Firms “cannot be protected” from the worst impacts of a no-deal Brexit, said Josh Hardie, deputy director general of the CBI, as the Conservatives gathered for a party conference set to be dominated by Brexit and the impending general election.
His comments came after the government’s no-deal planning chief Michael Gove claimed that the automotive and retail sectors were ready for the UK to leave without an agreement with Brussels – claims their industry bodies rejected.
Mr Hardie warned that a no-deal exit would leave the UK “mired in a swamp”, facing protracted negotiations with Brussels on trading arrangements.
He said: “Businesses are beyond disillusioned with the political brinkmanship and the looming risk of no deal.
“There can be no room for complacency in no-deal planning – which goes for government and business alike.
“But while firms can be prepared, they cannot be protected against the worst effects a no-deal exit would bring.”
He added that preparations “are already having an effect”.
He said: “Stockpiling, relocating operations and supply chains out of the UK are draining funds which could be used for increasing wages and investment.”
Mr Hardie rejected the claims made by some Brexiteers that a no-deal exit would give certainty to businesses.
He said: “The only certainty no deal brings is years of fraught negotiations with the EU, and neglect of the domestic policy agenda.
“We must leave with a deal that protects jobs and livelihoods – or get mired in a swamp where hundreds of smaller deals will be needed and negotiations begin from scratch.
“We forget about the UK economy at our peril.”
The risk of a no-deal Brexit has strained the relationship between the Conservatives and businesses.
Mr Gove told MPs on Wednesday: “The automotive sector, which I met earlier this week, confirmed that it was ready. The retail sector has confirmed that it is ready.”
But the British Retail Consortium said it was “impossible to completely mitigate the significant disruption which would be caused by no deal”.
And the Society of Motor Manufacturers and Traders likewise said it was “impossible to be fully ready for no deal” and that “we need a Brexit deal to unlock investment and safeguard the long-term future of the sector”.
A government spokesperson said: “We will be leaving the EU on 31 October, and it is our preference to do so with a new deal that is in the interests of both our businesses and citizens.
“We have stepped up preparations across all sectors, making £108m available to support businesses to ensure they are ready for Brexit and can take advantage of the opportunities of our future outside of the EU.”
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