UK ‘needs whole economy approach to make success of Brexit’

THE UK’s new relationship with the European Union (EU) must meet the needs of every sector of the economy to be a success, as the consequences of leaving any behind could have knock-on effects for others, says the CBI. This follows its largest consultation of members since before the EU referendum.

The CBI has held thousands of conversations across the country with trade associations and firms of all sizes since the summer and taken an in-depth look at the opportunities, concerns and questions that 18 sectors of the UK economy face ahead of EU negotiations in 2017 - on the ease of doing business, regulation, and access to talent.

In Making a Success of Brexit, the CBI calls on government to consider the complexity of the modern economy where no business operates in isolation. Products come with complementary services, supply chains overlap across borders, and many companies don’t fit neatly into a single sector.

Carolyn Fairbairn, CBI director-general, said: ‘Businesses in every corner of the UK are rolling up their sleeves as they prepare for life outside the EU and are committed to making it a success.
‘Leaving the EU will be a highly complex process, and all sectors of the economy are making their priorities clear to get it right.

‘Government will need to take a ‘whole economy’ approach to avoid leaving sectors behind.’

The CBI’s consultation reveals that many questions are shared by businesses across sectors.

  • Airlines – and the wider aviation sector, which employs nearly one million people - are asking how the Government will seek agreements that allow the smooth transport of holiday-makers, workers and goods, as are logistics companies, haulage firms and retailers
  • Restaurants are asking how they will continue to hire chefs from abroad, while companies in the chemicals and plastics sector - which export towards £30bn worth of products each year - are asking whether they will still be able to access the skilled employees they need at their plants. This is also an issue for logistics firms who already face a shortfall of nearly 35,000 HGV drivers
  • Construction companies – which will build the UK’s new homes, roads and rail in a sector worth over £100bn to the UK economy - are asking about the potential costs of importing materials and the future of the CE marking regime, as are many manufacturers
  • Our creative industries – which employ nearly 2 million people across music, film, video games, architecture and more - are asking about the future of Intellectual Property and data flows, as are life sciences businesses, technology companies and other sectors.

Carolyn Fairbairn, CBI director-general, said: ‘While each sector has issues specific to them, there are many crossovers and common principles that unite them, for example the need to avoid cliff edge changes that cause disruption to supply chains and trade.

‘Where companies differ is how they prioritise these issues and the contrasting emphasis they place on trade, migration and regulation. To make a success of Brexit for the whole economy, Government needs to work through all these issues, as well as seize the opportunities afforded by a new focus on the UK’s global economic relationships.

‘From aviation and chemicals to life sciences and agriculture, firms of all sizes will want to understand how easy it will be for them to trade in the future with the EU which remains the biggest market for British businesses. They need to know what rules they will be working by and how they can still secure access to skilled workers and labour, where shortages already exist.’

The report identifies that many legal requirements have cross-sector implications – for example, energy and environmental regulations have an impact on construction, housing, manufacturing, water companies. The success or failure of some sectors could affect others – the future of financial services regulation, for example, has been raised by firms in the automotive, housing, real estate and retail sectors, given the role they play in finance, insurance and pensions. Meanwhile, the increasing diversity of offerings from firms means they have cross-sector interests - some food and drink companies produce biofuels as well as the products on our supermarket shelves, and many manufacturers offer comprehensive services packages alongside their goods.

Carolyn Fairbairn, CBI director-general, said: ‘The modern UK economy is ever more interconnected. Legislation in one sector can have a knock-on effect in many others. For example, any business that handles data or has an online presence can be affected by future digital regulations, not just technology companies.

‘The CBI will work closely with the Government to deliver an outcome that helps to meet the needs of firms throughout the UK, building a post-Brexit economy that spreads prosperity to all.’
The CBI has identified six common principles as business priorities:

  • A barrier-free relationship with our largest, closest and most important trading partner
  • A clear plan for regulation that gives certainty in the short-term, and in the long-term balances influence, access and opportunity
  • A migration system which allows businesses to access the skills and labour they need to deliver growth
  • A renewed focus on global economic relationships, with the business community at their heart
  • An approach that protects the social and economic benefits of EU funding
  • A smooth exit from the EU, avoiding a cliff-edge that causes disruption

The CBI consultation also identifies specific issues that may impact different sectors.