Advertisement

Brexit news: Crashing out of the EU with no deal would bring 'absolute disaster' to UK, business minister warns May

A business minister broke ranks today to warn Theresa May that the Government must “do our duty” to stop the “absolute disaster” of Britain crashing out of the European Union with no deal.

In a startling attack on his Tory colleagues, including International Trade Secretary Liam Fox, Richard Harrington slammed the “sham of pretend trade agreements which have not happened yet”.

Rejecting Brexiteers’ claims that no deal would not damage businesses, he said that car plants could close and that the Government’s own analyses of leaving the EU in such a chaotic way “bring more than shivers”.

“I’m not prepared to sell business down the river for other people’s political dogma,” he told BBC Radio 4’s Today programme.

Meanwhile business chiefs said Brexit was already costing the UK billions.

Mr Harrington also turned on International Trade Secretary Liam Fox (PA)
Mr Harrington also turned on International Trade Secretary Liam Fox (PA)

They pleaded with the Prime Minister to rule out “no deal” as many firms are now having to escalate emergency plans to cope with a departure from the EU in just weeks.

“Time is running out to avoid a chaotic ‘no deal’ Brexit that would be catastrophic for the economy,” said Stephen Jones, chief executive of UK Finance, which represents about 300 firms in the Square Mile.

Insurers have had to move 20 million contracts out of the UK to the EU, as well as setting up 31 subsidiaries on the other side of the Channel or in Ireland, to minimise the Brexit blow.

One insurance firm alone has spent £300 million on Brexit preparations, and the 10 biggest banks are reported to have been left with a £1 billion bill.

Theresa May is due to set out her Brexit 'plan B' later today (PA)
Theresa May is due to set out her Brexit 'plan B' later today (PA)

Huw Evans, director general of the Association of British Insurers, said: “The cost of Brexit uncertainty is being felt across our world-leading insurance sector.”

Mike Cherry, national chairman of the Federation of Small Businesses, said only 14 per cent of smaller businesses have planned for a “no deal” scenario.

“Over the past few months, we’ve seen small business confidence plummet to its lowest levels since the wake of the financial crash,” he said.

Allie Renison, head of Europe and trade policy at the Institute of Directors, said: “With no deal still the default option, many firms are forced to invest in costly contingency planning, and the majority of those making plans have ramped them up in response to the failed vote on the Withdrawal Agreement.

“This is particularly an issue for manufacturing and agrifood, as the profit margins are often smaller than financial services, and require more physical changes in terms of moving production or buying up warehousing space for customs purposes.”

Catherine McGuinness, policy chairwoman at the City of London Corporation, said: “Continuing uncertainty about whether a Brexit deal that delivers a transition period will be secured has meant firms across the sector have had to continue planning for a no-deal departure, even if it means racking up large costs that may ultimately be unnecessary.”

Mr Harrington is one of many ministers ready to resign if the Government adopts a “no deal” policy. “Crashing out in my view is an absolute disaster … it’s not a road to a free trade agreement, it’s not a road to anything,” he said.

“It’s supported by a minority of a minority of people. The Prime Minister does not support it.

“She should in my view say ‘we are responsible people. we are going to do our duty to business and we are going to rule out a no-deal because we want a great deal’.”

His greatest fears are not over drug shortages or planes not flying if Britain leaves with no deal, but the impact on thousands of firms with tariffs and other trade barriers.

“I’m afraid of Jaguar closing, Mini closing, the life sciences industry closing … because we would have no agreement that represents the way these businesses are integrated today,” Mr Harrington said.

Cabinet minister Mr Fox admitted at the weekend that many of 40 trade agreements that should be ready on March 29 may not be done in time.

Brexiteers believe that Britain could leave on World Trade Organisation terms, and strike a free trade deal afterwards, but Mr Harrington said: “The WTO is a last-resort position. It’s not for trading between some of the most sophisticated and complex economies in the world.”