CBI and other groups to urge ministers to change their Brexit strategy to allow more time for a long-term trade deal

Business leaders are to demand that ministers agree an indefinite delay in Britain’s departure from the European single market and customs union to give more time for talks on a long-term trade deal.

In a dramatic escalation of the battle to soften the government’s Brexit strategy, groups representing thousands of UK employers aim to present a united front during a summit at Chevening country house hosted by the Brexit secretary, David Davis.

“This is a time to be realistic,” Carolyn Fairbairn, director general of the CBI, was due to say in a London School of Economics speech on Thursday outlining their demands. “Instead of a cliff edge, the UK needs a bridge to the new EU deal. Even with the greatest possible goodwill on both sides, it’s impossible to imagine the detail will be clear by the end of March 2019.”

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Such a comprehensive transition phase would almost certainly require temporary adherence to EU rules on freedom of movement, accepting jurisdiction of the European court of justice and a ban on implementing trade deals elsewhere. But Brussels officials are likely to also demand an agreement in principle on the shape of the eventual EU trade deal, which could lead to such concessions becoming permanent.

“March 2019 is 20 months away. Time flies,” the chief EU negotiator, Michel Barnier, warned in a separate speech on Thursday in Brussels in which he claimed that Britain had yet to “face the facts” on Brexit. “Whatever the outcome of these negotiations, the message I would like you to convey on the ground is this: the real transition period began on 29 March 2017, the day on which the UK presented its [article 50] notification letter.”

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Davis will be joined at the grace-and-favour government mansion in Kent by ministers from the Department for Business and the Treasury, who are known to be more sympathetic to the need for an extensive transition phase.

“With negotiations under way, the secretary of state for exiting the European Union is determined to bolster the government’s engagement with the business community on Brexit,” said a government source, announcing the crunch summit.

Other attendees, including the Engineering Employers Federation and British Chambers of Commerce, are known to be determined to use the event to highlight their members’ concerns about the pitfalls of the government’s current strategy.

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Terry Scuoler, chief executive of the EEF, said: “The brinkmanship involved in taking Brexit negotiations to the line, while leaving businesses guessing about the likely outcome, risks causing serious economic damage.”

In a preview speech to the London School of Economics on Thursday, Fairbairn added: “The prospect of multiple cliff edges – in tariffs, red tape and regulation – is already casting a long shadow over business decisions. The result is a ‘drip drip’ of investment decisions deferred or lost.”

The CBI describes its proposed transition phase as a “common sense” and “limited” process, but it concedes that this would have to remain in place for as long as it takes to conclude a long-term free trade agreement with the EU.

“It’s essentially operating on the same rules we have now, almost like a rollover,” explained Rain Newton-Smith, the CBI’s chief economist, who was due to announce the plan in a joint lecture with Fairbairn. “This is not about whether we leave the EU, it’s about how ... this is a pragmatic way of leaving the EU.”

Asked about the CBI intervention before Friday’s G20 meeting in Hamburg, Germany, Theresa May said there would be an implementation period but insisted it was only to smooth the path to a final trade deal.

“What we want to do of course is ensure that at the end of the negotiating period we’ve got not just the arrangements for our exit from the EU but also the future relationship with the EU,” the prime minister said.



“We’re going in to negotiate a comprehensive free trade agreement so we can continue to see that trade – we want to see tariff-free trade, we want to see as frictionless border as possible.”



She said it would then be possible to discuss what she had included in her article 50 letter including an “implementation period” to ensure an exit that was “as smooth and orderly as possible”.



Five employers groups – including the Institute of Directors and Federation of Small Businesses – have been invited for five hours of talks from 10am to 3pm on Friday. As well as ministers from the Brexit and business departments there will be civil servants involved in Brexit talks and the economic secretary to the Treasury, Stephen Barclay. Several FTSE 100 chief executives are also rumoured to be coming, but not, as originally thought, the chancellor, Philip Hammond.

The Chevening estate was shared between the “Three Brexiteers” – Davis, Boris Johnson and the international trade secretary, Liam Fox – when May became prime minister after the referendum. A subsequent wrangle with trustees meant Johnson ended up as the “prime nominee”, but all three ministers have use of the palatial 115-room mansion.

The business summit comes as Labour stepped up the pressure by announcing that Jeremy Corbyn will hold private talks with Barnier in Brussels next week. Chuka Umunna, a proponent of permanent single market membership, also welcomed the CBI proposal.

But the deep and prolonged transition phase proposed by business is likely to enrage Tory eurosceptics who believe it would amount to a betrayal of referendum aims to “bring back control”. It also poses multiple practical challenges for Downing Street, not least how to allow Fox’s trade department to continue negotiating trade deals elsewhere.

Adam Marshall, director general of the British Chambers of Commerce, said its members were “focused on outcomes rather than process” and it was up to the government to work out how to square such a transition with its political red lines, or come up with a better idea.

“Regardless of how they voted in the referendum, our members want to see certainty now,” he said.

“Firms tell us this feels like common sense,” added Fairbairn. “But if others have alternatives that deliver equivalent economic benefits, now is the time to put them on the table.”

A government spokesperson said on Thursday evening: “The government has been clear that we want to ensure a smooth implementation of our new partnership with the European Union that is in the interests of businesses in the UK and across the EU.

“We know that businesses are asking to be given as much certainty as possible as we move through the exit process. That is why we have recently announced we are stepping up our business engagement to ensure we consider the challenges and opportunities facing them as we exit the EU.

“While we will be leaving the single market and the EU customs, we want to achieve a comprehensive free trade agreement that allows for the most frictionless possible trade.”



Additional reporting by Anushka Asthana

