Time for preparing for a no deal Brexit has run out, business leaders tell London MPs

Time for preparing for a no deal Brexit has run out, business leaders tell London MPs

Stark warnings of the impact of a no deal Brexit coupled with more than a little frustration with parliament – that was the message from business leaders addressing a meeting of the All-Party Parliamentary Group on London held at Portcullis House in Westminster yesterday.

Time for avoiding the consequences of leaving the EU without a deal has run out, leaders from London’s construction, insurance, legal and financial industries told a group of the capital’s MPs.

“Everybody urgently needs transition to give firms the time to organise their businesses and avoid the cliff edge,” said Rachel Kent, head of regulation at law practice Hogan Lovells and board member at the City-based international strategy group lobbying on post-Brexit regulation.

Firms which had hoped for transition were now implementing their contingency plans and setting up EU-based subsidiaries, she said. Current estimates of 5,000 to 7,000 City job losses were likely to increase as jobs moved out of London, while “for every City banking job that is lost, three other jobs will go as well.”

The building industry was facing huge uncertainty particularly over the supply of labour and the movement of goods, said Mark Reynolds, chief executive of major construction and consultancy business Mace. With most building materials imported from the EU, including 92 per cent of timber, delays at ports would cost the industry £2 million a week, he added – costs which would be borne by the supply chain with huge implications for small companies in particular, hitting construction across the UK.

Reynolds said that 40 per cent of the 11,000 strong Mace workforce on sites in London and the south east are from the EU, and that recruitment at all levels has already been affected.

Government proposals on immigration salary thresholds were set too high, hitting construction in London as well as hospitality and care providers, the MPs heard. “There seems to be a myth that there’s a market of UK people waiting to take these jobs – but they just ain’t there,” commented APPG co-chair Bob Neill, the Conservative MP for Bromley and Chislehurst.

London’s position as the insurance capital of the world – the place where insurance was effectively created after the Great Fire of London – was also at risk, said Seth Williams, public affairs chief at the Association of British Insurers. London had slipped behind the USA, Japan and China in the global insurance market and “France is snapping at our heels,” he said.

With 100,000 people employed in insurance in London, and 40 per cent of its work conducted with EU business, there were major concerns around future legal frameworks, continuity and enforceability of contracts and cross-border data transfer, affecting individuals as well as companies. Drivers in Europe now faced having to apply for “Green Card” documentation last used in the 1970s, for example. “Transition is fundamental,” William said. “The closer we get to 29 March 29 with nothing sorted out, the more jittery we are getting.”

Lack of certainty was having an impact across London – and “London is the economic dynamo of the country,” said Labour co-chair Steve Reed, the MP for Croydon North. “And I’m hearing at the moment of no upside to Brexit – just damage limitation.”

Business leaders would not be drawn on Reed’s second referendum suggestion, expressing frustration with politicians failing to listen and with the current “horror show” in parliament. “It must be about compromise on all sides,” said Williams. “We need to get over this stage,” added Kent. “Then we can work together to meet the next challenge.”

“I can feel the frustration. We have become more polarised,” Reed admitted. , Commenting after the meeting, Kensington MP Emma Dent Coad concluded: “The prospect of no deal or hard Brexit is pretty terrifying frankly.”

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