote is certainly not going to stay if it concludes that what it voted for last time was a form of socialism in one country rather than a socialism within Europe. If Labour loses those ‘stay’ votes it is likely to remain in permanent opposition or stay short of a majority.”

Powered by Guardian.co.ukThis article was written by Toby Helm Political editor, for The Observer on Saturday 30th December 2017 22.00 Europe/London

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