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How business lost the Brexit battle

Nicole Sykes is the former head of negotiations at the Confederation of British Industry (CBI).

July 2016. The captains of British industry have congregated in a glass-walled City conference room. The meeting is so oversubscribed that FTSE chairmen huddle by the complimentary brownies and turf out the note-takers in the observer chairs ringing the room. It’s a bruised company.

Overwhelmingly pro-European, many sit at the helm of international business, focused on the market of 500 million people the U.K. has long been a part of. There are German voices among the chatter, Italian, Irish and the odd, bemused, American. They employ millions of people between them and generate billions in tax revenue for the government. Just a week before, the U.K. voted to leave the EU. For most, it is a personal as well as a financial loss.

Yet the tone isn’t one of recrimination or even regret. Far from inhabiting the “gloomster” mindset they will one day be accused of, the universal attitude is determined. The British people have decided. We have to make this work the best we can. Adapt. Make a success of it.

The sentiment echoes round both the top table and the cheap seats. In the first weeks following the referendum, these and hundreds of other businesses would coalesce around five priorities for the new U.K.-EU relationship. First, retaining the ease of U.K.-EU trade that the single market provided. Second, balancing regulatory equivalence with the EU, with flexibility and influence over the domestic environment. Third, a migration system that would see firms able to continue to access the skills they need while recognizing public concerns. Fourth, protection for the economic and social benefits of EU-funded projects. Fifth, a clear strategy for international trade.

Four-and-a-half years on, and in the final days of Brexit negotiations, whether a deal is secured or not, U.K.-EU trade will not be “easy.” The regulatory balance has tipped so far towards domestic control it may upend the free-trade agreement entirely. Vast proportions of current EU staff at U.K. firms would not be eligible to work in the U.K. under the new immigration system. The replacement for many EU funded programs is still to be confirmed. An admittedly tenuous win on international trade takes business’ score on Brexit to one out of five. How did it go so wrong?

Fractured relationship

When the CBI’s president’s committee convened that fateful summer, the game had long been set — and Vote Leave was running it. Just as Brexiteers plugged into people’s preconceptions about power slipping across the Channel and patriotic devotion to the NHS, they leveraged Britain’s declining trust in institutions to paint business as out of touch and elite. Every survey of companies demonstrated a majority for Remain, yet even if 20 percent of an industry stood unsure or were Brexiteers, Vote Leave could disregard the percentages and paint the private sector as split.

If firms or trade bodies were considering planting their flag in the ground for Remain, Vote Leave would politely remind them of confusing Electoral Commission rules on third party campaigners, or less politely send students to interrupt their annual conference. Experienced campaigners operating on their own turf, Vote Leave outclassed at every turn chief executives dipping their toes in political waters for the first time. That made firms hesitant to speak up, driving bosses’ views underground, to be expressed only in carefully scripted responses to employee Q&As and secreted as “risks” in annual reports. And, worse, it fractured the relationship between the bulk of business and a chunk of the Conservative Party.

That hesitance did not fade and that fracture did not heal when the ballots were counted. When Theresa May was elevated to prime minister, this legacy meant it was not in her interest to be seen cavorting with businesses her backbenchers were less than keen on, and she was not particularly interested in them.

Before businesses had anywhere near the full picture of the deal they wanted, let alone the opportunity to tell the prime minister what that was, she had set out the red lines that would steer the Brexit deal towards its natural conclusion —where we are today. Control of immigration, our borders and laws meant no single market and no customs union, which in turn meant no “easy trade” and no regulatory balance.

Could it have been different if business had more ably ducked Vote Leave’s bullets and fired back their own? If they had clambered over the brambles set outside No. 10 in 2016, or spoken truth to power more readily on the occasions they did make it through? Perhaps. There was certainly a time when it felt as if business was edging closer to what it wanted.

Had May’s Chequers plan passed muster, it would have taken business’ Brexit scorecard much closer to four out of five. But then the red lines reasserted themselves, and the house of cards tumbled down.

Since that point, business’ ambition has been whittled down, month by month, from a close partnership to “a deal” and “not no deal.” Still the CEOs say they have to make this work the best they can. Adapt. Make a success of it. But we’re a very long way from what was envisioned by those same bosses in those heady post-referendum days, and the U.K. economy will be the worse for it.

This article was amended to update the author information.


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