Prominent business leaders around the United Kingdom have expressed growing alarm as the draft Brexit agreement, which was largely touted as the only chance to preserve stability in trading between the UK and the EU threated to fall apart following the resignations of Brexit minister Dominic Raab and pensions minister Esther McVey along with other junior ministers.
The resignations came within just 12 hours of Prime Minster Theresa May announcing that her cabinet had agreed to the terms set in the draft. The development once again set stage for Britain leaving the European Union without a deal before March 2020, sending the value of the British Pound and stock prices in the region plunging. The pound went down by 1.8 per cent against the US dollar during the early evening trading, and has a good chance of going down even further.
Why a Deal with the European Union is Important for Business
Germany-based automobile manufacturer stated that it still hoped that all parties involved would work towards a final agreement to maintain a frictionless trade framework on which numerous international production networks are based. However, with the uncertainty in the political environment, the company preparing itself for a no-deal Brexit, which it considers as a worst-case scenario.
A deal is on immense importance to the UK, owing to the fact that the European Union is their biggest trading partner, which cumulatively accounts for 53% of imports and 44% of exports. A failure to achieve a deal with the EU could disrupt efficient supply chains that have been used by the defense, automotive, and aerospace industries among others for the past 45 years.
Calling Theresa May’s government as ‘the most disastrous’, business leaders are concerned that a no-deal Brexit would cause great difficulty to large scale industries, by increasing costs and complexities arising from red tape thereby affecting the regional markets adversely in a significant way.
Business Leaders Found Theresa May’s Deal to be Favorable
Industry leaders and representatives from Diageo, Royal Mail and the London Stock Exchange who had been briefed about the draft agreement by ministers, had largely shown a positive response calling the deal ‘the best chance of a compromise’ to make the transition period secure and avoid chaos.
Executive chairman of Cicero, the public affairs firm representing top financial firms in the UK stated that although most business executives did not like Theresa May’s deal, most have come to terms that it is the only viable option at present.
The sudden spate of resignations has put a number of businesses in the state of horror, as it is extremely difficult to negotiate another deal in the time left, leaving a feeling of instability in the atmosphere.
Even as a number of senior politicians called on Theresa May to quit, Jurgen Maier the UK chief of Seimens emailed his statement: We hope all sides keep calm, look at the facts, and move to support this draft to provide UK business with greater certainty.
The Next Step for the Brexit Deal
Across the board, legislators have looked down at May’s deal, feeling that the result would make Britain subject to EU rules, with hardly any say, including the alignment of Northern Ireland with the EU to avoid the formation of a hard border.
While senior executives are still holding out hope that the deal goes through before the end of the year, others were looking at other options on the table including an extension of the negotiation period, a national election, or a second referendum.
Clearly, the current situation is weakening confidence in the country and reinforcing uncertainty in the market. A clear resolution is the need of the hour.