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: 297321

Reported Deaths: 6805
CountyCasesDeaths
DeSoto19814231
Hinds18949395
Harrison16886282
Rankin12842265
Jackson12750234
Lee9720163
Madison9516204
Jones8035148
Forrest7289138
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Washington5232130
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Scott296171
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Yazoo292066
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Simpson277581
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Leake254172
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Clay179452
Stone173429
Tallahatchie171739
Clarke170773
Calhoun158628
Smith153833
Yalobusha145736
Greene128133
Walthall125441
Montgomery123540
Noxubee123431
Perry123235
Lawrence121421
Carroll119425
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Webster111132
Jefferson Davis102731
Tunica99824
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Humphreys93128
Kemper91423
Quitman77514
Franklin76420
Choctaw70117
Jefferson62827
Wilkinson62727
Sharkey49217
Issaquena1676
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Alabama Coronavirus Cases

Cases: 499411

Reported Deaths: 10149
CountyCasesDeaths
Jefferson719951403
Mobile36396741
Madison32674469
Tuscaloosa24391423
Montgomery22789523
Shelby22250219
Baldwin19915289
Lee15070161
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Morgan13785255
Etowah13413327
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Walker6600260
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Colbert6007121
Coffee5261104
Dale4680107
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Franklin400779
Covington3996107
Chilton3911104
Escambia379473
Tallapoosa3637143
Clarke344553
Chambers3432111
Dallas3428142
Pike292973
Marion288796
Lawrence285787
Winston258568
Bibb246058
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Butler201466
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Monroe166739
Randolph165141
Washington157036
Macon147845
Crenshaw146755
Clay146254
Cleburne140141
Lamar133933
Lowndes133151
Wilcox123225
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Perry106427
Sumter100832
Coosa90324
Greene88732
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