Blind Brexit? Businesses fear even more uncertainty

Business is worried enough about Britain crashing out of the European Union. Now it has a new nightmare: a b...

Posted: Sep 20, 2018 5:30 PM
Updated: Sep 20, 2018 5:30 PM

Business is worried enough about Britain crashing out of the European Union. Now it has a new nightmare: a blind Brexit that could extend the uncertainty over trade for years.

Fears are rising that the United Kingdom may leave the European Union in March 2019 with a deal so vague that it gives companies and investors no greater clarity on the future than they had in June 2016 when voters backed Brexit in a referendum.

The political pressure increased Thursday when the only firm proposal for Brexit was panned by a key EU leader and French President Emmanuel Macron described people who said leaving the bloc would be easy as "liars."

"The prospect of a vague Brexit, with only a slimline political declaration about the future EU-UK relationship published alongside a legally-binding withdrawal agreement, is gaining ground," said Mujtaba Rahman of the political risk consultancy Eurasia Group.

A blind Brexit may be even worse for some companies than a scenario where the United Kingdom leaves in March without an agreement on preferential access to Europe's vast markets. That would deliver a major shock but executives would at least know what they're dealing with.

Stephen Phipson, CEO of the manufacturing trade group EEF, said further years of uncertainty would be most painful for large foreign manufacturers with complicated supply chains that crisscross borders.

Investments on hold

Global companies such as Airbus, Siemens, BMW, and Nissan are in the firing line.

"An automotive manufacturer that has three plants here and one in Eastern Europe, he's going to put his investment over there," said Phipson. "Boards won't release capital to invest because they're not sure of the environment."

Many companies have put investments on hold following the vote for Brexit because they don't know whether they'll face new regulations, tariffs or customs checks at borders. It's also unclear if they'll be able to move staff between the European Union and the United Kingdom, or be forced to pay new taxes.

BMW said Tuesday that it would shut its Mini factory in England for one month of maintenance immediately after Brexit because it can't be sure of getting the parts it needs. Jaguar cited uncertainty over Brexit as one reason for putting 1,000 workers on a three-day work week until Christmas.

Some executives have pinned their hopes on a proposal developed by British Prime Minister Theresa May that would maintain close trading ties in goods and agricultural products and include a transition period of nearly two years.

But the European Union's top political leader Donald Tusk took a hard line on the plan — known as Chequers — after a meeting of EU leaders in Salzburg on Thursday, saying the proposal would not work because it risks undermining the bloc's single market in goods and services.

'Very unappealing'

May insisted that her plan is the only way forward. Still, she could be forced back to the drawing board by pressure from the European Union, her own party or the opposition.

But even a blind Brexit would have opponents, including some that argue Britain would be giving up its negotiating ace: money it owes to the European Union.

"Hardliners will fight back by saying that the UK is throwing away its best card — the £39 billion divorce payment to the EU — for vague warm words about the future relationship and so would have little or no leverage during the talks on it during the transitional phase," said Rahman.

Asked about a scenario where a blind Brexit was followed by Britain eventually crashing out the bloc without a final deal on trade, Phipson was unequivocal.

"That sounds very unappealing," he said.

Mississippi Coronavirus Cases

Data is updated nightly.

Cases: 319948

Reported Deaths: 7371
CountyCasesDeaths
DeSoto22285267
Hinds20719421
Harrison18431317
Rankin13901282
Jackson13718248
Madison10263224
Lee10059176
Jones8467167
Forrest7832153
Lauderdale7261242
Lowndes6517150
Lamar635188
Lafayette6313121
Washington5425137
Bolivar4841133
Panola4670110
Oktibbeha466198
Pearl River4605147
Marshall4574105
Warren4440121
Pontotoc425873
Monroe4157135
Union415777
Neshoba4063179
Lincoln4008112
Hancock386987
Leflore3515125
Tate342486
Sunflower339491
Pike3371111
Alcorn327272
Scott320374
Yazoo314171
Adams308086
Itawamba305178
Copiah299966
Coahoma298784
Simpson298589
Tippah291968
Prentiss284161
Leake272074
Marion271280
Covington267283
Wayne264642
Grenada264087
George252251
Newton248663
Tishomingo231868
Winston230181
Jasper222148
Attala215073
Chickasaw210559
Holmes190474
Stone188433
Clay187954
Tallahatchie180041
Clarke178980
Calhoun174132
Yalobusha167840
Smith164134
Walthall135347
Greene131834
Lawrence131124
Montgomery128643
Noxubee128034
Perry127238
Amite126242
Carroll122330
Webster115032
Jefferson Davis108234
Tunica108127
Claiborne103130
Benton102325
Humphreys97533
Kemper96629
Franklin85023
Quitman82216
Choctaw79118
Wilkinson69632
Jefferson66228
Sharkey50917
Issaquena1696
Unassigned00

Alabama Coronavirus Cases

Cases: 548657

Reported Deaths: 11306
CountyCasesDeaths
Jefferson810031566
Mobile42105831
Madison35690525
Tuscaloosa26173458
Shelby25607254
Montgomery25081614
Baldwin21868314
Lee16278176
Calhoun14719327
Morgan14629285
Etowah14175364
Marshall12453230
Houston10781287
Elmore10293214
Limestone10179157
St. Clair10162251
Cullman9952201
Lauderdale9603250
DeKalb8972190
Talladega8460184
Walker7338280
Autauga7241113
Blount6945139
Jackson6932113
Colbert6413140
Coffee5635127
Dale4928116
Russell454841
Chilton4476116
Franklin431382
Covington4275122
Tallapoosa4138155
Escambia401680
Chambers3728124
Dallas3607158
Clarke353061
Marion3240107
Pike314378
Lawrence3133100
Winston283472
Bibb268564
Geneva257981
Marengo250565
Pickens236962
Barbour234559
Hale227278
Butler224271
Fayette218862
Henry194543
Randolph187544
Cherokee187345
Monroe180041
Washington170539
Macon163051
Clay160059
Crenshaw155957
Cleburne153444
Lamar146837
Lowndes142254
Wilcox126930
Bullock124342
Conecuh113630
Coosa111729
Perry108626
Sumter105732
Greene93634
Choctaw62125
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