Is time running out for a Brexit deal? UK business chiefs are ‘deeply concerned’
According to UK business chiefs, businesses will have to make plans for a worst case scenario. The five main UK business lobby groups informed the UK Prime Minister Theresa May that they are ‘deeply concerned’ about the lack of progress on a Brexit deal with the EU.
“In the absence of clarity, businesses will inevitably have to implement plans for a worst-case scenario, which could cost the UK economy billions of pounds, thousands of jobs and leave many families without a main income…"
"An increasing number of companies have made clear that in the face of uncertainty, they are now actively considering moving substantial volumes of work away from the UK. We know that many more large businesses are close behind in their plans.” the groups wrote in a letter to UK Prime Minister Theresa May.
Facing increasing pressure, Theresa May has set the date of July 24th to publish a white paper of her plans for a deal. However, before she does this, she must reach an agreement with her cabinet and party regarding the Northern Ireland border.
Last week Airbus said that if a deal is not struck it would “catastrophic.” They went on to announced that it may pull investment from the UK if a deal is not struck. Such a move could threaten up to 14,000 jobs in the UK.
Ian Robertson, BMW UK Chief, told BBC last week that if there was no clarity on a Brexit deal in the next couple of months that they would have to prepare alternative plans, to the detriment of the UK. Customs manager Stephan Freismuth said that delays in the importation of components would seriously affect BMW's UK facilities."We always said we can do our best and prepare everything, but if at the end of the day the supply chain will have to stop at the border, then we cannot produce our products in the UK."
With about 90 per cent of components used in BMW's UK plants are imported from mainland Europe, the car manufacturer needs clarity on the UK's planned trade deal with the EU. BMW employs over 7,000 people across ots four plants in the UK.
But Airbus and BMW are not alone. Many other companies are concerned with the lack of progress regarding a trade deal between the UK and the EU post-Brexit.
Goldman Sachs plans to double its Frankfurt office to 400 staff through a combination of relocations and local hires.
Siemens has warned the UK government that time is running out to secure a Brexit deal.
Bank of America Merrill Lynch says it will relocate up to 125 UK staff to Dublin.
HSBC will move up to 1,000 jobs to France.
JP Morgan is likely to relocate 1,000 front and back-office roles London.
EasyJet has applied for a new air operator’s certificate (AOC) in Austria. This will allow them to continue operating in the European Union post-Brexit.
Morgan Stanley has plans to add some 200 staff to its Frankfurt operation through a mix of new hires and relocations. They plan to add 80 staff to their Paris office.
Jaguar Land Rover is set to move production of its Discovery model from Birmingham to Slovakia.
Call to support Theresa May
The UK Health Secretary Jeremy Hunt has called for people to get behind the UK Prime Minister, saying, “It’s completely inappropriate for business to be making these kinds of threats… We are in an absolutely critical moment in the Brexit discussions, and what that means is we need to get behind Theresa May to deliver the best possible Brexit, a clean Brexit.”
As of now, the UK’s negotiators have yet to begin formal discussions with EU on their future economic relationship. Despite this, the UK’s Brexit Secretary David Davis ambitiously plans to have details finalised by October 2018. The biggest worry for UK business is that May fails to reach an agreement with the EU. Her now famous quote, “no deal is better than a bad deal,” acting as a constant reminder to UK business that a ‘no deal’ is quite possible.
Speaking to Sky News last weekend, international trade secretary Liam Fox said, “We’ve got to be free in a negotiation to say if we don’t get the deal that we want, there won’t be any agreement.’’ He continued, “Companies are right to say that if there’s no deal that won’t be good for Britain, but it won’t be good for Europe either. In an era when we’ve got complex integrated supply chains, it will be necessarily bad for both sides.’’
“To have any real leverage in the Brexit endgame, the UK must reserve the right to walk away without a trade deal,” according to a letter written to May by the pro-Brexit group ‘Economists for Free Trade.’
Business chiefs expressed concern about the 21-month transition period given to businesses to prepare for Brexit, mainly due to the fact no one knows exactly what they should be preparing for. “The original benefits of transition are being wasted as time ticks down… Every day, larger companies are not only contingency planning, but spending many millions on implementing these plans, without even knowing what to prepare for.”
It is hoped that Theresa May's white paper will provide UK business with the much needed clarity that they require. However, whatever she produces will need approval from the EU. In the meantime, the advice from UK business chiefs is to prepare for the worst case scenario.
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