Skip to main contentSkip to navigationSkip to navigation
The City of London’s skyline
In the City of London, leading financiers argue that the political brinkmanship is failing to take account of how quickly many such commercial deadlines will be upon them. Photograph: Daniel Leal-Olivas/AFP/Getty Images
In the City of London, leading financiers argue that the political brinkmanship is failing to take account of how quickly many such commercial deadlines will be upon them. Photograph: Daniel Leal-Olivas/AFP/Getty Images

Brexit deadlock means time is running out fast for businesses

This article is more than 6 years old
Brexit policy editor

In the absence of progress business leaders will be soon be forced to make irreversible decisions on future investment and employment

Opponents of Brexit are simply “playing for time”, David Davis has claimed, amid growing signs of political deadlock in both Brussels and Westminster. But for the potential victims of a disorderly Brexit, time is the one thing they don’t have.

Businesses say this week’s failure to make progress on on either EU exit talks or domestic Brexit legislation means they are increasingly forced to assume the worst when planning for the final year of British membership.

Airlines, for example, have told their suppliers that they could soon be legally unable to sell annual advance tickets because the lack of a transition deal means they cannot guarantee regulatory approval to fly after March 2019. “If we don’t get [a transition deal] sorted quickly after Christmas, it will be squeaky bum time for lots of businesses,” said one aviation executive in receipt of such warnings.

In the City, leading financiers argue that the political brinkmanship is failing to take account of how quickly many such commercial deadlines will be upon them.

“A week may be a long time in politics, but in business it is nothing at all,” said Xavier Rolet, chief executive of the London Stock Exchange, in an impassioned piece for the Daily Telegraph on Wednesday.

He echoed the warnings of the chancellor, Philip Hammond, that the value of any transition deal to the British economy will decline quickly if it is not in place before business leaders are forced to make irreversible decisions on future investment and employment.

“Any exit fee will earn something in return as we enjoy continued membership benefits for a defined period,” wrote Rolet, in a last-ditch plea for Britain to open its cheque book to unlock talks in Brussels.

The Brexit secretary insists Britain should hold its nerve in the face of such threats. “They are using time pressure to get more money out of us,” Davis told MPs on Tuesday after a private dinner with the European commission failed to break the deadlock. “That is what’s going on. It’s obvious to everybody.”

Yet, even Britain’s chief negotiator acknowledges that this leaves little room for manoeuvre.

“We are reaching the limits of what we can achieve without consideration of our future relationship,” he added.

On top of this deadlock in Brussels, the government now also has to contend with growing opposition to its EU withdrawal bill in the House of Commons. Reports that Tory whips have had to delay its committee stage for a second time in the face of a slew of hostile amendments point to a bumpy road ahead even if they can cut a deal.

Yet without smooth passage of the withdrawal bill, all sorts of other crucial Brexit legislation risks being held up, including bills intended to set out Britain’s new immigration and customs laws.

This only intensifies the uncertainty for exporters and employers about the terms under which they will soon be expected to trade.

With EU workers in Britain unsure whether they will be able to work at all, firms report that many are looking at long-term personal decisions on schooling and housing and deciding not to risk sticking around in the hope there will be a deal.

“Businesses we are speaking with are stressing the huge importance of EU staff to their operations, with real worry that Brexit will result not only in a smaller pool to recruit from but also skills and talent shortages,” said Darren Seward, at NFU Mutual.

Yet he argues the onus should also now be on employers to brace themselves for whatever Brexit might bring.

“Some businesses already have plans in place for addressing these challenges – such as working more closely with schools and colleges – but in general, very few businesses appear to have done much planning and preparation for Brexit,” added Seward. “While it’s difficult to prepare for an unknown, businesses should at the very least start thinking about how they would manage a changed employment landscape.”

Most viewed

Most viewed