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A business-led campaign to widen a “thin” Brexit deal struck between Britain and the European Union will begin immediately in the new year, it has emerged, amid concerns about the long-term effects on the UK’s economy.
In an interview with the Observer, Carolyn Fairbairn, the outgoing director general of the CBI, said that securing a basic deal with the EU should be seen as a “starting point” for a deeper relationship. She warned of a serious effect on Britain’s large services sector, including financial and legal services, as well as engineering.
UK government officials remain locked in talks with their Brussels counterparts this weekend, just a fortnight before the deadline identified as the last point at which a deal can be agreed. The main stumbling blocks remain fishing rights and “level playing field” conditions related to state aid. However, even if a deal is signed off, there are grave concerns among British business bodies over the barriers to trade that it will erect.
Fairbairn said that any deal would be a “significant improvement” on a no-deal outcome, while the removal of tariffs would be “existential” for the car industry. However, she said her “really big disappointment” was the lack of help for British services in the potential deal, adding that the CBI would immediately fight to broaden the agreement.
“Any deal we get now is likely to be focused on goods, and it should be treated as a starting point for a more comprehensive deal in the future,” she said. “At the CBI, we would be doing two things. First of all, we would be looking to help businesses make the most of where we are, to look for the opportunities and to manage that transition. And second, we will be working with the government and supporting the negotiations around building further chapters. [We would like] a services chapter. We’ll need more on aviation. We’ll need more on haulage. Data will be crucial. We hope that there will be a data agreement, but there will be more to do on the back of that. That will be the challenge of the next one to two years. And we will be on that case pretty well immediately. But we need that base case of a foundation deal first.”
Some groups have raised serious concerns about the extent of new barriers to trade that will be erected even in the event of a deal. While tariffs will be removed, bureaucracy will increase and both government and industry are braced for issues at the border. A business taskforce to manage the transition has been forged between government and industry in an attempt to smooth the Brexit process in the new year.
Looking back on a tumultuous five years in the job, Fairbairn said it had “been a mistake, and a lost opportunity for our country” for businesses not to have had greater involvement in the shape of the deal.
Cash reserves and stockpiling have been run down as a result of the virus, with many businesses assuming the Brexit transition period would simply be extended. “There is some wishful thinking,” Fairbairn said. “The single thing that would be getting businesses preparing best is a deal. Disruption of some sort is likely.”
It comes as Boris Johnson is being warned that securing a deal with the EU is the best and easiest way to improve relations with a Joe Biden White House, should the Democratic candidate win this week. Biden has voiced concern that Johnson’s Brexit tactics could affect Northern Ireland’s Good Friday Agreement.
Sir Nigel Sheinwald, Britain’s former ambassador to the US who served in Washington between 2007 and 2012, said that a deal was the route through which Johnson could build relations with Biden. “I do think that they need to calculate what the impact of no deal would be, not just on the future relationship over free trade agreements, but more generally, on Britain’s standing with a new Biden administration,” he said. “No deal looks a very lonely position if you’ve got a Biden administration in Washington.
“The very strong view among Biden’s team is that Brexit was a strategic mistake of some magnitude. They’ll be wondering how we fill that gap and will have concluded over the past four years that we haven’t really been able to identify a new British role in the world.”
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