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CBI calls for Brexit deal as decline in private sector activity slows

Suban Abdulla
·3-min read
Brexit negotiations are due to resume on Monday, as the deadline for reaching a deal nears. Photo: Getty
Brexit negotiations are due to resume on Monday, as the deadline for reaching a deal nears. Photo: Getty

As the pace of decline in the private sector has eased, and the final round of Brexit talks commence on Monday, more than three-quarters (77%) of UK businesses want to see a Brexit deal agreed.

A new report by the Confederation of British Industry (CBI), showed that private sector activity fell in the quarter to September, but at a slower pace than last month to -23% from -39%. The third consecutive month in which the rate of decline has eased.

CBI said of the 648 companies surveyed only 4% would prefer no-deal Brexit on trade in the coming months, while almost half of respondents (47%) said the impact of dealing with the coronavirus crisis has negatively affected preparations for Brexit.

Of the respondents, 86% of distribution, 83% of manufacturers and 73% of those in the services industry support a trade deal agreement according to the CBI.

The composite measure shows that activity in the distribution sector stabilised in the three months to September to -1% from -26%, after five rolling quarters of decline. The pace of decline also slowed in manufacturing to -20% from -46%, while consumer services dropped to -39% from -64% and business & professional services to -28% from -32%.

It predicts, the fall in private sector activity to ease again in the next quarter to -11%. Distribution companies expect activity to fall to -23%, consumer services to -22% and manufacturers expect a further easing to -6%, while business & professional services firms expect business volumes to stabilise to -2%.

Previously, the British Chambers of Commerce (BCC) warned companies reported having “little cash or information to plan” for the impact of significant changes in UK-EU trade from the end of the year.

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Dame Carolyn Fairbairn, CBI director general, said: “Next week Brexit talks enter the eleventh hour. Now must be the time for political leadership and the spirit of compromise to shine through on both sides. A deal can and must be made.

“Businesses face a hat-trick of unprecedented challenges – rebuilding from the first wave of COVID-19, dealing with the resurgence of the virus and preparing for significant changes to the UK’s trading relationship with the EU.

“More than three-quarters of businesses want to see a deal that will support people’s jobs and livelihoods,” she continued.

“For the whole continent, the pandemic has diminished firms’ ability to prepare for an abrupt interruption of restrictions on trade and movement between the UK and the EU.

“A good deal will provide the strongest possible foundation as countries build back from the pandemic. It would keep UK firms competitive by minimising red tape and extra costs, freeing much-needed time and resource to overcome the difficult times ahead.

“Governments across Europe have shown a level of ambition to fight the pandemic many wouldn't have believed - time to show that same creativity and flexibility on securing a Brexit deal.”

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“The pace of decline in private sector activity has continued to slow this month, with many businesses having sprung back into operation,” CBI economist Alpesh Paleja added.

“Prioritising bringing infections down is the right move and the Chancellor’s new package of support will go a long way towards helping businesses and households through winter. But these are challenging times and we must still keep a close eye on those sectors that will remain under severe pressure in the coming months.”