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‘F*** Business’: The story of how corporate Britain got screwed by Brexit

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n 22 June 2016 – the day before the Brexit referendum – more than 1,000 business executives signed a letter backing the UK’s membership of the European Union.

The group, which including the bosses of half of the companies in the FTSE 100, stated: “Britain leaving the EU would mean uncertainty for our firms, less trade with Europe and fewer jobs”.

Business lost that battle of course. The electorate voted by 52 per cent to 48 per cent to leave.

And the stark reality is that business has lost just about every battle since.

After the referendum, corporate Britain fought for the UK to remain, if not in the European Union itself, then at least in the EU’s single market and the customs union. They lobbied for a liberal immigration regime.  

But the customs union membership is going, single market membership will soon be history and the incoming new immigration regime will be much more restrictive.

And now, if Boris Johnson fails to conclude a free trade deal, there is the prospect of tariffs on exports to and imports from a region with which we do almost half our trade. All from the end of this month.

“It’d be hard to imagine a worse outcome than this,” admits one weary business representative.

Even a thin free trade agreement would be well below the worst fears of many firms and lobby groups on that morning after the shock referendum result back in 2016.

As ministers freely admit, the UK government has been battling for the abstract conception of “sovereignty”, not concrete business interests, in the negotiations with Brussels.

Deal or no deal, business has lost the Brexit war.

So how did it come to this?

In June 2018 Boris Johnson, then Foreign Secretary in Theresa May’s government, was at an event for EU diplomats.  

Belgium’s ambassador to the EU asked about businesses concerns about the possibility of a hard Brexit, which in those more innocent days was defined as the UK leaving the single market and customs union.

“Fuck business,” was Johnson’s reported response.

So whose fault is it that business has lost the Brexit war?

Was it the fault of a Conservative Party driven by pro-Brexit ideology? Was it because ministers were too afraid to challenge the prejudices of party members? 

Or was it a failure of businesses to lobby effectively? Did corporate Britain fail to grasp the nature of the post-referendum world and the new priorities of the public?  

Did politicians fuck business or did business, to some extent, screw themselves?  

Opening the closet

It was this decision by Ms May which set the UK on an early course to a hard Brexit.

“If we [business] had been bolder during that first six-month period and more collected that would have made a difference,” says Ms Sykes.

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Theresa May announced the UK would leave the single market at a speech at Lancaster House in January 2017

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Theresa May announced the UK would leave the single market at a speech at Lancaster House in January 2017

(AP)

The problem, she says, was that in those early months many business leaders were still scrambling to work out just how important European Union membership was for their operations, from everything from regulations, to data transfer rules, to the composition of their workforces.

“Businesses were still opening their closets and trying to find what skeletons were in there with EU flags on them,” she says.  

“There was this lack of understanding about what the EU meant at that point. That stopped them working out exactly what they needed from the deal.”

Nevertheless, businesses did get their act together. And lobbyists argue that, though it was far from perfect, Theresa May’s 2018 “Chequers” plan – which would have permanently harmonised UK and EU regulations – did reflect a reasonable consideration of business’ concerns.

“Business did have a lot of traction – we had a much more sensible dialogue with government,” says one participant in talks that produced Chequers.

But, of course, the plan prompted resignations from hardline Brexiteer ministers including David Davis and Boris Johnson, who would not accept what they saw as the constraints it would place on the UK’s sovereignty.  

And Chequers was eventually “chucked”.

“There was considerable disappointment at the time – an awful lot of work went into thinking of a model that would work for both sides,” reflects one lobbyist.

“We’ll do it from New York”

Business groups say that access to ministers to make their arguments and point out the commercial realities from leaving the single market was a problem during the early days of Theresa May’s administration – but they feel it got better.

The problem was less being heard, than being properly listened to.

The CityUK represents the British financial services sector, which accounts for around 7 per cent of the UK economy and is one of our most important export sectors.

The group’s former chair, John McFarlane, who was also chair of Barclays at the time, had a meeting with the Brexit minister David Davis when Davis was Brexit Secretary.

A source recalls that Davis, on being informed by McFarlane about the concerns about his members’ ability to serve EU clients from London after Brexit, leant back in his chair and breezily said “you guys are smart enough to figure all of this stuff out”.  

McFarlane’s replied: “You’re right minister. We will figure it out, but we will do it from New York”.  

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‘You guys are smart enough to figure all of this stuff out,’ former Brexit Secretary David Davis told financial services firms

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‘You guys are smart enough to figure all of this stuff out,’ former Brexit Secretary David Davis told financial services firms

However, some think part of the problem was that firms were too reticent to speak forcefully, perhaps over-conscious of not being invited back.  

“When they did get in the room they didn’t always speak up,” says one observer.

“I certainly remember various meetings with ministers where you would maybe have one company that would come out and be the brave one and say ‘this is the reality for what it means for getting food into our supermarkets’ or ‘this is the reality of tariffs on our cars’ – but they would often be the exception rather than the rule.”

The die was cast

But most observers say that if business did make mistakes, it’s also doubtful how much difference a better lobbying performance could have been after Boris Johnson, the man who had campaigned against Theresa’s relatively business-friendly Brexit plan, was overwhelmingly elected Tory leader in the summer of 2019 – and especially after he won a decisive general election victory on a “Get Brexit Done” platform in December 2019.

“From the point Boris Johnson came in, the die was cast,” says Nicole Sykes, formerly of the CBI.

The former Vote Leave campaign team who entered Downing Street with Johnson loathed the CBI and other big business lobby groups because of their role in supporting the Remain side during the referendum.

One representative describes Downing Street’s approach as “business has to get on with it and get ready, it doesn’t have seat at the table in the same way”.

“There was a sense in government that business were a part of the problem,” lamented the outgoing CBI chair, Carolyn Fairbairn, in October.

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Boris Johnson won on a decisive general election victory on a “Get Brexit Done” platform in December 2019

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Boris Johnson won on a decisive general election victory on a “Get Brexit Done” platform in December 2019

(AFP/Getty)

Yet some feel that this year’s Covid pandemic and the massive economic crisis it created actually helped to repair relations with Downing Street and the Cabinet Office to some degree because government and business both simply had to work together.

However, the economic emergency this year, almost inevitably, also meant many firms were distracted from Brexit.

“Every government affairs team was either furloughed or focused on Covid,” says Nicole Sykes.

“No businesses were focused on lobbying on Brexit or the deal details at that point because it [the pandemic] just consumed everything else.”

And most businesses groups feel that the fundamental problem has been that, for the Conservative Party, Brexit was always much more of an ideological project, rather than an economic one.

“This has never been an economic issue for a very substantial and influential part of the Conservative Party and to that extent the voice of business has been somewhat irrelevant,” says one lobbyist.

“If this was about the economic arguments we would have ended up in a very different place.”

And they think that internal Conservative party politics, rather than ignorance or ideological blindness, are the reason Cabinet ministers are now saying – flying in the face of all the evidence, including the analysis of the Bank of England and the Office for Budget Responsibility – that a no-deal Brexit would be a perfectly decent outcome for the UK economy.

“We know that [Cabinet Office minister] Michael Gove really gets it now. We know that [the Chancellor] Rishi Sunak to a certain extent gets it now. But we know they’re not really prepared to raise their heads above the parapet to say so,” claims one.

The lifting of the albatross?

And what of the future for business and government after this traumatic four and a half years?  

Some in business think a chaotic no-deal Brexit could change ministerial attitudes, especially if major companies announce they are closing plants because of tariffs, including 10 per cent levies on cars exported to mainland Europe.

“If Nissan decided to make it clear before the May 2021 local elections that it was leaving the North East and a lot of Red Wall Conservative MPs suddenly saw that in their seats the Labour vote that had voted Tory were voting Labour again in big numbers, maybe that would have an impact,” says one.

“It needs to be something like that to move people away from ideology.”

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If Nissan left Sunderland after a no-deal Brexit, could that break the ideological Tory fever?

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If Nissan left Sunderland after a no-deal Brexit, could that break the ideological Tory fever?

(REUTERS)

Some think it’s this kind of pressure from below that could break the fever in the Conservative party and allow ministers to return to the negotiating table with the EU in the New Year to, finally, hammer out a free trade deal.

And if there is, at the final possible moment, a free trade deal? Some in business are hoping for a reset in those circumstances too.

“The Brexit negotiations have been such a sodding albatross around everyone’s neck. There is an optimism that, once they can say they have delivered on Brexit, it will allow things to get back to normal,” says one.

Deal or no-deal, business groups stress that there’s still a vast amount that has to be negotiated with Europe in the coming years, ranging from equivalence on financial services regulation, to data transfer rules.

Whatever they think of their motivations, UK firms will need to work with politicians in that effort.

Nicole Sykes says the brutalising Brexit war since 2016 should be a cause for internal reflection for business too.

“One of the triggers for why it’s easier for politicians to ignore businesses these days is that there has been a declining trust in business,” she says.  

“Business is going to have work a lot harder to win that back if it wants to win the respect of politicians and have that privileged place in policy making.”

At the moment, corporate Britain feels anything but privileged.


Source: UK Politics - www.independent.co.uk


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