Brexit transition deal needed as soon as possible, business leaders urge

Updated: 

Business leaders are calling for a Brexit transition deal to be agreed "as soon as possible" as firms are preparing to make "serious decisions" with consequences for jobs and investment early next year.

In a draft letter intended for Brexit Secretary David Davis, five of Britain's biggest business lobby groups also called for the transition period to match as closely as possible current trading arrangements with the European Union.

Theresa May, who on Monday will make a House of Commons statement on last week's European Council summit, has requested a time-limited transition of around two years with the UK and EU trading on broadly similar terms to now and payments to Brussels to fulfil already agreed budget commitments.

But although EU leaders agreed at the summit to begin scoping work on a future relationship, they made clear to the Prime Minister she must make more concessions on a divorce payment to unlock talks on trade and a transition.

The private letter, which is believed not to have been sent yet, was reportedly signed by the CBI, British Chambers of Commerce, manufacturing trade body EEF, the Institute of Directors and the Federation of Small Businesses.

The letter, originally obtained by Sky News, said: "Agreement (on a transition) is needed as soon as possible, as companies are preparing to make serious decisions at the start of 2018, which will have consequences for jobs and investment in the UK.

"And the details of any transitional arrangement matter: the economic relationship the UK and EU has during this time-limited period must match as close as possible the status quo."

The letter added: "It is vital that companies only have to undertake one adjustment as a result of the UK's withdrawal, not two - and that businesses, the UK Government and authorities in the EU have enough time to make the changes needed to deliver Brexit successfully."

The letter appeared amid reports that the Government may use the coming weeks to step up preparations for no deal in an attempt to force the EU's hand in negotiations by showing the UK is ready to leave without an agreement, in the hope that it could kickstart trade discussions with fewer concessions on an exit payment.

On Sunday, Liam Fox said leaving without an agreement and trading on World Trade Organisation (WTO) terms was "not exactly a nightmare scenario" but stressed he would prefer to have a deal.

The International Trade Secretary also dismissed as "completely wrong" suggestions from French president Emmanuel Macron that "secondary players" in the UK were "bluffing" about the possibility of a no deal outcome.

Commenting on behalf of the Open Britain campaign group for close ties with the EU, Labour MP Chuka Umunna said: "Business groups are understandably alarmed by the Government's lack of progress in the talks. And the full-blown Cabinet disagreements over how a transition period would work make it even less likely that a deal will be reached.

"No deal would be devastating for business, for people's jobs and wages and for national security."

Liberal Democrat leader Sir Vince Cable said: "Uncertainty is toxic for business and is already having a serious effect on investment. When the Government plays negotiating games by threatening to crash out of Europe, it is not taking account of the fact that it is spooking business investors.

"The business lobbies are pleading for clarity and certainty and not getting it. They are hoping for a prolonged transition as part of a negotiated Brexit. But the Government can't and won't focus on that objective let alone what happens after the transition."

Meanwhile, Jean Claude Juncker's chief of staff was accused of leaking details of a private dinner at which the European Commission president discussed Brexit with Mrs May ahead of the Council summit.

Martin Selmayr was accused by Nick Timothy, the PM's former chief of staff, of briefing an account of the meeting that appeared on the website of the German newspaper Frankfurter Allgemeine Zeitung (FAZ).

Earlier this year, Mr Selmayr was accused of leaking details of another private dinner between Mrs May and Mr Juncker at 10 Downing Street which the Commission president was said to have left "10 times more sceptical" than when he arrived.

In the highly personal new account of last Monday's dinner, Mrs May was said by FAZ to have "begged for help", and seemed "anxious" and "tormented" as well as "despondent and discouraged".

Mr Timothy tweeted: "After constructive council meeting, Selmayr does this. Reminder that some in Brussels want no deal or a punitive one."