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Getting down to business

by Vicky Pryce | 21.07.2017

Are business voices warning about the risks of Brexit finally being taken seriously? The fact that the new “Business Council”, which includes all the main business representative bodies, has at last had its first formal meeting at No 10 Downing Street is cause for hope. According to reports, the attendees spoke as one in condemning talk of “no deal” being in any way an acceptable option. But one still wonders why it has taken so long to get to this point and whether business input will be used in the most constructive way.

This is in part business’s own fault. British business was conspicuously quiet during the referendum debate, with consequently little real impact. Admittedly, the Stronger In campaign was chaired by a businessman, Lord Rose, but it became clear early on that what was needed instead was a charismatic politician who could move sentiment.

Certainly, people forget that it was firms rather than the government that were responsible for some 2.5m jobs created since 2010, providing directly and indirectly the tax revenue the country needed. Yet business has suffered a serious decline in trust since the 2008 financial crisis and has struggled to regain it since. And many trade associations and their individual members had previously been scathing about regulation from the EU, much of which it has become clear would have existed irrespective of our membership – and in fact often benefited businesses by ensuring a level playing-field across the European single market.

Any business that put its head above the parapet during the referendum to defend Europe and its positive impact on business performance had its motives questioned and was immediately branded unpatriotic. But this vitriolic atmosphere is hopefully at an end. The snap election result has increased the need to consult and involve business, reversing a trend which since the 2015 election had led to the disbandment of a number of business advisory groups including even a panel on monitoring the economy which used to regularly advise the business secretary on the latest trends.

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So government is now finally, on the surface at least, turning to business for advice and looking at ways to avoid a ‘cliff edge’, including retaining the free movement of people during a transition period.

After all, it is businesses that know and understand many of the issues that will matter in the negotiations: what frictionless trade in both goods and services really means and the benefits it brings; how supply chains work and what the impacts on various sectors are likely to be if Britain is no longer part of the customs union; how leaving current EU regulatory bodies might increase rather than reduce the burden on business; and how workers from other parts of the EU have contributed to profitability and growth, as well as to revenue for the Exchequer.

It is that detailed understanding that the civil servants and those involved in trade negotiations mostly lack. The Spanish lawyer Miriam González Durántez, of Dechert, now argues that firms actually need to be involved in the negotiating process if the right deal is to be obtained.

Whether or not that is accepted, it may be more important to use this offer of ‘rapprochement’ with the government to cut through what is clearly an evidence-light Brexit policy environment and for business to work with the technocrats and policy makers to pinpoint where the true costs of leaving the current trading arrangements might lie.

But if the British Business Council becomes just a talking shop without proper recognition of what is at stake, firms will have no option but to put into practice those contingency plans that the Institute of Directors has highlighted now exist. That could mean staff and operations being moved abroad or investment being reduced. This is no mere threat, but simply a realistic response to a chaotic and uncertain reality.

Vicky Pryce is a board member at the Centre for Economic and Business Research, and former Joint Head of the Government Economic Service.

Edited by Bill Emmott