Thu 18th Apr 2019
MPs cannot afford to squander latest chance for consensus
For most businesses, the 31 October ‘flextension’ agreed by the European Council will be preferable to deadlines that are repeatedly moved forward at the last possible moment. But their frustration with this seemingly endless political process is palpable.
This extension buys Parliament some time to come to a consensus, but they can’t afford to squander it. Businesses need answers to plan for the future, so politicians must agree on a way forward urgently. It would be a disaster for business confidence and investment if a similar late-night drama is played out yet again in October. Afterall, a deadline that is continuously pushed back isn’t a deadline – it’s an invitation to cancel investment, stop hiring, or move UK operations somewhere else.
We are seeing that the ongoing political noise and drama is having an increasingly negative impact on business growth and investment plans here with some members understandably holding back on these plans and making big decisions about their futures. In fact, our latest Quarterly Economic Survey, published last week in partnership with BDO, revealed that some 29% of members have either established or are considering establishing a presence outside the UK, up from just 7% in Q2 2017. Around 12% have already changed recruitment plans and 10% have refocused their target markets.
The damaging impact of Brexit is becoming increasingly apparent and our findings should serve as a clear warning that the ongoing impasse at Westminster is contributing to a sharp slowdown in the real economy right across all of the UK regions. These are some of the weakest figures we’ve seen in nearly a decade, and that’s no coincidence.
Rather than be drawn into the politics of Brexit, firms are looking for stability and answers. They want practical solutions to a number of issues that are still unclear ranging from trade agreements, migration rules and customs. For instance, the terms of trade agreements can affect pricing decisions, margins, even choice of business location and the geography of supply chains.
In the event that the Withdrawal Agreement is passed by Parliament, businesses then need a clear timetable and fair warning of the UK’s planned exit date, particularly those trading in countries where the UK has not yet finalised much-needed trade continuity agreements.
Ultimately firms could face the biggest change to their terms of trade in over a generation, without the information and clarity they need to navigate their way forward.