Image copyright Gearstd Image caption The Institute of Directors has ideas about how to bridge the Brexit gap

One of the UK's biggest business lobby groups has urged the cabinet to stop "dancing around the edges" of Brexit.

The Institute of Directors (IoD) called on the cabinet to come up with a "transitional agreement" to smooth the move to Brexit.

It wants it to bridge the "the Brexit Gap" between leaving the EU and setting up new trading arrangements.

It warned that without agreement, business faces "short-term chaotic cliff edges".

The group criticised the cabinet for engaging in what it called "a range of speculative arguments over transition".

In recent weeks cabinet members have given opposing views on how long a transition period would last and what it would involve.

The IoD report Bridging the Brexit Gap: Options for Transition said: "Instead of dancing around the edges, this issue must become a policy discussion for the cabinet.

"This could minimise the growing level of confusion and uncertainty in this area."

However, Gerard Lyons, an economist and leading figure in the Economists for Brexit group this week described concern about a "cliff-edge" Brexit as "alarmist talk" similar to the fear of the Y2K bug threat to computers at the turn of the millennium.

Stalling investment

Chancellor of the Exchequer Philip Hammond warned in June: "There is a large amount of business investment that is being postponed until business can see more clearly what the likely outcome of these discussions is."

Allie Renison, IoD head of EU and Trade Policy, said: "The Chancellor is right to worry about business investment stalling.

"This is among the most frequently considered changes to deal with Brexit, alongside relocation of operations to the EU.

"The latter is especially true for IoD members in Northern Ireland who are currently considering co-location [or] relocation."

The IoD suggests a range of options including:

Doing a deal to extend the Article 50 deal beyond March 2019

Joining the European Economic Area

Agreeing to stay longer under the rule of of EU law

Creating a transitional customs agreement, similar to the EU Customs Union

Ms Renison said: "The IoD has put forward this range of options for transition in the hopes that it sparks a proper debate on the practicalities of how best to Brexit.

"Prioritising interim arrangements and thereby mitigating the risks of EU exit means the eventual opportunities aren't diminished by short-term chaotic cliff edges."