UK facing ‘national emergency’ as Brexit no-deal fears rise

Published March 22, 2019, 9:30 AM

by AJ Siytangco

By Agence France-Presse

Britain faces a “national emergency” as the risk of a no-deal Brexit rises, business and union leaders warned Thursday in an open letter to embattled Prime Minister Theresa May.

It came as the Bank of England (BoE) expressed concerns that further “uncertainties” over a “cliff-edge” no-deal Brexit “could have a significant effect on spending” by businesses.

Two British organisations usually at odds with one another -- businesses and unions -- have come together to issue a grim warning about a no-deal Brexit (AFP / MANILA BULLETIN)
Two British organizations usually at odds with one another — businesses and unions — have come together to issue a grim warning about a no-deal Brexit (AFP / MANILA BULLETIN)

The heads of Britain’s biggest employers’ grouping, the Confederation of British Industry, and union umbrella organization the Trades Union Congress urged May to change tack and find a “Plan B” to avoid the country leaving the European Union without a deal.

“Our country is facing a national emergency. Decisions of recent days have caused the risk of no-deal to soar,” read the letter from CBI director-general Carolyn Fairbairn and TUC general secretary Frances O’Grady.

“Firms and communities across the UK are not ready for this outcome. The shock to our economy would be felt by generations to come,” added the pair, who demanded an “urgent meeting” with May.

The grim warning, contained in a rare coming together of two organizations usually at odds with one another, comes as May meets the other 27 EU leaders in a Brussels summit to plead for a three-month postponement to Brexit.

The premier has already asked EU President and summit host Donald Tusk for the withdrawal date to be moved to June 30 from March 29.

However, EU leaders are likely to refuse her request, leaving Britain vulnerable to departing from the bloc with no trade deal in place.

The BoE meanwhile on Thursday said it had decided to keep its main interest rate at 0.75 percent following a meeting this week at which policymakers discussed “the possibility of further cliff-edge uncertainties that could have a significant effect on spending as any new deadline approached” for Brexit.

The central bank said that doubts over Britain’s exact departure date from the European Union were already weighing on “short-term economic activity, notably business investment”.

Minutes of its latest meeting added: “Shifting expectations about the potential nature and timing of the United Kingdom’s withdrawal from the European Union have continued to generate volatility in UK asset prices, particularly the sterling exchange rate.”

May’s Brexit deal has twice been resoundingly rejected by British lawmakers, and a third vote the premier hoped to hold this week was canceled by the House of Commons speaker on procedural grounds.

‘Plan B’

“The current deal-or-no-deal must not be the only choice,” added Fairbairn and O’Grady in their joint letter.

“A ‘Plan B’ must be found — one that protects workers, the economy and an open Irish border, commands a parliamentary majority, and is negotiable with the EU.

“A new approach is needed to secure this — whether through indicative votes or another mechanism for compromise,” they added.

“We cannot overstate the gravity of this crisis for firms and working people.”

The BoE added that according to its own findings, “around 80 percent of (UK-based) companies judged themselves ready for a no-deal, no-transition Brexit scenario”.

This compared with about 50 percent in January of its regular survey of about 300 businesses.

Despite the increase, many of the companies surveyed “also reported that there were limits to the degree of readiness that was feasible in the face of the range of possible outcomes in that scenario.

“These included issues relating to tariffs, border frictions, exchange rate movements and recognition of certifications, which many companies had noted were outside their control,” the BoE minutes added.