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No-deal Brexit during coronavirus pandemic is 'setting alight shed while house on fire'

Tom Belger
·Finance and policy reporter
·2-min read
Director-General of the CBI, Dame Carolyn Fairbairn speaking at the CBI annual conference at the InterContinental Hotel in London.
Director-general of the CBI, Dame Carolyn Fairbairn speaking at the CBI annual conference at the InterContinental Hotel in London. (PA)

One of Britain’s most senior business leaders has issued a stark warning about firms’ preparedness for a no-deal scenario when the Brexit transition period finishes at the end of the year.

Carolyn Fairbairn, outgoing director-general of the Confederation of British Industry (CBI), warned failure to secure a trade deal would damage growth and worsen inequalities.

Britain will remain closely tied to the EU until 2021 as part of a transition deal struck between Brussels and prime minister Johnson’s government last year.

But negotiators are running out of time to break the deadlock in talks over a future trade deal, and the UK government has refused to extend the transition.

Fairbairn has written to the prime minister, warning it risks the same “catastrophic” cliff-edge as last year. Significant new trade barriers and a rupturing of economic and other longstanding ties are likely if no agreement is reached.

READ MORE: UK recession to be worse than France, Italy, Spain, and Germany, warns OECD

Fairbairn warned such an outcome would be a “major block” to recovery from the coronavirus crisis, which has battered UK and EU economies. "As one member put it to me — just because the house is on fire, it doesn't make it okay to set fire to the garden shed,” she told the BBC.

"Small businesses were not ready last time there was a no-deal Brexit threat — this time they will not have had a moment to prepare for it," she told the BBC.

“Many businesses are fighting to survive as the impact of COVID-19 unfolds. A good deal with would be a foundation stone of renewal,” she added on Twitter.

Minister Michael Gove claimed on Wednesday that the EU’s chief negotiator Michel Barnier was “inclined to move” on certain issues including state aid and fisheries. But both sides have repeatedly warned they will not compromise on key questions, including the EU’s insistence Britain stay aligned with many of its rules to enjoy tariff-free trade.

Gove also made a surprising claim in the Commons that the CBI did not support an extension to the transition period. Fairbairn appeared to respond to the suggestion in a tweet later on Thursday, writing: “Government has ruled out an extension — business have no choice but to plan on that basis. But that means a deal is the only acceptable option.”

READ MORE: Johnson plans Brexit talks with EU chief amid looming recession

The CBI also announced on Thursday that Fairbairn will leave her post in November and be replaced by Tony Danker, head of Be The Business.