Business lobby group CBI warns Tories over no-deal Brexit

The Confederation of British Industry has warned Conservative leadership candidates over leaving the EU without a deal.

A no-deal scenario would do “severe” damage to businesses, it said in an open letter to all the MPs running to lead the party.

Director general Carolyn Fairbairn warned them that smaller companies can not afford the necessary preparations for leaving without a plan.

She invited them to meet her members.

Esther McVey, the first of the 11 confirmed candidates to stand, said earlier this week in a column for the Daily Telegraph, that the UK needs to “actively embrace leaving the EU without a deal”.

‘Long-term damage’

Former Foreign Secretary Boris Johnson and ex-Brexit Secretary Dominic Raab have said they would like to renegotiate the terms of Mrs May’s Withdrawal Agreement with Brussels, but would enforce the current leaving date of 31 October.

The CBI’s letter says: “Firms large and small are clear that leaving the EU with a deal is the best way forward.”

“Short-term disruption and long-term damage to British competitiveness will be severe if we leave without one. The vast majority of firms can never be prepared for no-deal, particularly our [small and medium-sized] members who cannot afford complex and costly contingency plans.”

The CBI says it speaks on behalf of 190,000 businesses employing a third of the UK’s private sector workforce.

Business has traditionally been important to the Conservative Party as one of its main sources of financial support.

However, overall donations to the party collapsed in the first quarter of the year, according to figures published by the Electoral Commission. The party received £3.7m in donations and public funds in the three months to March. For the fourth quarter of 2018, it was £7.5m.

Analysis: BBC business editor Simon Jack

British business has tonight issued a challenge to the next prime minister to prove that the Conservatives are the party of business. That can only be achieved, says the CBI, if the next leader commits to leaving the EU with a deal.

The lobbying group insists that firms large and small are clear that leaving the EU with a deal is essential to protect the economy, jobs and living standards.

However, of the 11 candidates (so far), at least half say they are prepared (in fact some of them are determined) to leave the world’s largest trading bloc as scheduled at the end of October – with or without a deal in place.

That includes the current favourite, Boris Johnson who, when Foreign Secretary, had a message for business leaders during the Brexit negotiations that ended in “ck” but wasn’t “back”.

That expletive – directed to a community that had traditionally seen the conservative party as its natural partner – shocked some in the business world and for others merely highlighted the dwindling influence of business in the politics of Brexit.

That gulf still seems very wide with business saying it can’t work with anyone who contemplates no deal – and a party which may find it hard to contemplate a leader who won’t.