UK businesses urge to rule out ‘worst’ options

Financial markets already reacting to signs of ‘hard Brexit’

LONDON: Britain’s government needs to immediately rule out leaving the European Union (EU) without securing preferential access to the bloc’s single market, or investment will suffer, the head of a leading business organisation said on Saturday.

Financial markets have already reacted to signs Britain could be heading for a ‘hard Brexit’ with limited access to the bloc, as sterling tumbled to its lowest in 31 years on Friday.

Carolyn Fairbairn, director-general of the Confederation of British Industry, said the government had not publicly excluded the possibility it would accept a very poor trade deal to secure other goals when leaving the EU in just over two years’ time. “What we would like is a ruling out of the really worst options,”

“It is the investment decisions that are being taken now that make this urgent,” Fairbairn added. Earlier this week Prime Minister Theresa May said she wanted to give British businesses the maximum freedom to trade with and operate within the EU, when she starts formal exit talks early next year.

But she said it was non-negotiable that Britain would block free movement of EU citizens and reject the jurisdiction of the European Court of Justice.  The EU views both these as integral to its single market for trade, capital and labour. If Britain fails to agree at least a temporary trade deal with the EU before the two-year legal time limit on formal exits talks expires, then it will default to World Trade Organization (WTO) rules for access to the single market. These involve tariffs on manufactured goods and many restrictions on services.

US trade deal

Separately on Saturday, Don DiMicco, the trade advisor to US presidential candidate Donald Trump, said he would favour Britain over the EU for a trade deal once it left the bloc. “They (the British) are our friends, they have always supported us, and we’ve worked together, and they are leaving the EU in our estimation for the right reasons.

The Telegraph reported on Saturday that Britain’s interior ministry planned to allow all 3.6 million EU citizens currently in Britain to stay after Brexit - something the government had previously said was subject to negotiation. By 2019 most would be entitled to permanent residency under current laws, and it was “a given” that the rest would be allowed to stay too.

“They will be allowed to remain in Britain. But it is important that reciprocal agreements are made with the EU to ensure that British people abroad get the same rights.”

Published in The Express Tribune, October 9^th, 2016.

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