CBI chief warns against ‘no deal’ Brexit

CBI chief warns against ‘no deal’ Brexit

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PA

Leaving the EU without a trade deal would be “irresponsible”, the president of the CBI business group will warn.

Paul Drechsler will say he agrees with the PM that a deal can be done but it is “wrong” for others to suggest the only choice is to leave without one.

He will say both UK and European firms fear this “worst-case scenario”.

Pro-Brexit group Change Britain accused the CBI of being “proven wrong time and again on Europe” and said it should be “more optimistic” about the UK.

Mr Drechsler’s speech in London follows similar warnings from the British Chambers of Commerce and former chancellor George Osborne earlier this week.

He will say that business supports the government’s plan for an ambitious trade deal and the CBI is working with business groups throughout the EU to work towards a deal in everyone’s interests.

“But to those whose first and only choice is for Britain to walk away without a deal, I say you’re not only wrong but irresponsible,” he will say.

Mr Drechsler argues that if the UK were to revert to World Trade Organisation trading rules in the absence of an EU deal, British firms would face tariffs on 90% of their exports to the EU without an agreement and more “regulatory hurdles” which would hurt firms across the bloc.

He will say that while some businesses are already preparing for such a “worst case scenario”, others are unable to do so because the costs are too high.

Theresa May has said Article 50 will be triggered by the end of this month.

While the prime minister has expressed determination to secure an agreement, she has also said that “no deal is better than a bad deal”.

Foreign Secretary Boris Johnson has said the UK can be “ever-more European and ever-more internationalist” at the same time and that there is every reason to believe a “win-win” EU deal can be done within the two-year timeframe for Brexit negotiations.

Mr Drechsler will say that getting a “smooth Brexit” would be in “everyone’s interest”.

But Change Britain spokesman Chloe Westley said: “The CBI campaigned to join the euro and warned of economic disaster if we left the EU. It has been proven wrong time and again on Europe and there is no reason to suggest that this has now changed.”

“It is overwhelmingly in the EU’s interests to strike a free trade agreement with the UK. Instead of being pessimistic about our future, the CBI should support the government in getting the best deal for Britain.”

And Patrick Minford, chairman of Economists for Brexit, said it was wrong to assume that Brexit without an EU trade deal would be bad for the UK.

“Our research demonstrates that that if the UK removes all import tariffs, even if the EU does not reciprocate, we will add to 4% to GDP and 7.3% to UK treasury receipts, compared to the status quo,” he said.

“Our economy can and will flourish outside the single market and we do not need a trade deal with the EU to deliver that.”


About World Trade Organisation rules

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Reuters

  • WTO sets rules for international trade that apply to all members, no free movement or financial contribution, no obligation to apply EU laws although traded goods would still have to meet EU standards, some tariffs would be in place on trade with the EU, trade in services would be restricted.
  • If talks – with the EU and others – do not reach a deal before Brexit takes effect, trade rules would default to World Trade Organisation (WTO) rules.
  • The UK and EU would be obliged to apply to each other the tariffs and other trade restrictions they apply to the rest of the world.
  • That is because the WTO rules allow countries to discriminate in favour of a trade partner only in a limited number of circumstances – including a full bilateral trade deal.

CBI chief warns against ‘no deal’ Brexit}

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