Theresa May must rule out worst aspects of hard Brexit, says CBI chief

Business leaders have demanded Prime Minister Theresa May move to rule out the "worst aspects" of a hard Brexit break with the EU.

CBI director general Carolyn Fairbairn said it was a matter of urgency because uncertainty was impacting on investment decisions.

Ms Fairbairn warned it was crucial for ministers to state that Britain would not be reduced to the basic tariff arrangements set down by the World Trade Organisation (WTO) when it is expected to exit the EU in 2019, and that the "passporting" system allowing easy access for service industries would stay in place.

"What we would like is the ruling out of the really worst options. The falling into WTO rules in only 29 months from now, which is the prospective timetable, would mean up to 90% of goods could potentially have tariffs on them. There would not be the passports for our service industry.

"What is important here is to rule out some of these really negative options. To be choking off investment now, to be affecting investment now, is a really important thing.

"The urgency is around investment. It is the investment decisions that are being taken now that make this urgent," she told BBC Radio Four's Today programme.

Ms Fairbairn said some of the messages coming out of last week's Tory conference were not helpful for business.

The remarks come after business leaders with the CBI and manufacturing body the EEF signed an open letter warning of the dangers of a hard Brexit as they urged the Government to "give certainty" on the issue.

The letter said: "We respect the result of the referendum, but the Government must make sure that the terms of the deal to leave ensure stability, prosperity and improved living standards.

"Every credible study that has been conducted has shown that the WTO option would do serious and lasting damage to the UK economy and those of our trading partners."

The letter also questioned whether negotiations could be completed in the two-year framework envisaged.

"Many areas of regulation now up for discussion are highly complicated. The Government should therefore secure agreement of a transitional period, to ensure that businesses can continue to operate with no 'cliff edge' change to current circumstances until regulatory and legal changes can be implemented."

Mrs May has said she will formally trigger the two-year exit negotiations by the end of March.