Top business lobbies demand urgent Brexit transition deal

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A quintet of leading British business lobbies have co-drafted a strongly worded letter urging government demanding an urgent Brexit transition deal.

The private letter, which was obtained by Sky News, is written by The Institute of Directors (IoD), Confederation of British Industry (CBI), British Chambers of Commerce (BCC), the Federation of Small Businesses (FSB), and the EEF manufacturing body.

It’s yet to be sent to David Davis, but reportedly warns that an agreement on a transition "is needed as soon as possible, as companies are preparing to make serious decisions at the start of 2018, which will have consequences for jobs and investment in the UK".

The letter adds: "It is vital that companies only have to undertake one adjustment as a result of the UK's withdrawal, not two - and that businesses, the UK government and authorities in the EU have enough time to make the changes needed to deliver Brexit successfully."

This warning comes after a particularly torrid period for the government.

At home, the prime minister has been locked in a bitter intra-party dispute over her leadership, while Brexit divorce negotiations have reached deadlock. EU negotiators have been playing hardball, demanding more concessions before entertaining discussions on trade and transition.

All five lobby groups are asking the government to make the concessions necessary to unlock the talks on trade. In a statement, the IoD’s head of EU and trade policy, Allie Renison said that Brexit was “not a game of brinkmanship; the livelihoods of too many businesses and employees are at stake.

“Holding fast to points of principle should not be the overriding concern here, particularly when it comes to moving on to discuss transition and the future relationship. Rigidity will cost both sides dearly, whether it is on the European Court of Justice’s role for citizens’ rights, discussing the financial settlement or the inevitability of talking about trade across the Irish border.

“Showing flexibility is not the same as showing weakness. Rather it is a reflection of the remorseless logic of the time constraints we face.”

About Francois Badenhorst

I'm AccountingWEB's business editor. Feel free to get in touch with comments, tips, scoops or irreverent banter. 

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By DJKL
25th Oct 2017 10:53

Agree with the various bodies, first half of 2018 looks like the crunch time when arrangements will not be able to wait any longer.

We have now got close to the point where the uncertainty could be the main cause of long term damage rather than whatever terms are eventually hammered out; once jobs have sailed they are going to be tricky, in the short term, to entice back.

Still, looks good news for some, my son has not mentioned returning which means his contract in Frankfurt will have been extended for at least another six months- these German banks do love their new software and he might as well save as many Euros as he can whilst he still has the chance.

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27th Oct 2017 12:38

It is the EU who are trying to extract a ransom before letting trade talks commence: the British negotiators should not cave in to fascists and bullies whose intention is to make Britain suffer for leaving.
Perhaps these business lobby groups should end their EU propaganda and warn of the dangers of capital controls, nationalisation and protectionism and help businesses to prosper in a global trading environment.

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By DJKL
to Knight Rider
27th Oct 2017 14:06

Who is or is not holding to ransom is frankly irrelevant to future economic prosperity, the economy does not care about such arguments, it cares about economic output.

Business lobbies can only say what they believe, in the absence of any definite path forward their concerns are totally rational, cheerleading or talking things up will make little difference.

We have a knowledge vacuum here, until it is filled business will react based on best available data, so in the absence of knowledge they will either hunker down and preserve liquidity to weather storms (what I am doing with our company-large bank balance earning nothing for insurance- leads to lower investment/growth but we are only directly exposed to our local economy re our activities)or if exposed to Europe re activities they will hedge their bets by opening/expanding their presence abroad to get a foot in the door re cross border trading/operations.

If they wait and there is a flood of UK based entities looking for premises/staff in Europe once we do have clarity, and if an EU presence is needed re preservation of some cross border trading activities (especially financial services), they will be competing in a sellers market re premises and staff and will need to pay far more, if, and I say if, the exit terms exert friction re cross border trading.

In such an event what happens re say commercial property rents in Frankfurt or Paris for say banks etc?

So, I reiterate, come next year if there is still little certainty we will likely lose employment, how much, who knows, but it will likely be more well paid employment and less minimum wage employment that offshores.

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to DJKL
27th Oct 2017 17:11

The payment of a huge ransom is not in the interests of UK businesses or taxpayers who will have to pay for it. The irony of the EU refusing to talk about trade is not lost on my parent's generation who largely voted to join a common market and who largely voted to extricate themselves from subjugation by a foreign power.
Businesses should be planning for some EU imposed friction in trading activity perhaps by sourcing locally, exploring new markets or sourcing from outside the EU. Volatility brings opportunity, those businesses who sit on their hands waiting for clarity deserve to fail.

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By DJKL
to Knight Rider
27th Oct 2017 18:37

So, what interim step can a financial services/bank take to ensure it can still trade into the EU post A day?

Only one ,as far as I can see ,is relocate certain operations now and deal will relocating required balance sheet reserves etc once whatever rules are brokered are clear, whenever that may be.

Trading/ manufacturing concerns are slightly different, they know worse case they fall back on wto terms re tarriffs, though permission to sell certain products/ customs clearance etc may have a bit of red tape, but given they benchmarked before this ought not to be major issue, more a time delay issue until we dot the Is and cross the Ts; I see slightly less issue for these business entities and greater logistics issues if they are forced to open abroad re lead times etc.

Business entities selling services into EU, I do suspect fair few already have EU presence, but do suspect possibly a stepping up of EU manpower where they operated in the past sending over UK operatives.

"Volatility brings opportunity", not in my experience of running/managing business entities, it more often leads to either paralysis or a 50/50 shout re which way to go; one route is fine the other can kill the business if it is not big enough to ride the storm after making the wrong call and can lead to a," you've gotta ask yourself one question:"Do I feel lucky?" Well, do ya, punk?" moment.

And re the ransom, depends how huge and what operating costs it may save over future years. If I offer to rent you an asset at £5 a year , to run for ever, or sell you a right to use it for £30 with little in the way of future cost, you might take the latter, remember, as in the Godfather, "It’s not personal, Sonny. It’s strictly business."

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to DJKL
31st Oct 2017 14:55

You are right that the considerations of manufacturing businesses are different to those in financial services. I wonder whether FS businesses operating in the Channel Islands share the concerns of UK businesses given that they are already outside the EU.
But if we take a world view there will be companies operating in the EU which will wish to continue to operate in the British market and will relocate here if necessary or choose to shift their focus to the East like the Pru.
As for the ransom it cannot be compared to a buy/lease decision as we don't know what the asset is or useful life. Once the EU agrees to talk about the future we may have some idea.

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