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Carolyn Fairbairn: “The Brexit deal is a compromise, it is progress and we should now make it work”

10 min read

The CBI’s Carolyn Fairbairn fears a defeat for Theresa May’s Brexit agreement could unleash yet more disruption and uncertainty for British business. She tells Sebastian Whale why the deal – while far from perfect – offers a clear route map to success

Theresa May has few protagonists fighting her corner. A dwindling pool of political outriders are doing the rounds on the airwaves, desperately trying to communicate why the Prime Minister’s Brexit deal is not in fact a dead duck, but one that is alive and kicking.

It was a boost therefore when the Confederation of British Industry (CBI) backed the Brexit agreement secured by May in November. But since then, leaked emails revealed the internal concerns the organisation held for its contents. Brexiteers sounded off their now tried and tested critique of the trade group. And the PM repaid the favour at the CBI conference by upsetting officials through her words on EU nationals “jumping the queue”.

Carolyn Fairbairn, the CBI’s impressive director general, is still sticking to her guns, however. On a brisk December morning, she greets me into the organisation’s swanky fourth floor multicoloured office in Cannon Street, at the heart of the City of London.

Compromise and pragmatism are Fairbairn’s words of the day. The CBI’s position on the deal is simple; there are aspects it dislikes, such as the lack of clarity over the future arrangement and the backstop. And there are parts of it the group welcomes, most notably that it eliminates the risk of no deal and does “charge a path” to a “good” trade deal in the future.

“Many of the aspects contained in the political declaration are what businesses have been asking for in terms of data flows, in terms of barrier-free trade. This is a route map now for getting to a good deal in the future,” Fairbairn says.

“So, the position of business is we’ve had two years of wrangling, we have the risk of no deal out there, we have an economy that is already feeling the pain – this is a compromise, it is progress, and we should now make it work.”

All that said, the CBI faced questions about discrepancies between its public and private utterances when a leaked email, seen by ITV News, saw the group’s head of EU negotiations argue there was “no need to give credit to negotiators I think, because it’s not a good deal”.

Fairbairn explains: “In those comments, internally, we were talking about the future trade deal, it was about the political declaration. Everyone agrees that is not yet a good deal, but it could become a good deal over time. We just need to be able to get through the Withdrawal Agreement and get to that stage of proper negotiation.”

With scores of Tory MPs queueing up to rebel, the Prime Minister is expected to be defeated heavily. Many are already considering what would happen next. Some wish to see a second referendum, others a general election. Brexiteers are keen to see the Government pursue a Canada+ deal and some, including Tory MP Nick Boles, would like the Government to consider the so-called Norway option. Wouldn’t the CBI prefer to see the latter outcome, which would see the UK stay inside the single market?

“We would ask every MP in the country to consider the economic impact of different choices on their constituencies and really think through the different alternatives. There is no majority in parliament for any other outcome. The risk of unleashing further disruption on British business and the impact that will have on jobs is very real. We do ask them to be pragmatic in terms of their decision,” she says.

“We are not trying to tell them how to vote – this is their choice; it’s not all about economics. But a large part of it we believe should be about economics because it is about jobs for the future and their local businesses.

“The political process may deliver other outcomes and we will evaluate them as they arise. But for the moment, based on the cards in front of us and the challenges that businesses are facing, this is the deal that we believe MPs should really consider very carefully.”

Fairburn is deeply concerned at the risk of the UK stumbling out of the EU empty-handed – and has yet to be assuaged by those who say Parliament could prohibit it from happening. “If you look at the ideologies that separate MPs at the moment, they are so strongly held that as a business community we look at that and we still see the possibility of an accidental no deal,” she says.

A no deal Brexit would lead “immediately” to a hard border in Northern Ireland, with all the consequential “implications”, Fairbairn continues. “Not just for prosperity but also for peace. That would be non-optional for the EU and Ireland.”

Leaving on WTO terms would also lead to 80 per cent capacity restriction at Britain’s ports, she argues, meaning “dramatic decisions” would have to be taken over what “gets through” – from prioritising food goods, pharmaceuticals, water purifiers and the rest. There would be no guarantee about the honouring of the millions of outstanding insurance contracts in the services sector, she continues.

She adds: “The reassurances that parliament can give on that, we absolutely take them in good faith and we hear them, and we believe that parliamentarians would want to deliver that. But the legal process at the moment is taking us out unless something is put in its place to stop that.”

But there are some, including former Brexit Secretary David Davis (interviewed in these pages), who are relatively sanguine about the prospect of leaving with no deal. “I have to say, that astonishes me, given the amount of evidence there is now on the table,” she responds.

What is her message to MPs on this issue? “What I would say to them is talk to people, listen, think about the jobs for the people living in their constituencies – think of the next generation who are coming out into the job market now. We do think it is the most vulnerable that would be hit most quickly.”

She adds: “The backstop is a technicality that no one wants – let’s not fixate on it. The ambition of our partners in the European Union is to get us out of it or never get into it. What we now need to do is move on and move on to all the other things that matter for our economy. The decisions that we take around our schools, around our NHS, around our productivity challenge – they have nothing to do with the European Union. We are being held back from dealing with them.

“The fourth industrial revolution, where the UK could lead the world, everybody else around the world is moving ahead of us if we’re not careful. The UK for the first time in many years in the EY world attractiveness survey has fallen behind France and Germany – for the first time since they started measuring it.

“That just gives you a sense of where our competitiveness is sitting. We can recover from that. We have so much going for us. But we have to move beyond it.”

The CBI has come in for severe criticism in recent years, particularly or most notably from Brexiteers, who argue the organisation has been consistently wrong on previous topics such as joining the euro. Fairbairn, who became director general in November 2015, says she has not paid much attention to the “unfounded” allegations against the organisation that represents 190,000 businesses.

“Of course, we have attracted criticism. Not everyone agrees with the point of view that business has. But what I would also say is that if you look at the way the policy positions have moved over the last two years, we were the first organisation to recommend the status quo transition, a standstill transition. It was greeted with derision, frankly. Six weeks later, it was government and Labour party policy. We have been equally strong in terms of the importance of frictionless trade – that is government policy,” she explains.

“So, is it a comfortable position? No. Is it the right position for the CBI to hold, to represent its members, which is what I think we have been doing, with honesty and evidence and clarity? I feel that we have been real contributors to this debate and will seek to continue to be so.”

The Government has ruled out unveiling its new immigration policy until after the meaningful vote on 11 December. Aspects of the new system briefed out suggest that migrants earning under £30,000 a year might struggle to win the right to work in the UK. While Fairbairn understands that there are public concerns on immigration and is wholeheartedly in favour of training “our young people”, she has deep reservations over the direction of travel and the recent language regarding EU nationals used by the PM.

“We do have real concerns about a rhetoric and a policy from government that appears to be shutting off, or indicating they will shut off, all so-called low skilled people coming into the UK. The impact of doing that would be so damaging for our economy and I think it is underestimated how big a shock that would be. Some have equated it to the oil price shock of the 1970s,” she says.

“If this happened overnight, you would see businesses go under and we would lose jobs rather than create jobs for our population. Our messages are really ones of measure and balance and recognition of where we are.”

She adds: “I would say one other thing, I do think we need to be incredibly careful about the language we use. The idea that we would be talking about EU workers in our country in derogatory terms I think is something that certainly our business community would really like to see stop.”

Fairbairn concedes that politicians and the business community have failed to convey the benefits and importance of immigration to the UK economy. “You’re hearing it now. Do I wish it had been earlier? I do,” she adds, calling for a “much more earnest conversation about the value that people bring to our economy”.

Looking ahead to 2019, Fairbairn is animated by the performance of the UK, particularly in fintech and life sciences. “But we need to move beyond Brexit,” she argues. She wants to see the conversation move to competitiveness, fairness and Britain’s leadership in the world, and the role business can play within that.

“In order to do that – and this is what keeps me awake at night – we must make this decision. We must take the progress that we have, we must turn it into a settlement and we must move on. Because the real forces that will shape our world and shape the next generation are the rise of China, the new technologies facing us, how we make our school system better, how we pay for the NHS, how we get growth outside London. None of these are to do with the EU and all of these are issues that lie entirely in our hands,” she concludes.

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