Business leaders were sweating last night as the prospects of a No Deal Brexit increased dramatically.
Top bosses urged ministers to ‘leave no stone unturned in search of a deal’.
It came as bank Morgan Stanley dealt another blow to Britain’s post-Brexit prospects, becoming the latest Wall Street lender to shift chunks of its assets out of London.
The banking titan is planning to move about £90bn of its assets to Frankfurt, according to Bloomberg, to ensure it has enough money on the continent to keep trading with European institutions.
Josh Hardie, deputy director-general at influential business group the Confederation of British Industry, said: ‘Shifting deadlines are already costing companies. So getting a deal is vital to protect businesses, jobs and living standards across Europe already under strain from the pandemic.
It was revealed by Bloomberg that banking titan Morgan Stanley is planning to move about £90bn of its assets to Frankfurt to ensure it has enough money to continue trading with European institutions (file photo)
‘But progress relies on political leadership, which is needed now more than ever to avoid a costly, damaging and divisive No Deal scenario.’
Mr Hardie added: ‘While talks continue, practical planning must intensify to minimise disruption… much more needs to be done. For goods, this means committing to a grace period for rules of origin, re-labelling products and phasing [in] border checks.’
He said that for the services sector, agreements to accept data protection rules as well as banking regulation standards ‘must materialise’.
Mr Hardie said: ‘A deal is both essential and possible.’
Allie Renison, of lobby group the Institute of Directors, said leaders ‘must leave no stone unturned in search of a deal’, and must not ‘walk away from an agreement that is almost there’.
‘The longer these talks drag on, the less room there is for business to adjust. The confidence shock of No Deal would cast a shadow over UK plc just as we can see light at the end of the pandemic’s tunnel.
‘Company directors want to crack on, not be mired in the disruption and uncertainty that No Deal would likely bring.’
The warning from business leaders came after Mr Johnson and EU chief Ursula von der Leyen met for an evening of animated dinner-table talks in Brussels on Wednesday, during which they agreed that Sunday would be the final day to set out a future path for Brexit talks.
But business leaders, who are still hanging in limbo waiting for a conclusion to the Brexit saga, were disappointed at the lack of further progress.
Firms across a range of industries fear that a No Deal Brexit, combined with disruption from the pandemic, will irreparably damage their operations.
The Food and Drink Federation (FDF) said the EU is a ‘key commercial partner’, as more than 60 per cent of food and drink exports from the UK head to the continent.
And while officials in the UK and the EU are making progress on Ireland, agreeing that no checks will take place on the border between Northern Ireland and the Republic of Ireland which remains in the EU, they have yet to agree a deal which will prevent tariffs being imposed.
Graham Hutcheon, chair of the Food and Drink Sector Council Exports Working Group, said: ‘With the end of the transition period now just days away, food and drink businesses are facing another massive export challenge.
‘More specialist support is urgently needed to ensure our industry comes through these challenges.’ There was still some hope among certain business leaders.
Mike Hawes, chief executive of automotive industry body the SMMT, said: ‘Even at this eleventh hour, we remain hopeful that a trade deal will be struck between the UK and EU.
‘Leaving the single market and customs union means we will incur significant additional costs, but a No Deal scenario would be far more damaging.
‘The resulting tariffs would put our manufacturers at a disadvantage in export markets, raise prices for consumers and make the UK uncompetitive, both as a market and producer.
Businesses were panicked last night as the prospects of a No Deal Brexit increased dramatically. The warning from business leaders came after Mr Johnson and EU chief Ursula von der Leyen met for an evening of animated dinner-table talks in Brussels on Wednesday (pictured)
‘We know the UK government understands this, and we hope it will do whatever it takes to secure a deal that safeguards the sector and hundreds of thousands of livelihoods that depend on its success.’ The aerospace industry, which is already struggling with a massive reduction in the number of travellers and thousands of cancelled flights, is in particular jeopardy.
Credit ratings agency Moody’s, which assesses how able companies are to repay their debts, said there will be risks to the sector as the UK leaves the European Union Aviation Safety Agency and regulatory powers shift to the domestic Civil Aviation Authority.
The UK and the EU have been trying to thrash out a safety agreement which will allow for ‘mutual recognition’ – where each side recognises and accepts the other’s rules, helping to minimise disruption.
Moody’s senior vice president Martin Hallmark said: ‘A trade deal and bilateral aviation safety agreement would remove many risks to the aerospace industry related to the end of the transition period.
‘This could include a broad regime of mutual recognition and cooperation and transitional arrangements to smooth the handover of responsibilities.’ While the UK’s dominant financial sector has largely been knuckling down to make its own preparations for Brexit, Morgan Stanley’s shift to Frankfurt will add to fears that London’s standing as an international financial centre may be eroded as it becomes more isolated.
JP Morgan, another US banking titan, has already moved around £180bn and 200 staff onto the continent from the UK, in what it called the ‘first wave’ of changes.
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