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AZ says UK investments on hold until there is Brexit ‘clarity’

Tomorrow's EU summit could be make-or-break for Brexit deal

AstraZeneca’s non-executive chairman Leif Johansson has told a French newspaper that the company has suspended investment in the UK as there is still no clarity about Brexit.

The company will also maintain that position if a transition deal doesn’t lay out a clear path for the UK’s future relationship with the EU27, he told Le Monde in an interview, saying that with less than six months to go before the 29 March exit date – and AZ’s Brexit bill already above £40m – the company has been forced to take difficult decisions.

Leif Johansson

Leif Johansson

AZ told Reuters that Johansson was referring to a freeze on manufacturing investments announced last year and did not signal any change in its plans.

Nevertheless, the comments by a senior figure in one of the UK’s biggest and most successful multinationals will add to the pressure on Prime Minister Theresa May as she faces the Cabinet today in a crunch meeting that will try to force some form of unity on her Brexit deal blueprint ahead of an EU27 summit tomorrow.

She has insisted that an agreement is still “achievable” – despite what seems to be a deep divide with the EU27 on the ‘backstop’ solution to the Irish border issue – and that the vast majority of the terms of the UK’s withdrawal agreement “are now clear.”

Of course, a joint political declaration that will describe the future relationship is still to be agreed, and on that point EU negotiator Michel Barnier was very clear in comments made after he met with Brexit Secretary Dominic Raab this week.

Once again, Barnier said the UK’s proposals for a free trade area – particularly on customs and the regulatory framework for goods – are unacceptable and would be “tantamount to providing the UK and its companies with a major competitive advantage over companies operating in the single market.” On this central issue the two sides seem as far apart as ever.

May said yesterday that the EU is now looking at a UK-wide customs arrangement – rather than one drawing a border in the Irish Sea and keeping Northern Ireland in the single market – but she acknowledged that there is no time to work out the details of such an arrangement in the few weeks remaining before a deal is due to be agreed.

That effectively means the UK and EU27 are now looking at a ‘double backstop’ – with the EU’s proposal kept in reserve – which May was adamant was unacceptable to the UK on grounds of sovereignty.

There is always the risk that the UK and EU will fail to reach a deal on a future relationship, rendering the backstop position – supposed to be a safety net that applies only if a wider deal or technological solution cannot provide a solution – effectively permanent. May also said that there would have to be an exit route from the backstop arrangement in a no-deal scenario.

For companies like AZ, the situation on this key trading issue looks set to become more rather than less complex as the negotiations enter the final stages. And for now, it seems unlikely that Wednesday’s EU27 summit will lead to the breakthrough on the divorce deal terms sought by industry.

Article by
Phil Taylor

16th October 2018

From: Regulatory

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