More than 60% of businesses believe an EU trade deal is more important than one with the US

The government must urgently publish its negotiating objectives for the next stage of Brexit talks, the Institute of Directors (IoD) has said, as it warned that business needs time to prepare for a new relationship with the EU by the end of the year.

In a survey, the IoD found that directors are holding back on investment in business because of the continued uncertainty over Brexit.

“To give businesses any chance of being ready for the new relationship by the end of 2020, the government needs to be as clear as possible about what its intended destination is,” Allie Renison, the IoD’s head of Europe and trade policy, said.

“With directors clear that negotiations with the EU are the priority right now, clarity is crucial for so many companies.”

The IoD found that while businesses welcomed the certainty given by the withdrawal agreement struck by the prime minister in October, it was not enough to unlock investment and planning decisions.

More than half of 952 directors surveyed (55%) said they would only be able to “make planning and investment decisions” with certainty when “we understand our future with the EU”.

More than 60% of businesses said the EU deal was “more important” to their business than a US deal with just 20% agreeing a deal with the US and other non-EU countries was “important” to their businesses.

The survey underlines the continued anxiety in the business sector over the future relationship with the EU.

On Saturday Sajid Javid raised alarm bells when he warned that the UK would not be “aligned” with EU rules after the trade talks, sparking fears of trade barriers where none currently exist.

Business leaders warned this could lead to unwelcome friction on cross-border trade with consequences for investment, jobs and the economy.

The IoD is now pressing the government to publish its negotiating goals urgently.

Brussels expects to publish draft negotiating guidelines on 1 February with its goals agreed among member states at a meeting on 25 February.

The commission is currently holding a series of seminars in Brussels with member state representatives on its goals in areas including fisheries, energy, transport and law enforcement.

The future mobility of EU citizens was discussed on Monday while space, the European defence fund, cyber security were the topics on Friday.

The prime minister is expected to set out his hopes in a major speech in the first half of February but so far there has been little to no parallel consultation with business to mirror what is going on in Brussels.

European commission spokesman Eric Mamer warned on Monday that it could be March before formal talks can begin. “We have said we will start negotiations as quickly as we can, but it will certainly not be before the end of February, beginning of March,” he said. “This is not a slowing down or speeding up of the process.

“This is simply the nature of the institutional process and the consultations that need to take place before the negotiation directives can be formally adopted.”

Renison added: “Avoiding the chaotic uncertainty of leaving the EU without a deal is clearly a relief to business leaders, but they are still much more inclined to feel this Brexit deal on its own doesn’t provide the certainty they need to invest and make plans for the future.

“Only clarity on the next phase of Brexit talks on trade and the wider economic relationship with the EU will resolve that uncertainty, particularly for Northern Ireland and trade within the UK itself.”