Last-minute Brexit deal vital for UK economy, government told

Business leaders and unions have heaped renewed pressure on the government to strike a last-minute Brexit agreement, saying the UK economy is ill-equipped for a disruptive no-deal scenario.

With talks between Boris Johnson’s government and Brussels on a knife-edge, the warnings from leaders in business and industry came as the pound slid on the global currency markets on fears that talks could end this week without a deal.

Sterling dropped by two cents against the US dollar to $1.323 on Monday morning as negotiators began last-ditch efforts to strike an agreement before the end of the Brexit transition period at 11pm on 31 December, when UK access to the customs union and single market is set to expire. The pound later recovered some ground but was still down more than a cent at $1.3332.

Minette Batters, the president of the National Farmers’ Union, said reaching a deal was critical for protecting farmers’ access to the EU, which is the UK’s biggest market where 70% of agricultural food exports are sold.

“It is critically important that both the UK and EU continue to negotiate on a free trade agreement and prioritise securing a tariff-free, quota-free deal as soon as possible,” she said.

“There will be significant disruption for British food and farming if there is no deal at the end of the transition period.”

Company bosses said there were still big outstanding issues. Stephen Phipson, the chief executive of the manufacturers’ organisation Make UK, said industry would never have foreseen it would be in this position, with manufacturing companies still unable in very large part to prepare.

The lack of clarity over a deal could cause chaos within weeks, he added. “The sector now faces the unenvious choice of a catastrophic no deal or a last-minute deal which will still cause damage to large parts of the sector and threaten jobs and competitiveness. At the very least we need both sides to come to an agreement which will provide at least some certainty and a starting point for industry in the UK and across Europe.”

Figures from the Bank of England indicate as few as 6% of companies are fully prepared for the end of the Brexit transition, from a survey of more than 3,000 company bosses published last week.

It said as many as 62% of firms are “as ready as they can be”, but business groups said most companies did not know what they were planning for because the details of the new trading relationship have been left until the last minute, preventing them from taking the necessary steps to adjust before Brexit.

James Sibley, the head of international affairs at the Federation of Small Businesses, said it was “deeply concerning” that key details remained unresolved. Three things – an agreement, steps to phase in the deal and financial support for firms – were all urgently needed, he added.

“Without these three measures we risk another severe economic shock which will exacerbate the impacts of this year’s incredibly damaging recession.

“The last time small firms were told to prepare for a no-deal outcome only one in five who believed that outcome would have a negative impact on them were able to do so. After such a torrid year, that figure will likely be a good deal lower this time round.”

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