Our jobs and future depend on a deal, business warns Boris Johnson
Boris Johnson has been warned that the fate of millions of jobs, Britain’s most deprived regions and the UK’s manufacturing base rely on him reaching an 11th-hour trade deal with the EU, as senior figures from every corner of the economy issued a final plea for a compromise.
Amid frustration and disbelief among prominent business people that a deal has still not been secured, consumer groups, universities, farmers and both large and small retailers said a deal was essential to allow them to cope with the impacts of Brexit, even with a deal in place. Some simply called on ministers to be honest about the impact of no deal.
Businesses said they were still finding issues over their Brexit readiness with the transition period ending in less than three weeks, deal or no deal. Meanwhile, business groups in areas such as the north-east said they would be left “exposed” with no deal in place. Consumer groups also warned of the impact on cross-border consumer rights, food prices and travel once the transition period ends.
However, a government spokesperson signalled last night that it was ready and willing to embrace no deal, saying that it had made “extensive preparations and invested £4bn for the end of the transition period, because regardless of the outcome of the negotiations, we must be ready on 1 January”. The spokesperson said that while “there will be challenges and bumps to overcome”, it had “laid the groundwork to minimise the disruption which occurs in either scenario”.
It is understood that business groups were still privately urging ministers to push for a deal this weekend, with the deadline for talks set for Sunday night. While the cabinet signed off their support for a no-deal outcome should Johnson opt for it, chancellor Rishi Sunak was understood to be getting hourly updates amid huge pressure on the Treasury to push for a deal.
Stephen Phipson, chief executive of the manufacturer’s lobby group, Make UK, warned that many of the 2.7 million jobs supported by manufacturing businesses were heavily dependent on trade with the EU. “A no deal would be catastrophic for Britain’s manufacturers, a sector which came to the nation’s aid when the Covid crisis struck,” he said. “It is vital the prime minister and president of the EU commission work together and find a pragmatic solution to deliver a zero-tariff and zero-quota deal to avoid additional friction at the border.”
With warnings that a no-deal outcome would be “existential” for the UK car industry, making it unprofitable overnight, Mike Hawes, head of the Society of Motor Manufacturers and Traders, said: “The resulting tariffs would put our manufacturers at a disadvantage in export markets, raise prices for consumers and make the UK uncompetitive, both as a market and producer. We know the UK government understands this, and we hope it will do whatever it takes to secure a deal that safeguards the sector and hundreds of thousands of livelihoods that depend on its success.”
The president of the National Farmers Union, Minette Batters, said: “More than 60% of our agri-food exports go to the EU, making it British farming’s largest trading partner. Reaching a deal is critical to maintaining those trade links and without it there will be significant disruption for British food and farming. The government needs to be straight with businesses about the impact of no deal and address many outstanding issues, such as ensuring the necessary authorisations are in place for agri-food exports and guaranteeing there will be sufficient financial support, advice and resources for businesses.”
Business groups in regions that voted in favour of Brexit warned that their reliance on EU trade meant they wanted the prime minister to compromise. Jonathan Walker, director of policy at the North East England Chamber of Commerce said the body had been making the case for a trade deal for four years because of the area’s economic reliance on Europe. “The EU is the north-east’s largest marketplace and the government’s own analysis has clearly set out how exposed we would be to the consequences of a no-deal Brexit,” he said. “It is ridiculous our businesses now only have a matter of days to prepare fully for the biggest change to trading conditions for generations with no clarity on how they will have to operate.”
The absence of a tariff-free deal would mean that supermarkets and their customers face £3bn in tariffs from next year, according to Andrew Opie, director of food and sustainability at the British Retail Consortium. He said four-fifths of UK food imports arrived from the EU each day. “While retailers are doing all they can in time for 1 January, no amount of preparation for retailers can completely mitigate disruption to food and other essential goods that come from or through the EU,” he said.
Tony Danker, the CBI director-general, also issued a plea to the prime minister to look at what’s at stake in the negotiations. “With less than three weeks to go, we also need to plan in parallel for 1 January, deal or no deal,” he said. “We need both sides to be deeply practical – and to remove the immediate threat of a damaging cliff edge.”
Sue Davies, head of consumer protection at Which?, said no deal would have significant impacts for consumers in the immediate term “with a likely adverse effect on cross-border consumer rights, food prices and travel once the transition period ends”. She added: “One of the consequences of the likely economic uncertainty is that people could see the value of their pensions or investments impacted.” Abta, the leading association of travel agents and tour operators, urged for clarity whatever the rules will be. The rules about future travel in Europe remain unclear.
Universities UK said that no deal would see “immediate disruption to universities’ activities and could have longer-term consequences for their international competitiveness”. It added: “There must be assurances that no deal will not disrupt universities’ existing supply chains, halt EU and UK data flow, or hinder the future mutual recognition of professional qualifications.”
Meanwhile, a huge dossier of concerns about the lack of Brexit preparedness, whatever happens in trade deal talks, was published by parliament last week.
Warnings over preparedness were received by the business select committee from groups including the Law Society, the Association of Convenience Stores, the Institute of Chartered Accountants in England and Wales, the offshore oil and gas industry and the Mineral Products Association.
Arla Foods, a cooperative owned by about 11,200 dairy farmers based in seven northern European nations, said even now they were finding “new issues that we have not been aware of before”.
A UK government spokesperson said last night that 900 more officers had been hired to manage the border, with 1,100 border staff set to be recruited by March. They added there were more than 20 existing helplines to provide advice to specific sectors, and that import controls would be introduced in stages. “We’ve developed a playbook which maps out every single foreseeable scenario with minister-approved courses of action so we can implement them immediately if needed,” they said.