CBI chief still concerned despite Brexit deadline extension

An extension to the Brexit deadline will not leave businesses “dancing in the streets” as many remain unprepared for a no-deal outcome, the director general of the Confederation of British Industry (CBI) has warned.

Carolyn Fairbairn said no-deal planning and stockpiling was leaving some of her members feeling like they were “burning money every day”.

Her comments come after EU leaders offered Prime Minister Theresa May a further six months to ratify or rethink her withdrawal deal.

The second extension to the Brexit process – initially intended to conclude on March 29 – pushed the deadline back to October 31.

Speaking at the Institute for Government in London on Thursday, Ms Fairbairn said the new delay would provide “brief relief” for businesses worried about the “cliff edge” of a no deal.

She said: “It will be quickly followed by frustration, exasperation, we’re still here.

“Six months will come around extremely quickly and I think members will already be thinking ‘but that’s the run-up to Christmas’.”

Ms Fairbairn added: “I’m afraid there will be no dancing in the streets around this and I wouldn’t expect much in the way of ramming down of no-deal planning.”

The British economy had shrunk by 1-2% as a result of the Brexit uncertainty, she said.

“We must have political compromise now to get this deal done so we don’t find ourselves in the same situation in six months’ time,” Ms Fairbairn added.

Just 4% of the CBI’s members say they are “completely ready” for a no-deal Brexit, and up to 50% of small businesses having done “absolutely nothing at all”, Ms Fairbairn warned.

Regulated sectors such as finance and insurance were more ready, with other sectors braced for disruption at ports and new tariff schedules.

Ms Fairbairn called on the Government to use the new Brexit delay to find a political compromise.

“Our huge hope off the back of this six-month reprieve is that it’s used to set up a process and it’s not just people locked in a room on their own which we’ve seen in the last few days,” she argued.

Ms Fairbairn said there should be a three to four-month process of bringing together civic society and wider stakeholders to discuss Brexit.

She added: “It could ask the question ‘what kind of Brexit do we want?’ We should have done it two years ago, why don’t we do it now?

“Me personally, I might have liked a slightly longer extension to enable that to happen, but actually this focuses minds.”

She also said more thought should be given to phase two of the political negotiations with the EU once the UK’s withdrawal had been agreed.

These would involve the “biggest trade negotiation in the UK’s history” and should be driven by a “strategic framework” of what was wanted.

Asked about former minister Boris Johnson as a prospective leader of his party, Ms Fairbairn said his alleged expletive-laden message to businesses revealed last year was “deeply shocking”.

She branded the Labour Party’s proposed policy to give workers a 10% stake in firms as “stupid”, saying it could “damage” the economy.

“What we know is that the day after that proposal was announced, it was debated in at least four international boardrooms that we know of around the world, and they were putting in place plans to move headquarters were it to happen,” she said.

Ms Fairbairn also argued that Labour’s proposal to nationalise utilities, with prices determined by Parliament, “starts marking us sound like a Banana Republic”.

She said the CBI supported the party’s plans to improve employee engagement and was discussing with Labour figures alternative ways to implement this.