Thousands of UK Jobs at Risk over Slow Brexit Negotiations, Business Groups Caution

Prime Minister Theresa May faces a new onslaught over her Brexit plans from corporate Britain, after the U.K.’s five main business lobbies urged her to make progress in the negotiations or risk losing jobs and investment.

After facing down a rebellion in her Conservative party over her flagship piece of Brexit legislation last week, the unrelenting pressure on the premier continues from all sides. U.K. Plc is warning that tens of thousands of jobs are at risk, and infighting in her cabinet over budget funds threatens May’s position. To cap it all, she’s due to attend a summit of European leaders at the end of the week after making scant progress during the past three months on the terms of rapidly-approaching divorce.

Business ratchets up pressure

Бизнес партнерство и бизнес-идеи

Britain’s major business lobby groups used the second anniversary of the Brexit referendum on Saturday to tell May they’re ” deeply concerned” that time is running out for her to secure a Brexit deal that protects jobs and investment.

“In the absence of clarity, businesses will inevitably have to implement plans for a worst-case scenario, which could cost the U.K. economy billions of pounds, thousands of jobs and leave many families without a main income,” the groups said in a letter to May. “An increasing number of companies have made clear that in the face of uncertainty, they are now actively considering moving substantial volumes of work away from the U.K.”

The letter followed a strident warning on June 21 from Airbus SE about the risks May’s Brexit strategy poses to business. The aerospace giant said a no-deal Brexit, which May has repeatedly said is an option, would be “catastrophic” for the company and could lead to it pulling investment from the U.K. — where it employs 14,000 people and supports tens of thousands more in the supply chain.

German automaker BMW, which also employs thousands of people in Britain, followed with its own warning that it’ll have to start making contingency plans that will damage Britain.

May’s cabinet isn’t impressed

The warnings haven’t impressed some members of May’s cabinet. “It’s completely inappropriate for business to be making these kinds of threats,” Health Secretary Jeremy Hunt told the BBC on Sunday.

International Trade Secretary Liam Fox was also dismissive of the concerns about a no-deal Brexit. “We’ve got to be free in a negotiation to say if we don’t get the deal that we want, there won’t be any agreement,” he told Sky News. Foreign Secretary Boris Johnson was reported by the U.K. media to have been less than diplomatic, dismissing the concerns of business with a four-letter expletive.

“Would it be too much to ask that senior members of the cabinet behave like grown-ups, discuss serious issues in a serious way, and avoid running to the papers with childish threats or swearing at foreign dignitaries?” Tory lawmaker Nick Boles said on Twitter.

Still, there was some respite, with the Financial Times reporting that some 50 Conservative lawmakers are prepared to block any attempt to crash out of the EU without a deal.

EU leaders bemoan a lack of progress, too

European leaders will hold a summit in Brussels June 28-29, at which the U.K. once hoped it would more or less wrap up the terms of divorce and allow it to concentrate on negotiations for its future relationship with the bloc. Instead, glacial progress since March leaves envoys with other issues to resolve, including a backup plan for the Irish border and the protection of regional food and drink products.

Data compiled by Bloomberg shows that between March and June, envoys agreed on just 5 percent of the wording of the Brexit treaty, to add to the 75 percent already settled. That leaves a fifth of the deal to be resolved by October — including all the thorniest topics. EU leaders will express concern about the lack of “substantial progress,” according to the first draft of the summit statement.

The problem is, the government still doesn’t know what it wants

The slow progress is due mainly to May’s squabbling ministers. She faces a near-impossible task of keeping all the warring factions in her divided party happy. Her inner cabinet is still split over which of two options on future customs arrangements to pursue, and yet EU envoys have rejected both. May’s preferred option is “bureaucratic and unwieldy,” Andrea Leadsom, a member of her cabinet, told the Daily Telegraph on Monday.

May’s promised white paper spelling out Britain’s vision for the future relationship isn’t due until after the EU summit.

It’s not just Brexit her ministers are warring about. After the premier promised a 20 billion pound boost to health-care funding, Defense Secretary Gavin Williamson is now demanding 20 billion pounds over the next decade to boost his own department, a more traditional ground for Conservative spending.

The Mail on Sunday reported Williamson as saying Tory lawmakers could vote down the budget if the funding wasn’t forthcoming, and telling senior military officers of May: “I made her — and I can break her.” Williamson ran May’s leadership campaign in 2016, and as chief whip, was responsible for party discipline until he took his cabinet post in November. His office didn’t respond to a text message seeking comment on the Mail’s Sunday report.

At least there’s one bright point for business

After decades of debate, Parliament on Monday will finally get a vote over whether to allow Heathrow Airport to build another runway, something that business has been clamoring for.

Transport Secretary Chris Grayling said in a statement on Monday that the expansion must comply with five pledges: the project can’t cost taxpayers a penny; it must boost the economy and create 100,000 new jobs; 15 percent of new landing slots must be for domestic flights to boost the regions; it will comply with existing climate change and air pollution commitments; and there will be legal protections on those commitments, with Heathrow facing unlimited fines for breaching them, according to the government.

May is compelling her lawmakers to vote for the project, an order that led Trade Minister Greg Hands to quit his post last week. There’s no such point of principle for Johnson, a long-time opponent of Heathrow expansion who once vowed to lay down in front of the bulldozers to stop the project. He’ll be out of the country and unable to vote either way on it.

–With assistance from Ian Wishart.

Copyright 2018 Bloomberg.

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