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A 'no deal' Brexit is “simply not an option” and poses “catastrophic risks” to the economy, CBI Director-General Carolyn Fairbairn told an audience of Scottish business leaders.

She urged Scottish businesses to stand up and be counted on the key issues of the day, stating that the evidence and clarity of thought they bring to difficult issues in turbulent times can lead to better outcomes for both the economy and wider society.

In her speech to the CBI Scotland annual dinner Fairbairn focused on two key aspect of Brexit: using the UK Government's proposals for post-Brexit trade as a baseline to secure the best possible deal for Britain and the importance of building a post-Brexit immigration system that combines public confidence with the ability to attract the people and skills companies need.

She also praised the achievements of Scottish firms and outline an optimistic view for the Scottish economy.

Fairbairn said: “We’re now just six weeks away from a summit that will shape lives across Scotland and the UK for generations. Now, firms don’t take political decisions – it’s not our job.

“But we can provide the evidence to help good political decisions to get taken. And with the support of our members ……that’s what we’ve been doing.”

She added: “A year ago, we called for a status quo transition period. To avoid a cliff edge for firms. And the government listened. So did Brussels. Providing we avoid no-deal...we will have a transition period.

“Then there’s the Chequers Proposal. If you believed what you read in the papers, you’d assume it is dead as a dodo. I don’t think you should believe everything you read in the papers.

"I’ll be the first to say – it’s not perfect. But it does have the makings of a workable compromise

"And has many of the ingredients that we know firms want and we have campaigned for.

“We know how much Scotland values smooth trade and open borders. We’ve made that very clear. And Chequers does propose a free trade area for goods with a common rulebook.

"That’s real progress and will be welcomed by firms across the EU as well.

"I will be in Brussels with Michel Barnier next week and with business groups across Europe making that case. Until we have a clear way forward, uncertainty will continue.

Fairbairn went on to point out "there was some good Brexit news a few weeks ago".

She said: "It was not big news in the press. But for some people, and some businesses, it will mean everything.

"It was the announcement that EU citizens will be granted the right to stay in the UK…whatever the outcome of negotiations.

“The CBI has been calling for this for two years as a matter decency as well as economics.”

On the prospect of a 'no deal' when the UK leaves the EU she said: “There’s another area where we are not done with speaking out. And that’s on the catastrophic risks of a no-deal exit.

“Because that’s what it would be for Scotland. A catastrophe.

“Delays to just-in-time delivery meaning that Scotland’s food exports would not reach markets in peak condition.

“Barriers to talent stifling Scotland’s professional services firms.

“And Scotland’s status as fintech power put at risk by new regulations on data.

“No-deal is just not an option.

“Not for the UK, not for Scotland, and not for the EU.

And there’s a very short window to achieve a deal.

“So we will be continuing to make the case for a sensible and pragmatic way forward – here and across the Channel.”

On a post-Brexit immigration system, Fairbairn pointed to Scotland's skills shortage issues which are already "biting".

She said: “Scotland has a brilliant and talented workforce. But look at the stats, and it’s also a shrinking workforce.

“Demographics are not in Scotland’s favour.

“Add Brexit uncertainty and a brain-drain to the South East and overseas. And you have a potent mix of problems.

“The skills shortages are biting. Not in the future, not soon. Right now.

“So last month the CBI called for a new immigration system. A system that earns public trust…

…while allowing business to attract the people they need. A system that’s open but controlled, too.

“And we are clear it must work for Scotland.

“Some have asked - do we need a devolved solution for Scotland?

“It’s a fair question. But the businesses I’ve spoken to say “not right now”. Let’s get it right for the whole UK.

“The better the outcome we get, the less need for variation across the UK. And the less companies need worry about doubled up systems and extra red tape.”

First Minister Nicola Sturgeon giving the keynote speech at the dinner echoed Carolyn Fairbairn’s warning about a no deal Brexit.

“There is no doubt at all that that would be catastrophic for businesses across Scotland and the UK.

“That said, one of the things I feel very strongly about is that our determination, understandable, legitimate and absolutely right determination to avoid a no deal scenario should not lead us into a position to where we are accepting a bad deal scenario.

“On many of these issues, the Scottish Government share many of the same concerns and many of the same priorities as the CBI does.”

She said that the CBI supported the remaining in the Single Market and customs union during the transition but the Scottish Government went further saying the UK should have a type of Brexit that allowed it to continue to be members of both.

She added that it was important that the voice of business should be heard to “move the debate out of the world of fantasy and into the world of reality".

The First Minister highlighted shared concerns on innovation, infrastructure investment, working to improve skills and on boosting exports.

She was struck by the fact that 70 companies are responsible half of Scotland’s exports, which she said presented a major opportunity for improvement.

She said that the Scottish Government would work with the CBI on a major conference at the end of November to help businesses to export.

“I think the example of the work on exporting highlights what we all have to gain from a collaborative approach between business and government.”

She said that because of Brexit “that partnership becomes ever more important".

She went on; “Brexit poses genuine risks there is no getting away from that, it poses big challenges to government and to businesses but we are more likely to get through these challenges if we work together to promote innovation, invest in infrastructure, support skills and encourage our exports.

“If we do that we can grasp the opportunity to raise productivity and sustainable growth and all of that is not an end in itself but is a means to making sure that individuals, families, and businesses across our country are more prosperous as a result.”