British firms plead for time to avoid Brexit cliff edge

LONDON • British business groups pleaded with the government to extend the time they have to prepare for the nation's departure from the European Union after leaders from both sides agreed to continue talks.

British Prime Minister Boris Johnson and European Commission president Ursula von der Leyen on Sunday gave negotiators another shot at reaching a deal on the terms of trade before the Brexit transition period ends on Dec 31.

Lobby groups responded with relief at the prospect that the sides may yet avoid a no-deal divorce, which would mean the application of costly tariffs and quotas.

The raft of changes that Brexit entails - from licensing standards to paperwork requirements - means British firms have a lot of work ahead to adjust to their new relationship with the nation's biggest trading partner.

"Government must move with even more determination to avoid the looming cliff edge of Jan 1," Mr Tony Danker, director-general of the Confederation of British Industry, said.

British and EU negotiators will try to forge a deal over the next few days, and if talks make progress, it is possible an agreement could be struck by the middle of the week, people on both sides said.

Though Britain voted to leave the EU more than four years ago, trade talks have come down to the wire as politicians haggle over key issues. Firms, meanwhile, have to try to adapt to life beyond Dec 31 without knowing the fundamental rules of engagement.

"This is about politics now. It is very difficult for business," said Mr Mark Price, a former trade minister and past deputy chairman of the John Lewis Partnership.

Officials have yet to decide how firms should deal with bureaucratic headaches such as how to comply with rules of origin or handle differing product standards.

Imports have already been disrupted due to high volumes of traffic at ports linked to Covid-19 and Brexit-related stockpiling.

"The UK has more to lose than us on transport in the case of a no-deal. I hope we can get to an agreement that will be necessary for the UK to ensure their supply chain," French Transport Minister Jean-Baptiste Djebbari said yesterday.

Britain's manufacturing industry also warned of a potential "knockout blow" if a Brexit deal cannot be secured in time.

Make UK, the trade body for British manufacturers, said it was slashing its growth forecast for the sector next year to 2.7 per cent, from 5.1 per cent just three months ago - roughly half the rate of growth it sees for the broader economy.

"Combined with the pandemic, many in industry are feeling like an exhausted boxer in the final round of a bout, with a no-deal exit from the EU potentially landing a knockout blow," its chief executive Stephen Phipson said.

Official data last week showed that British factory output in October was 7.1 per cent below its level a year earlier.

If the talks fail, Britain and the EU would revert to commercial rules set by the World Trade Organisation, which would mean new tariffs and Customs controls.

Shops would pass on extra costs from new tariffs to customers, meaning "it will be the public that pay the price of this failure", British Retail Consortium chief Helen Dickinson said.

As talks continued yesterday, Dr von der Leyen expressed satisfaction over some progress made.

"We are talking about a new beginning with old friends," she told a conference organised by the Organisation for Economic Cooperation and Development.

"We are on the very last mile to go. But it is an essential one. We want a level playing field, not only at the start but also over time."

BLOOMBERG, REUTERS, AGENCE FRANCE-PRESSE