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Business warning as talk of Brexit ‘No deal’ grows

'Managed no deal' plan is 'not a credible position' warns business

The UK government is increasing its planning for a ‘no deal’ Brexit at the end of March, with the EU27 also announcing today new measures to mitigate its impact, should no agreement be reached.

However while the UK government has set asides an extra £2bn in contingency funds, it is difficult to set apart the plans from political manoeuvres  - as it is in Theresa May’s interests to increase fears of a no deal Brexit to persuade MPs that her deal is the best and only way through the current political stalemate.

UK business groups have issued their own fresh warning on a no deal Brexit, and have criticised politicians for focusing on in-fighting rather than preparing for Brexit.

They have warned that there is not enough time to prepare for a no-deal scenario.

In a joint statement, the British Chambers of Commerce, the Confederation of British Industry, manufacturers' organisation the EEF, the Federation of Small Businesses and the Institute of Directors said: "Businesses have been watching in horror as politicians have focused on factional disputes rather than practical steps that business needs to move forward.”

The joint statement coincides with news that the government’s own Cabinet remains deeply divided – with some ministers backing Theresa May’s deal, some not ruling out a second referendum, and others calling for a ‘managed no-deal’ exit.

The business alliance has poured cold water on this final proposal, say it is “not a credible position.”

Brexit no deal

Huge delays at UK ports would be a major hazard of a no deal Brexit

The groups warn: “Businesses would face massive new customs costs and tariffs. Disruption at ports could destroy carefully built supply chains. From broadcasters, to insurance brokers, to our financial services - the UK’s world-leading services sector will be needlessly disadvantaged, and many professional qualifications will be unrecognised across the EU.”

It also warns that UK and EU nationals working abroad will be left in deep uncertainty about their future. The developments coincide with a new outline immigration plan from the UK government, which has also raised fears from businesses, as restrictions on immigration would negatively impact many sectors.

The organisations say there is no longer sufficient time to avoid “severe dislocation and disruption” in the 100 day remaining until 29 March 2019, and urge politicians to consult businesses over Christmas.

The group stopped short of recommending a political solution, however. The UK government has this week announced that the Common’s ‘meaningful vote’ on the proposed Brexit deal, delayed from 11 December, will now take place in the week commencing 14 January.

While the prime minister hopes that her pressure and warnings of a no deal could persuade her own Conservative MPs and win the crucial votes of Northern Ireland’s DUP, this still looks unlikely.

A rejection of the deal would result in a number of possible scenarios, from a no deal exit, to an extension to the Article 50 deadline for exiting the EU, or even its unilateral cancellation by the UK. Those in favour of this final option see it as a way to buy time for a second referendum, or for an improved deal to be negotiated with the EU, such as a ‘Norway’ style deal.

Asked for its views, a spokesperson for the UK pharma industry association the ABPI said it reiterated its message from 7 December, when the health secretary Matt Hancock issued medicines-specific no deal warnings.

This update was nearly two weeks ago, when the ABPI had called for greater clarity on the no deal contingency plans; its unchanged remarks suggest that no further information has been forthcoming from the government.

The health secretary’s updated included warnings that the key UK ports of Dover and Folkestone could see up to six months of delays in the event of a no deal, and the need for a significant increase in the use of airfreight to transport medicines which could not be stockpiled.

For pharma’s biggest companies, the cost has been considerable – Pfizer and GSK both estimate Brexit will cost them £100m.  Many smaller companies have gambled that a no deal scenario will be avoided, largely because the cost and scale of contingency planning would overwhelm their businesses.

Article by
Andrew McConaghie

19th December 2018

From: Regulatory

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