Around one in three British businesses will shift some of their operations away from U.K. — or have already done so — as part of their preparations for a disorderly Brexit.
That is according to a survey from lobby group the Institute of Directors, which surveyed 1,200 of its members and found that 16% had already begun to relocate British operations abroad.
A further 13% were “actively considering” such a move in the belief that the U.K.’s impending exit from the European trading bloc poses a significant risk.
The figures follow warnings for big U.K. corporates about the outlook for business. Most notably in January, the boss of Airbus said it was disgraceful that U.K.-based companies still didn’t have the clarity to plan for the future. He said the aerospace giant could move jobs and investment out of the country.
They also come with European Union chiefs reported to be concerned that the British Prime Minister Theresa May doesn’t have enough time to alleviate the threat of the country leaving the bloc without a withdrawal agreement in place.
Officials in Brussels fear the U.K. will only extend the two-year exit period from the EU — set to end on March 29 — by a few months, according to The Guardian newspaper. That would, they believe, neither give British politicians enough time to implement any Brexit agreement nor plan for no deal.
News of their concerns comes a day after Jeremy Hunt, the British foreign secretary, told the BBC that “a technical extension” of the U.K.’s two-year exit period from the EU may be needed to give British lawmakers enough time to properly scrutinize the legal terms within any agreement.
Sterling ticked down amid the continued uncertainty, from $1.31094 at 07:40 GMT to trade at $1.31011 around 9 a.m. U.K. time.
The chief economist at Toscafund, a $4bn London investment firm, has said attempts to delay or stop Brexit won’t spark a recovery in sterling.
In a January note, Dr. Savvas Savouri said that abandoning Brexit would leave the pound vulnerable to schisms in the UK’s main political parties: “The reality is that the only outcome that could see the pound rally from here is Brexit happening with a deal, and one delivered without any ‘meaningful’ delay,” Savouri wrote.
How did we get here?
U.K. and EU negotiators struck their withdrawal agreement in November, almost 2½ years after the Brexit vote. But an overwhelming majority of British politicians voted to reject it on January 15. Revised proposals put to the U.K. parliament on January 21 were criticized as being too close to May’s Plan A to be considered viable alternatives.
What happened this week?
MPs debated and voted on various amendments to May’s revised proposals on January 29.
A measure proposed by Yvette Cooper, a senior politician from the opposition Labour Party, and Conservative MP Nick Boles, that sought to delay the Brexit date was rejected.
However, a non legally-binding amendment tabled by Conservative Caroline Spelman, which explicitly ruled out a no-deal exit, was passed. This has been taken as a statement of parliamentary intent.
The key vote of the night was on a proposal from Conservative Sir Graham Brady that called on May to seek a renegotiation of the controversial Northern Ireland backstop. This passed by 317 votes to 301.
So what’s next?
May heads back to Brussels to reopen talks on the withdrawal pact. She will give British parliamentarians another opportunity to take control of the future direction of Brexit in mid-February, if she has made no progress in her renegotiations. Europhile politicians will then attempt to secure a legally-binding measure to both delay Brexit and stop the government from forcing a no-deal exit.
Are there any real alternatives to May’s deal?
Several British politicians argue that the U.K. should push for some form of membership of the European Economic Area. This is sometimes called the ‘Norway-plus’ option, referencing the EEA’s largest member. Norway and the other EEA countries can access the European single market without being full members; the ‘plus’ part would also keep the U.K. in the customs union in the hopes of preventing a hard border in Ireland.
Staying in the single market is an attractive prospect to U.S. businesses in London. The model also has significant support in parliament and in the EU. But it is reviled by prominent Brexit-backing lawmakers, as well as influential City regulators and UK-focused financial institutions, who all warn that it would leave the U.K. overly exposed to European rules without a say in their making.
What about a second referendum?
May is adamant that the public has already had its say but EU officials have suggested they could allow a short extension to the UK’s two-year exit period, for a referendum.
Will May survive?
Insiders say Labour could trigger another vote of no confidence in May’s government if it thinks it has a chance of winning. One politico said: “The moment of maximum danger for her [May] is when she comes out with her next plan, having had talks, having seen what the house thinks, and deciding, ‘Right, this what I am going to go for.’”
If a majority of MPs were to support a second no-confidence motion, parliament would have 14 days to form a new government before a general election is called. May could also opt to trigger a snap election. Either way, a poll is a distinct possibility.
Sir Mark Sedwill, Britain’s top civil servant, has told government departments to ready themselves.
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