CBI calls for ‘jobs first’ Brexit transition deal in 70 days to protect business

23 Jan 2018 By Marianne Calnan

Experts welcome customs union to avoid firms exercising plans to leave UK, with need for ‘responsive immigration system’

The chair of Confederation of British Industry (CBI) has called for an urgent ‘jobs first’ Brexit transition deal to be negotiated within 70 days to protect jobs and business.

CBI director-general Carolyn Fairbairn said in a speech at the University of Warwick on Monday (22 January) that a deal prioritising jobs needed to be committed to writing within the next 70 days. This would allow the government’s Brexit talks to begin in April, and terms to be agreed with the EU by October, she said. 

Fairbairn warned that decisions need to be taken fast or “firms will have no choice but to trigger their plan Bs. More jobs and investment will leave our shores and future generations will pay the price.”

She outlined that staying in the customs union would be best for Britain because its needs differ from Canada’s “high levels of control over immigration, regulation and trade policy”. While Canada does less than 10 per cent of its trade with the EU, “we do half of our trade with the EU – 43 per cent of our exports and 53 per cent of our imports”. What for Canada represents a lowering of trade barriers, would for the UK represent a raising of trade barriers, she said. “And when the EU is our largest trading partner, we can’t afford higher barriers to trade.”

Similarly, Fairbairn compared Norway’s lower level of control, saying that a “Norwegian-style solution could work” for UK businesses. Its lower level of control could be a “political problem” for the UK, with its obligation to permit the four freedoms – such as the freedom of movement – and its substantial contribution to EU countries. Therefore, while the Norway deal would provide valuable access, “we can and need to do better than this”.

When it comes to the final Brexit deal, Fairbairn urged negotiators to follow the status quo of the current position in the EU, and start with the “rules we already share, and move on from there” to create a successful outcome.

“Economics and prosperity must be put ahead of politics and red lines,” she said.

Kevin Green, chief executive of the Recruitment & Employment Confederation, which supports the CBI’s 70-day deadline, told People Management that the approach the UK adopts must ensure the impact on the jobs market does not threaten its prosperity. 

“We need a post-Brexit immigration system that is agile and responsive. It needs to be under constant review so it responds to business requirements,” he said. “In times of skills shortages we need to help businesses find the people they need.” 

Dr Lorand Bartels, senior counsel in Linklaters’ international trade team, also welcomed the CBI’s approach. He said a customs union with the EU would “reduce ‘red tape’ for businesses trading with the EU, but it would also limit the government’s ability to conclude independent and potentially more favourable trade agreements with third countries, including developing countries”.

Rachel Clark-Raee, HR officer at Expo Technologies, said that “flexibility is needed to find the right solution for the UK rather than using a model more appropriate for another country like Norway or Canada”.

She told People Management that the current level of uncertainty is a “big problem for businesses, and staying inside the customs union would mediate the negative effects of Brexit significantly. In my opinion, Brexit is not going to work out and we should be putting a second referendum back on the table.”

The government has already “agreed in principle” to a Brexit transition period, in which it accepts all EU rules with no power to shape them, a senior figure in Brussels said. This approach would mean accepting customs union rules and free movement.

Research surrounding the possible outcomes of Brexit in terms of jobs, workers and businesses has been met with scepticism from HR and economic experts.

A report from the Centre for London think tank revealed that hard Brexit – whereby Britain would likely give up full access to the single market and full access of the customs union along with the EU – would be “catastrophic” for London’s jobs and businesses. The study, released in July 2017, also warned that this could result in the loss of at least 70,000 City jobs.

A separate report published in December predicted that City firms could shed 10,500 jobs as soon as Brexit takes effect. The findings from accountancy company EY led experts to respond with scepticism, with some suggesting that such large-scale predictions are unrealistic while there is still so little information about the final outcome of Brexit.

EY’s study also delved into the potential impact of Brexit on the location of businesses and employees. It found that close to a third of financial services firms have publicly stated that they are considering moving operations or staff out of the UK, with almost a fifth confirming at least one relocation destination in the EU. If these predictions come to fruition, skills shortages will result.

Gerwyn Davies, the CIPD’s senior labour market analyst, was sceptical about the findings on the potential impact of Brexit on talent, businesses and jobs, arguing that predictions of talent losses because of a lack of EU citizens and job losses “have been confounded by stronger economic growth”. He said that for HR professionals, the number of EU nationals in employment had “reached a record high” so, while some sectors struggle to recruit, “there has not been a lack of EU talent in as large a way as many people expected” so far. 

A 2017 report from the British Medical Association found that one in five European NHS doctors in the UK were planning to leave the country post-Brexit, leaving the NHS significantly understaffed.

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