Brexit No-deal Brexit 'poses threat to global stability' – CBI head
Carolyn Fairbairn warns bosses at Davos that damage caused by disorderly exit could spread far beyond the UK
Fears are growing internationally that a no-deal Brexit poses a threat to the stability of the global economy, the head of Britain’s leading business body has warned.
Carolyn Fairbairn, director-general of the CBI, said the failure to sort out Britain’s departure from the European Union was damaging Britain’s brand abroad and had joined a list of systemic risks to the world economy.
Speaking at the World Economic Forum in Davos, Fairbairn said there was mounting concern at the potential for a no-deal Brexit to cause damage well beyond the UK. The CBI held a private breakfast for UK business leaders in Davos attended by the head of the International Monetary Fund, Christine Lagarde. The UK chancellor, Philip Hammond, will address a CBI lunch on Thursday.
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Fairbairn told the Guardian: “At my meetings at Davos, there is a recognition that the causes of vulnerability of the global economy now include Brexit.”
The annual gathering of the WEF has been marked this year by anxiety about slowing growth and the trade dispute between the US and China. Fairbairn said Brexit had now catapulted up the list of worries. “It is everyone’s interest that Britain leaves the EU in a way that works for the British economy, the European economy and indeed the global economy,” she said.
Although Theresa May has decided not to go to Davos this year, several senior Cabinet ministers – including Hammond, the business secretary, Greg Clark, and the trade secretary, Liam Fox, have made the trip to the Swiss alps in an attempt to reassure those running UK and international companies that Britain will remain open for business after Brexit.
Fairbairn said damage was already being inflicted on Britain’s reputation. “The world is watching as the UK seeks to navigate Brexit, and some are questioning the UK’s global brand. It’s a vital time to remind global investors about our core British strengths: openness, creativity, practicality, a pro-enterprise culture. The sooner we resolve our Brexit choices, the sooner we can return to these roots.”
She added: “The most critical thing is to avoid a no-deal Brexit. Business wants no deal ruled out for 29 March as soon as possible. The boost to confidence and investment would be immediate. Without that happening, there will be a continuing drain on jobs and investment across the country.” Hammond is likely to face questioning about the government’s plans for controls on migrant labour.
“UK firms are deeply worried that the UK’s post-Brexit immigration model could the government to reconsider its decision to halt most low-skilled EU migration and in particular the £30,000 salary threshold that determines what is considered low-skilled,” Fairbairn said. Hammond will tell the CBI lunch that he is providing £100m to create 1,000 new PhD places across the UK for the next generation of artificial intelligence. “Britain is a great place to do business,” he will say.
The German chancellor, Angela Merkel, told the Davos audience that Europe must “deal with the shock of Britain’s decision to leave the EU”. She said she was working towards a “well-ordered” Brexit, as Germany wanted a good future partnership with the UK on issues such as security and defence. “The easier the relationship, the easier for all of us,” she told delegates.
The chancellor also used her special address to Davos to push back against rising populism. She warned that the world order was under pressure, and that people must remember that the key decisions underpinning today’s global system were made after the second world war.
After the horrors of that conflict, the people in charge had certain instincts, Merkel says. We shouldn’t cast their decisions aside, as they were taken based on a wealth of experience, she insists.
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China’s vice-president, Wang Qishan, also launched a thinly veiled attack on Donald Trump’s America First strategy. “The Chinese culture values the teachings that one should help others to succeed while seeking one’s own success, create a world for all, treat others with respect and pursue win-win cooperation,” Wang said. “We reject the practices of the strong bullying the weak and self-claimed supremacy.”
With US officials staying away from Davos this year, Wang presented China as a firmer supporter of globalisation. “What we need to do is make the pie bigger while looking for ways to share it in a more equitable way,’’ he said.
Japan’s prime minister, Shinzō Abe, also urged delegates to support the “free, open, and rules-based international order”, hailing Japan’s new trade deal with Europe. “I call on all of us to rebuild trust toward the system for international trade,” Abe said, adding that it must be fair, transparent, and also protect intellectual property rights.
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