A cold shower for British business
3 developments this week have created confusion and alarm over Brexit
Many British business leaders returned from their summer holidays with a feeling of relief that Theresa May’s government was sounding more realistic about Brexit.
The government appeared to accept there must be a business-friendly transition after March 2019. It acknowledged there should be some sort of indirect role for the European Court of Justice in the transitional period. Slowly, ministers are coming to accept that a Brexit bill has to be paid, even if they will not publicly specify how much it should be.
But three developments this week have created confusion and alarm in business circles. Number 10 and other Whitehall departments are once again in disarray over Brexit, and corporate bosses could be forgiven for feeling they have been caught in a cold shower.
First, there was the leak of a Home Office plan to restrict the number of low skilled workers coming to the UK after Brexit. Precisely why the paper has been leaked is unclear. It may be an attempt to manage expectations, which will allow ministers to unveil a more modest version of its immigration proposals later this year, a move that would appeal to Brussels and to UK business.
However, the draft has been declared to be “catastrophic” by business leaders, who fear the loss of workers in key sectors like agriculture and hospitality. It has been disowned by Amber Rudd, the Home Secretary, and Philip Hammond, the chancellor. Even the staunchly pro-Conservative Daily Telegraph this morning proclaimed on its front page that Mrs May’s Brexit plans are “in disarray.”
The second adverse development has been the letter circulated by Number 10 calling on business leaders to declare publicly their support for Brexit. The letter was rebuffed by many executives who refused to be strong-armed into signing it.
The initiative seems to have been little more than a clumsy attempt by Number 10 to drum up some helpful headlines when so much Brexit planning is uncertain. But after several months in which ministers finally appeared to be engaging with business, the initiative has soured the mood among company bosses.
Thirdly, some of the government’s technical preparations for Brexit are starting to look shoddy. A notable example is the plan set out in a recent position paper on customs arrangements.
It set out a proposal for an “innovative” approach to remove the need for customs checks at the EU-UK border. The UK said it would collect duties on behalf of the EU for goods entering Britain that were bound for the single market. All goods would be electronically tracked to ensure that the difference between UK and EU tariffs was paid.
However, David Davis, Brexit secretary, was forced to admit at the weekend that the “track and trace” plan amounted to little more than “blue sky thinking”. This is a remarkable turnround given that ministers made so much of the original paper.
It is too early to tell whether the UK’s Brexit plans are hitting the rocks. Although the war of words between London and Brussels is ugly, British officials still believe the commission will move to discussion of stage two of the talks — the wider UK-EU trade relationship — towards the end of this year. But UK business is fearful about the slow rate of progress.
In the meantime, Mrs May has worries on the domestic front. Pro-European Conservative MPs are pondering a rebellion against the government over the EU Withdrawal Bill, which is starting to be debated on Thursday in the Commons. These MPs will find it easier to take a stand if the May government continues to look as confused and incoherent as it has this week.