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Analysis

CBI pulls punches on single market and customs union

by Hugo Dixon | 21.01.2018

The Confederation of British Industry is trying to nudge the government towards a saner Brexit. But its “softly, softly” approach doesn’t match the urgency of the crisis we face.

Carolyn Fairbairn seems afraid of rocking the boat by telling the government unpalatable truths in a speech she is making tomorrow. True, the CBI boss slams the Canada-style trade deal that hard Brexiters in the Cabinet advocate. This would be an “ocean away from what we need”. She is right that such a model would do almost nothing for our world-beating services industries, which account for 80% of our economy.

But the CBI boss avoids the obvious way to protect our services industries: stay in the EU’s single market. Fairbairn even criticises this option. On this point, the Trades Union Congress, is more robust. It is unequivocally advocating staying in the single market.

By contrast, Fairbairn suggests that we “start with rules we already share, and move on from there”. She then goes on to propose “a new independent court or joint committees” to handle disagreements when we decide to diverge from EU rules. The CBI – along with soft Brexiters in the Cabinet who also like this idea – don’t seem to have tested it on the other EU countries.

The other leaders are likely to say, as French president Emmanuel Macron did on his trip to Britain last week, that if we want to stay in the single market, “be my guest”. But they won’t be thrilled by Fairbairn’s idea, which will mean being stuck in complex negotiations on every aspect of the economy with the UK in perpetuity. They may think they have better things to do.

“A” or “the” customs union?

Fairbairn’s other big idea – that we should negotiate “a” customs union with the EU – is also sub-optimal. Why doesn’t she say we should stay in “the” EU’s customs union? As with the CBI’s softly, softly approach on the single market, it seems she doesn’t want to antagonise the government.

Fairbairn’s language closely mirrors that of David Lidington, the soft Brexiter who became Theresa May’s new right-hand man in the Cabinet after Damian Green was fired. Lidington told the Telegraph this weekend that the UK could stay in “a” customs union but not “the” customs union.

The distinction may sound minor and unimportant. But it masks the fact that nobody has found a way of keeping open our borders to the EU – which “a” customs union would do – without opening a back door that lets goods from other countries, with which the bloc has deals, flood into the UK.

We could of course try to copy the deals the EU has with the likes of Japan and South Korea – and, if it eventually signs pacts with them, China and America too. But if they refuse, our companies won’t have any reciprocal rights to export to these countries. The only sure way of securing our interests is to stay in the EU and remain a full member of its customs union.

Transition to a cliff

The other weakness in Fairbairn’s speech is that she avoids mentioning the most pressing issue: that the government is hoping to agree by the end of March a two-year transition deal to cushion the impact of Brexit. The economy is likely to fall off a cliff at the end of 2020 because two years isn’t nearly long enough to nail down a new trade deal.

The CBI ought to be sounding the alarm, but it isn’t – again because it seems worried about ruffling the prime minister’s feathers. The snag is that, if it doesn’t say something pretty quick, it could well miss the boat.

It could be said that the trade body’s softly, softly approach is politically smart. Maybe it wants to give the prime minister a chance to negotiate a deal where our rules can gradually diverge from the EU’s – and will come out decisively in favour of the single market if she can’t.

Maybe it wants to give May a chance to come up with a brand new customs union that doesn’t leave the back door open – and will back the existing customs union if she can’t.

Maybe it will eventually say that if we are going to stay in both the single market and customs union, we should then stay in the EU as well – because we will then keep our position as one of Europe’s most powerful countries rather than become a rule-taker.

Maybe, maybe, maybe. But, if not, the CBI will be selling industry’s interests short.

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Edited by Luke Lythgoe

4 Responses to “CBI pulls punches on single market and customs union”

  • If the Remain camp is winning the argument maybe the time has come for a change in emphasis? Like it or not, a very large part of the electorate is still solidly in the Leave camp. That is one problem.

    The other problem is equally important. It is assembling a face saving formula for the hard-Brexitters. Which means a good chunk of the Conservative party: the elderly, the retired and the activists. Simply those who are scared. The similarly minded Labour supporters also need the same re-assurances.

    So how to move forward with this consensus based approach in mind? Maybe this is the CBI strategy? If so in the world of real politic it needs creative support. Various thoughts soon come to mind. Cross-party cooperation is one obvious source. A long term national vision is another.

  • What possible explanation is there to the attitude of the CBI ? Is it possible, as some say, that the patronage exercised by the PM is such that Industry does not dare show a hostile attitude ? But surely the livelihood of the business’s concerned is involved ? It does not seem possible that the CBI would sacrifice its own business interests- those of the nation- because they were fearful of reactions from government .

    And yet, there are some very funny and strange goings-on in this country of ours which do not just add up. Who is in charge of the country?

  • well, there are dissenssions between the members of both the CBI and Federation of small enterprises.
    note, that many are also tory members (small c conservatives, though) or connected to them.
    this makes it difficult to lay too hard on the government.

    and you have to add one more aspect : delusional greed

    the thinking in many circles is still that the UK can bamboozle the rest of the Member States into accepting a “supra pares” role for the UK.
    somehow, they cling to the idea it’s perfectly reasonable to expect to both cherry pick the commercial advantages they want from the EU, and that it’ll be given to them.

    watch the FT online lead page of Macron’s visit to the UK a few days ago.
    on the same page, you had both stories : Macron tells May that she can have a bespoke deal, and Macron tells May that the UK can’t have a bespoke deal.

    somehow, this kind of information is “reasonable”. and the FT is reasonable. especially when you compare it to what one’s read in The Times, Guardian or Mirror. let’s forget about the garbage from the rest of the tabloid pack.

  • A glance at the correspondence following Hugo’s Times article shows that Brexiteer thugs still troll the media everywhere, while remainers hang back nervously, scared of offending anyone. After 40 years of anti=European propaganda, Britain is a sick country, and it’s no wonder many of our continental friends feel we should be quarantined for the greater good of the European project, while the sickness runs its course.