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Covid plus Brexit could be one

crisis too many for businesses

MANY FIRMS ARE JUST CLINGING
ON DURING THE CORONAVIRUS
CRISIS AND HAVE NO CAPACITY TO
CONTEMPLATE FAILURE IN TALKS
WITH EUROPEAN UNION

way from this unparalleled health and economic
crisis, Brexit talks continue from a distance. For
many firms facing unrelenting stress from
ACovid-19, these talks have been out of sight,
though not quite out of mind. Their full focus is on
immediate survival and recovery. But as more businesses
take tentative steps to reopen slowly and safely, every
decimal point of economic growth is being fought for.
Businesses expect that same spirit to be replicated in
Brexit talks this week.
The signals so far are not encouraging. Both the UK
and the EU have rigid mandates and are following them to
the letter. Negotiation by video conference doesn’t allow
for the kind of side-line conversations that are normally
used to smooth differences in trade talks. “Unless the
dynamic shifts, it looks like both sides will stay trapped in
a holding pattern, with no trade deal a real possibility at
the end of the year when the UK is scheduled to leave the
transition period as it leaves the bloc,” says Carolyn
Fairbairn, CBI director general. “For businesses, jobs and
economic confidence in this a year of crisis, it would be a
shocking outcome. comments Fairbairn. Before Covid-19, the UK led the we will be fighting for every job. We have forgotten what
“For many firms, particularly smaller ones fighting to world in professional services trade. But services trade has higher unemployment numbers feel like since we haven't
keep their heads above water due to Covid-19, the idea of collapsed, with company surveys showing the greatest fall experienced it since the 1980s. The regions that would be
preparing for an abrupt and chaotic change in EU trading in all measures since records began. “Perhaps by the end hardest hit are the least resilient and most disadvantaged.
relations in seven months is beyond them,” she continues. When large numbers of people are out of work, every
“They are not remotely prepared. Faced with the single job matters.”
desperate challenges of the pandemic, their resilience and “ So what is the answer? Negotiators promised progress
ability to cope is almost zero.” WHILE IT MAY BE TEMPTING on fishing and financial services by the end of the month.
With 10% of the economy closed, and 8 million FOR SOME TO DOWN TOOLS “Delivering on those promises could instil confidence
people in furlough and not working, the UK is already in urgently needed by businesses operating within our
recession. Stockpiles that were built up last year in AND HEAD STRAIGHT FOR THE interconnected supply chains,” says Fairbairn. “But these
preparation for a no-deal outcome in March, October, and EXIT, THERE ARE MANY self-imposed deadlines must start being met.
December last year, have been used to plug supply PEOPLE’S LIVELIHOODS AND “The desire for no further delay is understandable.
shortages created by the pandemic, while half of all After all, the UK made its choice in the Brexit referendum
manufacturers are having difficulty reconnecting their BUSINESSES AT STAKE. THE nearly four years ago now, and it is not clear delay would
supply chains. CURRENT AIR OF RESIGNATION necessarily bring a better deal when the UK starts to trade
“Many businesses, especially smaller ones, have SURROUNDING THE BREXIT with the European Union having left the bloc. But while it
burned through cash reserves they would have otherwise may be tempting for some to down tools and head straight
used for rainy days,” says Fairbairn. “One logistics firm TALKS MUST BE SHAKEN OFF for the exit, there are many people’s livelihoods and
would need to hire 300 new border officials starting in businesses at stake. The current air of resignation
June to prepare for a no trade deal Brexit, and are asking surrounding the Brexit talks must be shaken off. It is why
whether they should do this – and how this can possibly of the year these companies will be climbing back to their a new political dynamism on both sides is so essential if
be a sensible use of their stretched resources.” feet,” says Fairbairn. “However, an abrupt introduction of we are to reach a deal and protect the economy.”
Without a sensible arrangement on EU-UK regulation restrictions on trade and movement with the EU at that In recent months, political leaders across Europe have
and tariffs, many companies will face new costs into the point would be devastating. Take the automotive industry, shown that what previously may have been thought of as
millions of doing business in the UK. Meanwhile, the cost which has already seen sales plummet to record lows. impossible, is not. “A good deal with the EU will be just
of producing their goods has increased because social New tariffs, customs checks and delays, would add yet one strand of a national recovery plan as the UK responds
distancing – while essential – means lower productivity on further pain onto an industry that has been such a shining to the coronavirus pandemic,” Fairbairn concludes, “but it
the factory floor. “For them, the price of a bad EU outcome beacon for the UK economy over a number of years. The will be one of the most important for the future of our
is that they may no longer have a sustainable business,” net impact would be higher unemployment at a time when economy, jobs and livelihoods.”

12 INDUSTRIAL TECHNOLOGY • May/June 2020