CBI boss warns Tory leadership hopefuls of ‘severe’ damage from no-deal Brexit

Director general of the CBI Carolyn Fairbairn has warned of the dangers of a no-deal Brexit Credit: Victoria Jones/PA

Tory leadership contenders have been warned that a no-deal Brexit would cause “severe” damage to British business.

Confederation of British Industry (CBI) director-general Carolyn Fairbairn urged the next prime minister to reach an agreement with Brussels, warning that the “vast majority of firms can never be prepared for no deal”.

She said the next prime minister needed to listen to “clear, detailed evidence” from businesses when deciding on their Brexit approach.

Esther McVey has said the UK needs to “actively embrace leaving the EU without a deal”, while Boris Johnson and Dominic Raab have both said they would work to renegotiate the terms on offer with Brussels but would make sure the UK leaves on October 31, with or without an agreement.

In an open letter to the 11 participants in the race for Number 10, Ms Fairbairn said: “The next prime minister can only claim the Conservatives are the party of business if they secure a Brexit deal that protects the economy, jobs and living standards.

“Firms large and small are clear that leaving the EU with a deal is the best way forward.

“Short-term disruption and long-term damage to British competitiveness will be severe if we leave without one.

“The vast majority of firms can never be prepared for no-deal, particularly our SME (small and medium enterprise) members who cannot afford complex and costly contingency plans.

“We need compromise, consensus and honesty to resolve the Brexit impasse, quickly.

“Prolonged uncertainty is damaging our economy now – driving up costs and reducing sales.

“Stockpiling of raw materials and goods among SMEs is at a record high.

“Billions of pounds in investment are being diverted from the economy, harming future jobs and prosperity.

“The CBI urges the next Prime Minister to build their approach to Brexit from the bottom up – from the clear, detailed evidence of firms, on the ground, managing the day-to-day implications for jobs.

“Only then will the UK have the foundations for a world beating economy.”

Ms Fairbairn said Brexit was not the only concern for British business.

“Threats of renationalisation, continued doubts over vital projects like Heathrow, HS2 and Northern Powerhouse Rail, and unreformed business rates are just a few of the other challenges that make investors think twice,” she said.

“It’s time to restore the UK’s reputation as the stable and trusted country to start and grow a business.