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Stop Brexit ‘circus’, business urges as UK slashes growth outlook
LONDON, March 14, 2019 (BSS/AFP) – Britain’s finance minister and business
chiefs on Wednesday urged the country to avoid a “no deal” Brexit after
another crushing parliamentary defeat for Prime Minister Theresa May over her
EU-divorce deal with Brussels.
The fast-moving Brexit saga largely overshadowed the government’s budget
update that slashed the 2019 economic growth forecast, with the UK economy
also hit by China’s slowdown and trade war tensions.
MPs will decide later Wednesday whether the country should leave the
European Union without a deal, with analysts expecting parliament instead to
favour delaying its departure beyond the March 29 exit date, in a further
vote due Thursday.
Britain’s economy is expected to expand by 1.2 percent this year, assuming
there is an orderly EU exit, finance minister Phillip Hammond revealed in his
budget update on Wednesday. That was sharply down from prior guidance of 1.6
percent.
The sizeable downgrade, widely expected after a similar move by the Bank
of England, came one day after parliament overwhelmingly rejected May’s draft
Brexit divorce agreement.
– ‘Cloud of uncertainty’ –
“Last night’s vote leaves a cloud of uncertainty hanging over our economy
and … our most urgent task in this House is to lift that uncertainty,”
Chancellor of the Exchequer Hammond said in a budget thin on policy
announcements.
“Leaving with ‘no deal’ would mean significant disruption in the short and
medium term, and a smaller, less prosperous economy in the long term than if
we leave with a deal — higher unemployment, lower wages, higher prices in
the shops.
“That is not what the British people voted for in June 2016” in the
referendum to leave the EU.
The chancellor also warned the “spectre” of uncertainty was “damaging our
standing and reputation in the world”.
Earlier, Carolyn Fairbairn, director-general of Britain’s biggest
employers’ organisation, the Confederation of British Industry, slammed
politicians’ handling of Brexit.
“It’s time for parliament to stop this circus,” said Fairbairn after MPs
rejected May’s divorce deal for the second time.
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May needed to extend the Article 50 deadline for withdrawal from the bloc
to allow sufficient time for an acceptable deal, she added.
“A new approach is needed by all parties. Jobs and livelihoods depend on
it. Extending Article 50 to close the door on a March no-deal is now urgent.”
Catherine McGuinness, policy chief for the City of London financial
district, warned British business was now “staring down the precipice”.
“Politicians of every hue must overcome their differences and make
avoiding a no-deal Brexit the absolute priority,” she urged.
And the British Chambers of Commerce (BCC), which represents thousands of
firms, also insisted that a “no deal” exit had to be avoided.
They too voiced anger that politicians were still grappling with
implementation of the 2016 referendum result, issuing a stinging rebuke to
Hammond’s Conservative party, traditionally regarded as a big supporter of
private enterprise.
“The government must now urgently set out in concrete terms what it will
do to avoid the damage that a messy and disorderly exit on March 29 would
cause to businesses, communities, and the UK economy,” the BCC said.
– Zero-tariffs –
In a bid to soothe nerves, May’s government on Wednesday said it would
temporarily slash most import tariffs in the event of a “no deal” Brexit.
Britain also vowed not to apply customs checks on the border with Ireland,
albeit temporarily.
The new tariffs regime is aimed at avoiding both a jump in prices of EU
imports for consumers and any disruption of supply chains. It is intended to
last up to one year pending negotiations on a more permanent system.
Under the proposal, 87 percent of imports into Britain will be eligible
for zero tariffs, compares with the current level of 80 percent.
But the tariffs pledge also drew an angry response from business leaders.
“These are being imposed on this country with no consultation with
business with no time to prepare,” added Fairbairn.
And the BCC lambasted the “abrupt” move as an “unwelcome shock” for many
businesses.
In the auto sector, the government said carmakers reliant on EU supply
chains would not face tariffs for imported parts used to make vehicles in
Britain.
However, UK car industry body, the Society of Motor Manufacturers and
Traders, responded that a “no deal” would spark disruption and job losses in
a sector already plagued by collapsing demand for high-polluting diesel
vehicles.
Japanese carmakers Honda and Nissan have both recently decided to slash
investment in Britain.
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