According to the head of the British Industry Association (CBI), “a faint ray of hope” for the business sector is a law that makes it impossible for the United Kingdom to leave the European Union without an agreement at the end of October.
Carolyn Fairbairn, CBI chief executive, said in a statement on Thursday that most British businesses are in favor of extending the Brexit deadline of 31 October, as it is well known what harm an unregulated exit from the EU would do.
The motion, which was vehemently opposed by the Labor Party’s Labor Party and strongly opposed by the Conservative Prime Minister Boris Johnson, was approved last night by the House of Commons, 327-299. The point of the law is that if by 19 October Parliament does not give its consent to a new Brexit agreement or to the termination of British EU membership without an agreement, Johnson must initiate a three-month postponement for the EU, that is, until January 31, 2020.
According to the leader of the British Industry Federation, as long as there is no agreement on the terms of the exit, British companies will spend billions of pounds preparing for an uninvolved Brexit and will withdraw that money from productive investments.
CBI chief executive said foreign investors have already questioned whether Britain is a stable, open country for business.
Carolyn Fairbairn stressed that the postponement of Brexit must above all serve to prevent the political crisis in Britain from escalating into an economic crisis.
The CBI leader is not the first to warn the British government of the economic dangers of an untimely exit.
In a recent announcement, he said that an unregulated exit from the EU would cause severe disruption in the short term and serious damage to competitiveness in the UK business sector in the long term.
He added that the CBI estimates that the burden of customs duties that would arise in trade with the EU in the event of an untimely exit would add £ 20 billion (more than £ 7,300 billion) to the British corporate sector.
According to the trade union leader, 150,000 British companies do not have the infrastructure to handle sudden customs charges.
Another day, the British government’s official forecasting agency warned of the economic risks of a disorderly Brexit.
The Office for Budget Responsibility (OBR), an independent analytical workshop preparing budget and macroeconomic forecasts for the government, also outlined a budgetary stress scenario in the 300-page assessment of the real economic effects of the British termination of the EU membership agreement and transition.
According to the study, in the event of a disorderly Brexit, the British economy would be in recession from the fourth quarter of this year, and gross domestic product (GDP) would fall by 2.1 per cent in real terms over the duration of the recession.
According to the OBR stress scenario, the value of business sector investments would drop by 2.1 percent this year, compared to 8 percent in 2020, on an annual basis, with no agreement and no exit period.