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Business lobby group CBI warns Tories over no-deal Brexit

CBI DG Image copyright Getty Images

The Confederation of British Industry has warned Conservative leadership candidates over leaving the EU without a deal.

A no-deal scenario would do “severe” damage to businesses, it said in an open letter to all the MPs running to lead the party.

Director general Carolyn Fairbairn warned them that smaller companies cannot afford the necessary preparations for leaving without a plan.

She invited them to meet her members.

The UK had been due to leave the EU on 29 March, but Theresa May asked for an extension and the date was pushed back to 31 October.

The official race to succeed her gets under way after she stands down in early June, but jostling between Tory candidates has already begun.

‘Long-term damage’

Esther McVey, the first of the 12 confirmed contenders to stand in the Tory leadership race, said earlier this week in a column for the Daily Telegraph the UK needs to “actively embrace leaving the EU without a deal”.

Former foreign secretary Boris Johnson and ex-Brexit secretary Dominic Raab have said they would like to renegotiate the terms of Mrs May’s withdrawal agreement with Brussels, but would enforce the current October deadline.

The EU’s chief Brexit negotiator Michel Barnier has said the deal reached between the UK and the EU was “the only option” if the UK wanted to leave “in an orderly manner”.

The CBI’s letter says: “Firms large and small are clear that leaving the EU with a deal is the best way forward.”

“Short-term disruption and long-term damage to British competitiveness will be severe if we leave without one. The vast majority of firms can never be prepared for no-deal, particularly our [small and medium-sized] members who cannot afford complex and costly contingency plans.”

The CBI says it speaks on behalf of 190,000 businesses employing a third of the UK’s private sector workforce.

Business has traditionally been important to the Conservative Party as one of its main sources of financial support.

However, overall donations to the party collapsed in the first quarter of the year, according to figures published by the Electoral Commission. The party received £3.7m in donations and public funds in the three months to March. For the fourth quarter of 2018, it was £7.5m.

Analysis: BBC business editor Simon Jack

British business has issued a challenge to the next prime minister to prove that the Conservatives are the party of business. That can only be achieved, says the CBI, if the next leader commits to leaving the EU with a deal.

The lobbying group insists that firms large and small are clear that leaving the EU with a deal is essential to protect the economy, jobs and living standards.

However, of the 12 candidates (so far), at least half say they are prepared (in fact some of them are determined) to leave the world’s largest trading bloc as scheduled at the end of October – with or without a deal in place.

That includes the current favourite, Boris Johnson who, when foreign secretary, had a message for business leaders during the Brexit negotiations that ended in “ck” but wasn’t “back”.

That expletive – directed to a community that had traditionally seen the Conservative Party as its natural partner – shocked some in the business world and for others merely highlighted the dwindling influence of business in the politics of Brexit.

That gulf still seems very wide with business saying it can’t work with anyone who contemplates no deal – and a party which may find it hard to contemplate a leader who won’t.

Tory leadership candidate Jeremy Hunt has warned his party that pushing through a no-deal Brexit would be “political suicide” because it would result in a general election in which Labour could take power.

Despite the EU repeatedly refusing to re-open talks on the withdrawal agreement, Mr Hunt said he wanted to create a new UK negotiating team to change it.

Fellow leadership contender Kit Malthouse, a housing minister, has also said he would like to change the agreement, arguing there was a “prospect” of getting a new deal.

He said: “Those people who say no-deal would be a catastrophe and those people who say it would be a walk in the park are both wrong – it is somewhere in the middle.”

Who will replace Theresa May?

The winner of the contest to lead the Conservative Party will become the next prime minister.

Chancellor Philip Hammond told the BBC on Thursday that if MPs could not find a way through the Brexit impasse, the decision could be handed “back to the people” via a second referendum or a general election.

Mr Hammond, who is seen as one of the more pro-European members of the cabinet, described himself as a “divisive” figure and said he would like to see his view represented by a “fresher face” in the Tory leadership race.


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