Delay Brexit if no trade deal can be struck, urge business leaders

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Brexit should be delayed if a trade deal cannot be struck by the end of the two-year negotiation process, business chiefs have said.

The British Chambers of Commerce (BCC) also called for firms to be allowed freedom to continue recruiting skilled and low-skilled workers from the European Union after the UK has broken away from Brussels.

Prime Minister Theresa May has pledged to trigger Article 50 by the end of March and hopes to complete a trade deal alongside the agreement on the divorce from the EU.

The BCC said concluding both parts of the deal within the two years allowed by Article 50 would be the "ideal outcome", but "should this prove impossible, we should seek an extension to the negotiating period to enable completion of both agreements concurrently".

It comes after Sir John Major said the chance of no agreement being reached within the time limit is "very high".

The former prime minister attacked Mrs May for leading the public to expect a future outside the European Union that is "unreal and over-optimistic".

Meanwhile, the Government shot down the first challenge in the House of Lords against its plan to formally trigger the negotiations.

Peers voted by 299 to 136 against an amendment to the Brexit Bill demanding the UK retains membership of the European single market.

A transitional deal, which has been spoken about as a possibility by politicians on both sides of the English Channel, is only desirable if completing both strands of the negotiations simultaneously proves impossible, the BCC said.

The chamber also called for an immigration system "with minimal bureaucracy, costs or barriers" after Brexit, with EU workers exempted from the Tier 2 visa system for skilled workers.

In a report published to coincide with the group's annual conference, which will be addressed by senior politicians including Business Secretary Greg Clark and shadow chancellor John McDonnell, the BCC warned that the Tier 2 system would be "incapable of handling the volume" of applications if EU workers were included in it after Brexit.

Amid speculation about the regime ministers will impose to reduce net migration, the BCC said if workers from the EU were covered by restrictions, they should be "simple and light-touch" and "allow businesses to hire staff at any skill level".

The report noted concerns in sectors such as agriculture and hospitality, which have relied on low-skilled workers from EU countries to fill vacancies.

The group's recommendations for Brexit, based on feedback from more than 400 businesses at focus groups, along with nearly 20,000 responses to surveys, also include:

:: Giving certainty on the residence rights of existing EU workers - a priority in the negotiations for Mrs May

:: Minimising trade tariffs, with moves to avoid costly and burdensome non-tariff barriers

:: Developing new customs procedures in partnership with business and considering the creation of free trade zones around major British ports, allowing goods to be brought in, assembled and re-exported without any red tape or duty being paid

:: Ensuring stability by incorporating existing EU regulations into UK law and maintaining these for a minimum period following Brexit while keeping product standards aligned with, and recognised by, the EU

:: Avoiding a "hard border" between Northern Ireland and the Republic of Ireland

The BCC's director general Adam Marshall said: "Business communities across the UK want practical considerations, not ideology or politics, at the heart of the Government's approach to Brexit negotiations.

"What's debated in Westminster often isn't what matters for most businesses. Most firms care little about the exact process for triggering Article 50, but they care a lot about an unexpected VAT hit to their cash flow, sudden changes to regulation, the inability to recruit the right people for the job, or if their products are stopped by customs authorities at the border.

"The everyday nitty-gritty of doing business across borders must be front and centre in the negotiation process.

"What's also clear is that the eventual Brexit deal is far from the only thing on the minds of the UK's business communities. An ambitious domestic agenda for business and the economy is also essential so that business can drive our post-Brexit success.

"Firms across the UK want a clear assurance that Brexit isn't going to be the only thing on the Government's economic agenda."

Former business minister Anna Soubry, a leading supporter of the Open Britain campaign, said: "If it proves impossible to agree a good free trade deal with Europe at the end of the Article 50 process, it is essential that we arrange a transitional deal that will maintain our current terms of trade and prevent the economy from going over a cliff edge."