Prepare for Brexit by investing more in research, PM tells business leaders

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Theresa May has challenged business leaders to step up funding for research and investment to prepare the UK economy for the post-Brexit future.

The Prime Minister said UK businesses were falling short of rivals in the United States and Germany in pumping money into developing new technology.

In a speech at the CBI's annual conference she sought to reassure business leaders nervous about the Government's approach to Brexit that progress was being made on securing a trade deal with an implementation period after the UK leaves the European Union in March 2019.

Mrs May's address was preceded by CBI president Paul Drechsler who used his speech to criticise Cabinet disunity and the "soap opera" nature of the Brexit process.

Theresa May
Theresa May speaks at the annual CBI conference in London (John Stillwell/PA)

Calling for businesses to do more to fund research she said: "Today, for every £1 in Government support for R&D, British businesses invest £1.70.

"But in America, businesses invest around £2.70 and German businesses invest nearly £2.40. So I want you to work with us to drive up business investment."

Before the publication of the Government's industrial strategy and Chancellor Philip Hammond's Budget later this month, Mrs May stressed her desire to tackle problems in the housing market.

"We will build the homes our country needs so everyone can afford a place to call their own and all the security that brings," she said.

Mrs May used the speech to the CBI to insist that after a decade of recovering from the financial crash, the next 10 years will be about "a new chapter in the story of the British economy".

The Prime Minister defended her approach to the Government playing a role with its industrial strategy, but insisted there would be no return to 1970s interventionism.

On Brexit, the CBI has warned that 60% of firms will have begun implementing contingency plans for a no deal scenario by the end of March 2018 - putting pressure on Mrs May to secure urgent progress to avoid jobs being lost overseas.

Uncertainty over Brexit has also been given as a reason why some firms have been reluctant to invest in the UK.

The Prime Minister said: "I have made clear that a strictly time-limited implementation period will be crucial to our future success.

Read our response to @Number10gov speech to #CBI2017https://t.co/5pCaIvhOyO

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"I know how important it is for business and industry not to face a cliff-edge and to have the time it needs to plan and prepare for the new arrangements.

"During this period our access to one another's markets should continue on current terms, and I want us to agree the detailed arrangements for this period as early as possible.

"But we should also be able to develop our relationships with countries outside the EU in new ways, including through our own trade negotiations."

Carolyn Fairbairn
Carolyn Fairbairn welcomed the PM's "commitment" (Anthony Devlin/PA)

CBI director general Carolyn Fairbairn said: "The Prime Minister gave her wholehearted backing to a modern industrial strategy that backs dynamic, responsible business rather than heavy handed intervention.

"Four out of five firms are clear that industrial strategy is the fundamental building block of a fair UK economy with great jobs and rising living standards.

"With the pace of change of technology accelerating, business and Government must move quickly, together, to transform innovation, skills and infrastructure to boost all sectors and regions.

"The CBI has been clear this must be delivered in the partnership of the century between firms and the Government, with a pro-enterprise environment that unlocks more investment. The Prime Minister's commitment to this is welcome."