Brexit: British businesses warn Tory leadership hopefuls against ‘severe’ disruption from no deal

CBI chief calls for ‘honesty’ from politicians about the dangers of leaving the EU without an agreement

(Reuters)

Conservatives will forfeit their right to be regarded as the party of business if the new prime minister fails to secure a Brexit deal, industry has warned.

In a strongly worded message to candidates to replace Theresa May as Tory leader, the CBI said that a no-deal Brexit will cause severe disruption and long-term damage to UK competitiveness, which the vast majority of businesses cannot protect themselves against.

Carolyn Fairbairn, the CBI’s director general, said the failure to resolve Brexit was already hitting Britain hard, diverting billions of pounds of investment out of the economy.

Amid uncertainty not only over EU withdrawal, but also major infrastructure projects like the HS2 high-speed rail line and the Northern Powerhouse, Britain needs to restore its reputation as a “stable and trusted” country for investment, she said.

And she called for “honesty” from politicians over the implications of no deal, urging the 11 candidates in the Tory leadership race to listen to businesses – particularly small and medium-sized enterprises (SMEs) – on the real-world problems it will cause.

The warning came with some of the frontrunners in the succession contest making clear they were ready to take Britain out of the EU without agreement.

Bookies’ favourite Boris Johnson has said the UK will leave the EU on 31 October under his leadership “deal or no deal”. Dominic Raab has said he will not ask for a further extension to avoid no deal, while Esther McVey has said Britain should “actively embrace” withdrawal without an agreement.

Only Rory Stewart and Matt Hancock have said no deal is not an option, while Jeremy Hunt has not ruled out extending negotiations beyond the Halloween deadline to get an agreement.

Ms Fairbairn made clear that industry regards getting a deal as essential to the Conservatives’ long-term reputation.

“The next prime minister can only claim the Conservatives are the party of business if they secure a Brexit deal that protects the economy, jobs and living standards,” she said.

“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 SME members who cannot afford complex and costly contingency plans.”

As the political debate becomes more polarised on both sides of the Brexit debate, the CBI, which represents 190,000 firms across the UK, called for “compromise, consensus and honesty” to resolve to resolve the impasse quickly.

Prolonged uncertainty is damaging our economy now – driving up costs and reducing sales,” warned Ms Fairbairn.

“Stockpiling of raw materials and goods among SMEs is at a record high. Billions of pounds in investment are being diverted from the economy, harming future jobs and prosperity.”

Ms Fairbairn said that firms’ frustration with Westminster has grown over the past few years.

And she said her message to all 11 candidates for the Tory leadership was simple: “Champion business.

“Ongoing uncertainty has raised questions about our stability, and not solely because of Brexit.

“Threats of renationalisation, continued doubts over vital projects like Heathrow, HS2 and Northern Powerhouse Rail, and unreformed business rates are just a few of the other challenges that make investors think twice.

“It’s time to restore the UK’s reputation as the stable and trusted country to start and grow a business.”