‘No deal’ will shrink GDP by 8 per cent, says CBI

Carolyn Fairbairn

A no-deal Brexit would have “profound” economic consequences the UK economy, with GDP shrinking by up to 8 per cent and thousands of jobs being put at risk, the head of the Confederation of British Industry is to warn today.

However, the industry body says UK businesses believe that the proposed Brexit plan provides a solution they can work with and “delivers transition and avoids a hugely damaging cliff edge”.

But if parliament cannot agree a way forward next Tuesday, the Government must set out its plan to avert a ‘no deal Brexit’ and protect jobs, CBI Director-General Carolyn Fairbairn will say in a speech to South West businesses.

Ms Fairbairn will also highlight the importance of continued access to skills and labour for firms right across the region.

Speaking at the Bristol Old Vic, before an audience of senior figures from the region’s leading firms, Ms Fairbairn will say a no deal scenario would damage manufacturers as well as the South West’s burgeoning services sector.

She will also flag that exporting firms will no longer be able to rely on trade deals the UK has through the EU, including Japan, South Korea and Turkey, in the event of a no deal scenario.

Speaking about the diversity of firms across the South West, she wil say: “Whether you want to build an aeroplane, construct a nuclear power station, animate a film or launch a yacht or satellite, businesses here in the South West know how to succeed’.

“And it’s not just the diversity of South Western firms - it’s also about sheer weight of their knowledge.

“The University of Bath’s £60m new centre of excellence in Advanced Propulsion Systems, the University of the West of England’s use of cutting-edge tech to make life easier for older people.

“There’s so much to celebrate here.

“But as much as I’d like to make this speech a Shakespearean soliloquy about the South West I can’t ignore that, at a national level, things aren’t so rosy.

On the dangers of no deal, Ms FAirbairn is expected to say: “The responsibility to ensure an orderly exit is now in parliament’s hands. Each MP is democratically chosen to safeguard the security and prosperity of our country.

“And next week, they face a test. If they meet it with yet more brinkmanship, the whole country could face a no-deal, disorderly Brexit.

“The economic consequences would be profound, widespread and lasting. GDP would decline by up to 8%, meaning less money for our public services and those who rely on them.

“Businesses would face new costs and tariffs. Our ports would be disrupted, separating firms from the parts they need to supply their customers.

“Trade deals with countries like Japan, South Korea and Turkey would be lost.

“This region’s services sector, including broadcasters, insurance brokers and financial services firms would be at a sharp disadvantage.

“Make no mistake, no-deal cannot be ‘managed’. And it’s certainly not desirable.”

If the Government loses the meaningful vote, the CBI leader warns that: “It’s too big a gamble to simply hope that parliament will blink at the brink.

“If parliament can’t agree then it is for the government immediately to set out what it will do to avert a no-deal exit, and to guarantee this.

“If the government does choose this path, we have the chance finally to move beyond the all-consuming obsessions of Brexit.

“To start to heal the divisions that have left communities separated and investors questioning the UK as a business destination

“To address the challenges that have dogged our economy for decades.

“Lifting productivity, renewing creaking infrastructure, solving our skills challenge, investing in new technology, restoring competitiveness, and making this country fairer – for everyone.”

Ms Fairnairn will also call for “an open and controlled post-Brexit immigration system which “must take us beyond the generalisations and stereotypes, which, in the past, hampered honest debate”.

“As we leave the EU, our country has an opportunity - and a responsibility - to shape our own, independent immigration policy”, she will say.

“It must win public support and in turn support our economy.

She will add: “I also want to confront a myth that’s been gaining currency.

“It’s the idea that businesses turn to foreign labour because they are too lazy to invest in workers here.

“I hear politicians say it who should know better – and pull them up on it every time - because it couldn’t be more wrong.

Addressing the the government’s immigration proposals as outlined before Christmas, Ms Fairbairn will explain that these “fall far short of what our economy needs”.

“Overseas workers on low-incomes would be able to come here only for a single year.

“Companies would pay immigration charges at the unaffordable rate of over £1,000 per worker, per year.

“While consultation is welcome, these plans take us to within a year of when free movement is set to end.

“It’s simply not enough time. And it is now time to say so.

“One consequence of the historic lack of informed debate about immigration in this country is a lack of understanding about the scale of overseas workers’ contribution.

“So it’s up to us – the business owners, leaders and managers - to explain how overseas workers bring skill, innovation, and enterprise.

“Any hasty attempt to cut their numbers would not only harm business, but harm our country.”