Firms need 'five year' Brexit transition period, manufacturers say

The Government is being urged to agree a five-year transition to Brexit in its looming EU divorce talks to help business acclimatise.

Dame Judith Hackitt, who chairs the manufacturers' group EEF, is not the first business leader to request such a honeymoon period but it is an extended time frame compared to two to three years suggested by some other sectors, especially financial services.

Carmakers have been among manufacturers voicing fears on issues such as competitiveness - with MPs (BSE: MPSLTD.BO - news) this week expressing concern that Peugeot (Other OTC: PUGOF - news) 's interest in Vauxhall's parent company could potentially lead to UK job losses at the expense of workers in Germany and France.

In a speech tonight, Dame Judith will caution against the risk of a hit to UK jobs and investment through a "cliff edge" of uncertainty.

She (Munich: SOQ.MU - news) is expected to say in her speech: "While the Prime Minister has warned of walking away and, that no deal is preferable to a bad deal, that is not an option that business can accept because no deal means prolonged uncertainty and confusion.

"We simply have to avoid the UK departing in haste if we want to avoid spending the next 30 years repenting.

"What we must have is a deal that ensures our economy continues to thrive and is not sacrificed on the altar of satisfying assumed expectations in a referendum vote.

"That means a settlement that allows us to continue investing and creating the high-value jobs our economy will need in the future."

That sentiment was echoed by the Institute of Directors (IoD) in a report which called for a "clear course" to ensure stability for UK PLC.

Its wish-list included an immediate guarantee that the three million EU citizens living in the UK will be able to stay after Brexit, in order to reduce on-going uncertainty for employers and employees.

Like the EEF it also demanded that hoped-for single market access was fair for all sectors of the economy and that there was no cliff edge scenario that meant the UK was thrust into World Trade Organisation rules because no Brexit deal had been secured.

New IoD director-general, Stephen Martin, said: "British businesses want to make Brexit work, and are keen to explore trade opportunities with the rest of the world that arise once we leave the EU.

"But the first priority must be ensuring the exit process is a smooth as possible. The means avoiding a vacuum between the withdrawal agreement being settled and a new trade deal with the EU coming into effect.

"Companies have remained resilient over the last few months and will do everything they can to maintain investment and hiring plans when Brexit negotiations get underway.

"On its side, the Government must maintain business confidence through consistent communication that they are working to avoid a 'cliff-edge' scenario."