British businesses say new Brexit deal worse than May’s deal

British companies have expressed concerns that Boris Johnson’s new Brexit withdrawal deal could leave industry worse off than under the previous agreement with the EU.

Businesses, investors and economists have been almost unanimously in favour of the UK securing a withdrawal deal with the EU to avoid a no-deal Brexit, and markets appeared to welcome a diminished risk of a chaotic break on 31 October after the UK and EU unveiled a revised withdrawal deal on Thursday.

Sterling initially surged on news of the deal, hitting a five-month high of $1.2988 against the US dollar. However, in volatile trade the currency later gave up all of its gains, falling as low as $1.2756 after the Democratic Unionist party, key government allies, said they would not back the deal. The FTSE 100 rose by 0.52% to 7,182 points.

The vast majority of the 141 clauses contained in the revised political declaration published by the UK and the EU remained identical to that agreed by Theresa May. However, the changes meant the new agreement was “either the same or worse than the March deal” for goods exporters on every issue, said one industry source.

Multiple sources in industry groups and major companies said the new deal gave greater scope for regulatory divergence that would make it more difficult for British companies to sell to their biggest export market.

The revised deal removed a clause promising a relationship “as close as possible” to the current arrangements, as well as a clause that said “the United Kingdom will consider aligning with Union [EU] rules in relevant areas”. It also abandoned a commitment to avoid rules of origin checks, potentially adding significant barriers to trade, which could impact industries reliant on frictionless imports such as the automotive sector.

A spokeswoman for Jaguar Land Rover, the UK’s largest carmaker, said the company “needs a deal that protects tariff-free and frictionless trade and guarantees a level playing field on critical areas of regulation and immigration.”

Carolyn Fairbairn, director-general of the Confederation of British Industry, said “business has serious concerns about the direction of the future UK-EU relationship”, and added that the deal remained “inadequate” on services.

“Decades of free and frictionless trade with the UK’s largest market, forged by thousands of firms big and small, must not be abandoned,” she said.

May gave business groups explicit verbal assurances that her government would seek to continue regulatory cooperation with the EU after Brexit. The current government under Johnson has so far not given any similar assurances, amid indications that it would seek a deregulatory agenda, according to a separate source involved in discussions between business and ministers.

The government’s business department was approached with a request for comment.

Source: Read Full Article