UK prime minister Boris Johnson’s plans for a no-deal Brexit have put him on a collision course with business leaders.
Johnson said on Friday Britain would leave the EU without a trade agreement on 31 December, unless there was a “fundamental” change in the EU’s stance on key issues in the negotiations so far.
He said in a televised speech Britain would prepare with “complete confidence” and would “prosper mightily as an independent free trading nation.”
But the comments sparked a fierce backlash from business leaders, with widespread alarm over the severe economic disruption likely next year.
Small business chiefs, retailers, food and drink producers and City leaders all spoke out, warning of a heavy economic toll on households and firms.
Small firms: ‘No clear sense’ what to prepare for - or cash to put aside
Federation of Small Businesses (FSB) National Chairman Mike Cherry, said: “Not only have small firms been hit by the most severe recession on record over the past six months, they’re now 10 weeks out from the end of the transition period with no clear sense of what our future relationship with the EU will look like.
“They’re being told to both prepare and simultaneously manage a fresh set of Covid restrictions. Many simply don’t have the time or money to make adjustments, even if they want and need to.
“The last time we were told to prepare for a no-deal scenario you saw a big uptick in stockpiling. There simply isn’t the cash or staff capacity to make that possible this time round.
“More than four years on from the referendum, clarity is needed now more than ever.”
Food and drink firms: ‘Eye-watering’ tariffs facing UK shoppers on imported food
Ian Wright, the Food and Drink Federation’s chief executive, said: “The prime minister’s statement signals that we are heading into very dangerous territory. The perils of a no-deal exit for GB food and drink manufacturing remain as real as ever.
“In the event of a no-deal Brexit, shoppers will – literally – pay a heavy price. Imported food and drink from the EU will face eye-watering tariffs averaging 18% kick starting price rises. At the same time border delays and disruption will bring further costs which will not be subsumed by industry.
“A no-deal outcome is bad for food and drink businesses, bad for food security, and bad for every household in Great Britain.”
Retailers: Disruption from checks and ‘red tape’
Helen Dickinson, chief executive of the British Retail Consortium, also highlighted the risk to UK food prices, warning: “There is nothing retailers can do to insulate consumers from the impact of £3bn [$3.8bn] of new tariffs on food in our supermarkets.
“Moreover, new checks and red tape that will apply from 1st January will create additional disruption in the supply of many goods that come from or through the EU.
“Government must do what is necessary to agree a zero-tariff agreement, or else it will be the public that pay the price.”
The City: Main losers are businesses and households
Catherine McGuinness, policy chair at the City of London Corporation, which governs the Square Mile, said it was “deeply disappointing” negotiations appeared to be heading nowhere.
“Businesses and households on both sides of the Channel, who rely on trading with one another, stand to be the main losers from this political game of chicken,” she said.
“An acrimonious separation would only increase uncertainty for businesses for months to come, at a time when they most need support. The City has been clear throughout that a no-deal scenario would be inappropriate given the complexity of our relationship.”
Institute of Directors: No-deal preparations are a ‘Herculean task’
“Few would doubt that getting ready for no deal in the middle of a pandemic will be a Herculean task for many businesses,” said Allie Renison, senior policy adviser at the Institute of Directors.
“Our figures show that most directors think that Covid will magnify the impact of no deal. It’s tied their hands throughout the year and put immense pressure on cashflow, and will continue to limit bandwidth in the months ahead.
"To help businesses prepare, government must work closely with directors to aid their planning, providing information as soon as it comes to light. Financial support for small firms in particular should be stepped up, whether through vouchers or tax reliefs.”
WATCH: Boris Johnson tells UK to prepare for no-deal Brexit