The Confederation of British Industry which is the premier lobbying organization for UK businesses on national and international issues has opened up on the plight of businesses in the country.
Carolyn Fairbairn, the outgoing boss of the CBI has revealed that, British firms do not have the resilience to cope with a no-Brexit after the scourge of the coronavirus crisis. She further confirmed that a CBI member had likened a no-deal to “setting the shed on fire” while the house was in flames.
EU Trade negotiation, the bone of contention
Brexit negotiations haven’t been going well between the UK and EU despite the former’s desire to reach an agreement with the EU this year, according to a government spokesperson. With the mounting strain on British businesses, it is quite evident it is not able to withstand the additional disruption of leaving the EU without a trade deal, according to the outgoing CBI boss.
Dame Carolyn Fairbairn told the BBC that any buffers to cope with the additional cost and planning of an exit from the EU without a deal had been exhausted by the COVID-19 pandemic.
“The resilience of British business is absolutely on the floor. Every penny of cash that had been stored up, all the stockpiles prepared has been run down”.
She further highlighted some key issues with businesses who are faced with the reality of making urgent decisions regarding their businesses. Trade negotiations are not going well as they broke up last week with the EU’s chief negotiator saying that very little progress had been made on key sticking points including future fishing rights in UK waters and commitment to maintain a “level playing field’ over regulation and competition.
“The firms I speak to have not a spare moment to plan for a no-trade deal Brexit at the end of the year- that is the common sense voice that needs to find its way into the negotiations”.
According to Dame Fairbairn, there has been a diversion of management attention from any Brexit contingency especially considering the devastating impact of COVID-19 and the fight for business survival. She worries over the likelihood of a political commitment being abandoned in the current transitioning trading arrangements.
“As one member puts it to me- just because the house is on fire doesn’t make it ok to set fire to the garden shed. If we have a political timescale that takes us to a brinksmanship deal in December that will be catastrophic for British business- they will not be ready”.
In spite of the current situation, she described the government’s intervention to support workers’ wages during the lockdown as a vital way for the economy to hibernate. In a letter to the Prime Minister, she called on government to make employment for young workers the government’s top priority, as well as ensuring the UK emerges from the crisis with a focus on investment in environmentally sustainable industries.
A government spokesperson said,
“We’ve been clear that we want to reach an agreement with the EU this year and we are prepared to work hard to accelerate talks…we have taken unprecedented action to support businesses through this pandemic and to ensure the UK’s economic recovery is as strong and as swift as possible. Extending the transition period would simply prolong the negotiations and create more uncertainty for businesses”.