The UK’s largest business lobby has warned the government that its threat to overturn the Northern Ireland protocol is forcing companies to rethink investing in the UK and dragging the economy.
The Confederation of British Industry (IWC) said immediate talks with the EU, rather than a political criterion, were needed to resolve the deadlock over the protocol, which regulates post-Brexit trade between the EU and Northern Ireland. and Great Britain.
Boris Johnson’s government is preparing to launch new legislation on Monday that would give ministers the power to rule out parts of the protocol, despite intense criticism from companies and opposition MPs and the threat of retaliation from Brussels. .
Tony Danker, director general of the IWC, said reaching an agreement was in the best interests of the UK economy as businesses and households struggle with rising cost of living and the imminent risk of recession .
“I don’t think it’s time for size; I think it’s time to make a deal, “he said.” I firmly believe that Europeans are being adamant. At the same time, our measures, which may come on Monday, to take unilateral measures in response are not helpful. “
The head of the lobby, which represents 190,000 companies across the UK, said renewed Brexit uncertainty over the protocol dispute was hurting the UK economy. Last week, the Organization for Economic Co-operation and Development (OECD) predicted that the UK would be the second worst-performing G20 country next year, after Russia.
“We see that global companies are falling short in the UK right now,” Danker said. “Look at the UK and think [there is a] combining a bit of concern about Brexit, some of these OECD figures, and we see global companies thinking, “Maybe the UK is not for investing right now.”
However, Danker said he believed there was a “very firm landing area” for an agreement that would satisfy the UK, the EU and businesses in Northern Ireland.
A spokesman for the UK government said: “The protocol as Belfast is undermining it [Good Friday] agreement and distribution of power.
“Our legislation will solve the problems. It has always been our preference to resolve this through talks, but the EU has so far refused to change the protocol, which is needed to provide the necessary solutions for Northern Ireland. Our focus has been, and will continue to be, on preserving peace and stability in Northern Ireland. “
The CBI also issued a sharp slowdown in growth for the UK economy in its latest economic outlook, following a strong week for Johnson’s personal authority, in which it faced a vote of no more censorship. 40% of its own deputies.
Reflecting a severe impact on household incomes due to lower cost of living, the pressure group predicted that UK GDP would grow by 3.7% this year, below an estimate previous 5.1%, and only 1% in 2023, revised downwards from 3% earlier.
With inflation hitting its highest levels since the early 1980s, airports struggling to cope, national rail strikes on the horizon and “Groundhog Day battles with the EU” for the protocol, the CBI warned that there was a real risk that the economy would reach a “distant second”. in politics this summer ”.
As rival Conservative factions try to re-establish the government’s economic agenda with their own preferred policies, Danker said ministers need to step up their level of commitment to the economic challenges facing Britain.
“The economic ideas that we should discuss should be about what should drive confidence and business investment. They are not talking about what is more conservative,” he said.
With less than 40 days to go before parliament enters the summer holidays, the CBI said there was an urgent need for the government to announce measures to support companies with rising costs, staff shortages and bottlenecks. the supply chain.
Rain Newton-Smith, the CBI’s chief economist, said the war in Ukraine, the Covid, the continuing tensions in supply chains and Brexit had “proved to be a toxic recipe for UK growth”.
Despite an increase in exports to other advanced economies, the CBI expects a weak recovery in world trade in the UK, with UK exports still 10% below pre-Covid levels by the end of 2023.
“In the context of rising cost of doing business and continuing supply chain pressures, easing trade flows is in everyone’s best interest. It’s not just about reducing non-tariff trade barriers in Europe and to sign free trade agreements, “he said.
“Post-Brexit regulatory reforms to support growth, innovation and sustainability can lead to competitiveness. But divergence could therefore introduce more bureaucracy and friction that undermines this mission.”