8 February 2019

Update

The Prime Minister seeks changes to the backstop

This week the Prime Minister has been to Northern Ireland and Brussels as she seeks to renegotiate her Brexit deal. Meanwhile, the CBI has continued to underline the dangers of a no deal Brexit and has highlighted the hugely damaging implications for the UK of crashing out of trade deals it belongs to through membership of the EU. 

The Prime Minister seeks changes to the backstop

Following the House of Commons' rejection of the Prime Minister’s deal, the CBI has been clear that any changes to the deal must pass three tests: a deal that protects our economy, commands majority support in Parliament and a deal that is negotiable with the EU. Critically, the business community is clear that a March no deal must be avoided at all costs.

Read the CBI’s full reaction to last week’s vote

With a March no deal drawing closer and with an accidental “no deal” Brexit becoming more likely, the CBI’s President, John Allan, sounded the alarm on the hugely damaging implications for the UK of crashing out of 40 trade agreements spanning five continents it belongs to through EU membership. Such EU Free Trade Agreements have supported firms of all sizes to grow and could be lost overnight and include the rapidly growing creative firms trading with South Korea and specialist machinery firms trading with Mexico.

Read John Allan’s intervention on the need for continuity of non-EU Trade deals

To further illustrate the urgency of the continuity of third country trade, Josh Hardie, CBI’s Deputy Director-General, attended the Business Organisations Trade Advisory Group with Secretary of State, Liam Fox, and the Trade Permanent Secretary, Antonia Romeo. During the meeting trade continuity with third countries post-Brexit was discussed as well as potential tariff schedules in a no deal scenario and business sentiment around inward investment.

Meanwhile, the CBI commented on the latest forecasts from the Bank of England which saw a downgrade in its forecast for 2019 growth to 1.2%, which would be the weakest expansion since 2009. Responding to the forecast, Rain Newton-Smith, CBI Chief Economist emphasised how this is now crunch time and with the economy seizing up from uncertainty called for a March no-deal scenario to be taken off the table. Further to these comments, in the Evening Standard, Rain also issued a clarion call to politicians alerting them to the potentially disastrous long-term effects of a no deal exit on the UK’s services industry, which accounts for 80% of the economy.

Read the Evening Standard article

With the next parliamentary debate planned for 14 February, the CBI will continue to engage with politicians across the political spectrum to voice member concerns on the impact of no deal and the impact on long term UK competitiveness, drawing on the CBI’s recent no deal regional analysis, which includes over 40 real-world case studies of companies in every UK region.

Read the CBI’s recent no deal regional analysis

For more information please get in touch with the CBI’s EU Negotiations team or visit the CBI Brexit Hub.