DEBUG: https://d3n8a8pro7vhmx.cloudfront.net/london4eu/pages/5/features/original/heart_photo.png?1501497680
DEBUG:
DEBUG: blog_post
Mind your own business
28 Nov, 2018

Throughout the whole sorry Brexit saga, the role of business has been hard to fathom. With one or two high profile exceptions, the overwhelming majority of businesses favoured remaining in the EU. This was because of the benefits of regulatory alignment and tariff-free access to our largest and closest trading partner. But they said and did virtually nothing. Why, asks industrial journalist and L4E Secretary Andy Pye?

Even now, after two years of negotiation and argument, business is reluctant to come out and say that Remain is the best option for them and for the country. Sure. they do now publicly say that No-Deal would be disastrous for us all - this publication by the EURIS consortium of trade associations expresses this eloquently.

And yet, despite the fact that even the Leave camp believes that the latest May Deal is worse than Remaining in the United Kingdom, Business appears to back May's deal, rather than the Campaign for a People's Vote and the option to Remain.

Unless business publicly changes its mind and it too lobbies its MPs hard, there is a risk that apparent approval of May's Deal by business may embolden MPs to support it.

But what are the realities of May's Deal from a business perspective?

  • It's a blind Brexit - in the departure lounge with no idea of destination.
  • It kicks the can down the road, so years more negotiations, which will create more business uncertainty and lack of investment
  • It's a hard Brexit and ultimately business will lose access to the single market and customs union
  • It does nothing for services
  • It does nothing to redress the acute shortages of engineers, agricultural workers, healthcare professionals
  • So it replaces the economic suicide of No Deal, by a slow decline.

In addition::

  • Hard Brexiters will use it as a stage on the road to total isolation from Europe
  • Leave camapaigners say it is worse than Remaining
  • All the established benefits of the EU (FoM, peace project, research collaboration) are lost

And yet despite entrenched political opposition from all sides at Westminster, the first poll of senior business leaders since Theresa May unveiled her Brexit withdrawal agreement has revealed overwhelming backing for the deal. According to a snap survey of more than 800 people by the Institute of Directors, 72% said it was important to get the agreement over the line before March 29 to avoid a potentially catastrophic no-deal scenario.

“Up and down the country, firms large and small are deeply concerned by the potential for a no-deal scenario, and business investment is already being choked off by the surrounding uncertainty. The need to avoid no-deal must be at the forefront of MPs’ minds when they come to vote on the agreement," said IoD director general Stephen Martin. “The deal we have might not satisfy everyone, but this is still the clearest route to securing a smooth exit. It is a necessary step towards moving on to the future relationship negotiations, which cannot begin in detail until we have legally left the EU.”

The IoD findings are, it must be said, at odds with the estimates given by Chief Executives of two leading UK trade associations, who have privately told me that 70% and 85% respectively of their members still back Remain. These associations typically represent the second and third tier UK manufacturing companies. They are smaller and supply the large first tier organisations in, for example, the aerospace, automotive, pharmaceutical and food industries.

And yet on 19 November 2018, the CBI gave a warm welcome to the prime minister who plans to lead Britain out - and the draft deal she has negotiated. Director-General Carolyn Fairbairn said: “It's not perfect, it's a compromise, but it's progress. It takes us back from the cliff edge, avoids no deal, charts potential path to future frictionless trade deal. That is progress, we should not go backwards." The CBI issued a statement, welcoming it.

In other words, the reasons for backing it have nothing to do with the merits of the deal. Top of the list is purely the fear of the worst alternative. In addition, support is based on a short-term desire for certainty: business fears delay and uncertainty and the effect on inward investment. A third reason has to do with not wanting to antagonise Government, for fear of losing Government contracts and research grants; many businesses have been intimidated into silence and some have been forced to sign gagging orders. Finally, business does not want to encourage splits in the workforce, some of of whom will have voted to Leave.

These arguments could not be more wrong. Let's change them.

Business is confused. At the recent Maintec exhibition for maintenance engineers, some were saying that Brexit would be a good thing, because it would further suppress investment from already low levels and therefore maintenance would come to the fore! In other words, the UK would have to make do with ever more outdated machinery. Others believe that the loss of the European workers will force businesses to invest in automation and robotics, where the UK has lagged its European counterparts for decades. The truth is that there has been nothing stopping the UK from investing in modern manufacturing and maintenance methods, but to use them as a sticking plaster to hide the worst effects of Brexit, while our competitors steam on unhindered, will emerge as one of the biggest crimes of Brexit.

Despite appearances to the contrary, the CBI is not as convinced by the merits of the deal as it would have us believe. Before the EU referendum, the vast majority of the 190,000 companies who make up its membership wanted Britain to remain in the EU.

The organisation inadvertently sent internal emails to ITV News which appear to highlight a difference between the confederation's public views about the political declaration and those held inside internally. The CBI's Head of EU Negotiations, Nicole Sykes, argued there was ”no need to give credit to negotiators I think, because it’s not a good deal."

According to investor Deborah Meaden, writing in The Times, "In a sense it should not come as any great surprise that senior staff within the CBI have misgivings about supporting the political declaration. It contains no commitment to frictionless trade. The draft agreement removes the uncertainty that businesses hate - but only until the end of 2020."

Meaden regards the May proposal as "a species-threatening event for many British businesses. It is, potentially, an asteroid headed for our supply chains, our ability to recruit talent, our export markets and our access to finance."

Thereafter, she says, the UK's trading relationship - which will help shape our future prosperity - might end up being very close to the EU, but could equally end up being very distant.

The CBI would prefer Britain to stay in the Single Market and the Customs Union - we are leaving both. Yet the organisation is backing Theresa May’s deal even if it considers it to be a bad deal - because it is better than no deal - which the CBI believes would be disastrous.

This is a false position. Any conceivable “deal”, even if it gets past Westminster, will just put the big decisions off until 2020.

Meaden asks businesses to consider the impact Brexit has had even before it has happened: almost 50 employers have already cited Brexit as the reason for cutting 21,000 jobs and we have lost £42 billion in inward investment since the referendum result, equivalent to a further 24,000 new jobs.

She argues that it is only going to get worse with May's Deal that will mean deep damage to the fastest growing sectors of our economy, plus years of uncertainty because the promises two years ago were so contradictory and the biggest questions remain unresolved. The Prime Minister’s proposed agreement is not the solution to this Brexit crisis but an exacerbation of it.

Meaden expresses surprise and disappointment at the CBI’s stance. Apparently, none of the 100-plus bosses of British businesses who are opposed to this deal and have called for a People’s Vote were invited to speak. Rather than put that option on the table and debate it, the CBI has chosen to accept its fate, to hunker down and to hope. "We all know what that did for the dinosaurs when they faced a species-threatening event," Meaden concludes.

Next steps

We must deploy counter-arguments wherever we can influence business positions - whether with employers or via a trade association at work or in campaigning with local businesses. The action we want businesses to take is to contact their trade association and their MP and come out for rejection of the deal and a call for a Referendum on the Terms with the option to Remain (People's Vote).

A People's Vote means only a 22 week uncertainty period - from the introduction of legislation to Referendum Day. May's Deal offers at least two (and probably more than four) years of continuing uncertainty after Brexit Day.

Much of business has failed to notice that with Theresa May backing a deal, no-deal is off the realistic agenda. They have not grasped that the choice is between May's Deal and Remain, so whoever wins, a People's Vote provides certainty for business for the next few years. And if Remain wins, we have certainty into the foreseeable future.

Many business leaders have forgotten that Remain is the best outcome for almost all UK industry and commerce.

Our duty is to help them remember.

 

Articles on this page reflect the views of the author, not necessarily of London4Europe.